Canadian companies that keep giving employees raises in an attempt to win the war for talent may be wasting their time, according to new research.
A recent report from Canadian Policy Research Networks (CPRN), based on a survey of 2,500 working Canadians, reveals that people care more about having good relationships at work than they do about pay and benefits.
The findings mirror those of a survey of Canadian employers that showed while 80 per cent of respondents are having trouble finding and holding onto staff, most are still relying on compensation strategies to solve their problems when employees want more than pay increases.
“I think HR people have figured it out but I don’t think HR people have been able to convince executives that it takes more than money to keep people,” said Nadine Winter of N. Winter Consulting. Her firm released the report Redefining Rewards early last month. It details the persistent gap between what companies are offering employees and what the employees want.
Bonuses and pay hikes do offer some immediate redress to staffing problems, but on average the good feelings and renewed commitment only last for about six months before disenchanted employees start looking elsewhere again.
The problem is that making the kinds of substantive changes that will engender loyalty from staff can be inconvenient and cause a lot of discomfort for leaders and managers who are unwilling to spend the time or money on these types of programs and initiatives.
Managers often resist giving staff time off for training, or to let them apply for internal positions. “But what good is a policy that says an employee has to stay in a job for one or two years before they can move to another position in the company if they end up leaving the company altogether,” she said.
It is the same problem for work-life balance. The inconvenience can seem monumental, but employers have to get use to dealing with the short-term inconvenience for the long-term gain, she said.
Employees also want better communication channels but the fact of the matter is a lot of senior people don’t have the necessary communication skills, said Winter. Not only are they unwilling to improve their own communication styles, but they are unwilling to spend the money to improve communication skills in other leaders and managers throughout the organization.
The CPRN study, What’s a Good Job? The Importance of Employment Relationships took a unique approach to examining the labour market, focusing on relationships between people.
“We have long paid a lot of attention to issues of pay and benefits,” said Grant Schellenberg, senior researcher with CPRN and co-author of the report. “I think by and large they still want those things, those aspects are certainly there. But what is also critical is the importance people attach to the intrinsic aspects of the job.”
Schellenberg and his co-author, Graham Lowe, contend that since the working world has changed so much with the onset of the new economy, so too have perceptions of what is and is not a good job.
For example, Schellenberg and Lowe found that many temporary workers consider themselves to have a permanent job due to their ongoing relationship with a staffing agency. Similarly, distinctions between self-employed and paid employment are less clear, with 12 per cent of all self-employed people having such a strong relationship with one employer they could be considered “disguised employees.”
And so rather than use traditional simplified definitions about job status, tenure and pay, they wanted to focus on employee experiences at work and what they felt about their employment relationship.
When respondents to the CPRN survey were asked if they were to look for another job, what would they most want, 74 per cent said being treated with respect was very important while 62 per cent said being well paid was very important. Interesting work (72 per cent) and a feeling of accomplishment (71 per cent) were also deemed more important than pay.
Schellenberg and Lowe’s work and the notion that work relationships have changed fundamentally will serve as the basis for a new Web site to be launched by CPRN later this year, www.jobquality.ca. Aside from information and articles on developing quality jobs in the workplace, the site will provide employers with free employee surveys and results can be measured and compared against national benchmarks.
Strong relationships at work lead to a host of positive benefits for the employer including improved job satisfaction, lower turnover, reduced absenteeism and higher morale.
Winter’s firm surveyed 75 Canadian firms from December 2000 to February of this year to determine the effect of reward and recognition strategies on attraction and retention. Of those surveyed, 80 per cent reported they are having difficulty finding and holding onto talent.
Despite the “so-called downturn” people are and will continue to be in short supply, said Winter. “It doesn’t really matter where you look, there is a shortage of skill and it is not just IT people alone. That is a myth.”
While it may not be the most important demand, a large number of employees are still looking for better pay. It is absolutely essential to have competitive and creative pay packages including good base and incentive pay, but that is not enough, she said. According to the survey 43 per cent of respondents say their pay programs are not meeting employee demands.
Almost 60 per cent changed their compensation strategy in the past two years, but only eight per cent have introduced work-life balance programs. Looking ahead, just 25 per cent said they plan to introduce changes like flex-time, onsite child care and subsidized fitness programs.
Other findings from the N. Winter survey include:
•39 per cent believe there is a gap between what employees want in communication and what the company is providing;
•52 per cent believe career development and training is not meeting employee expectations; and
•45 per cent believe work-life balance programs aren’t meeting employee demands.
While Winter said it may take a while for executives to get accustomed to the changes they will have to make, Schellenberg is more optimistic.
This should actually be very good news for companies, he said. If everyone is asking for 30 per cent raises and better benefits, then the employer has a problem. But they are looking for low-cost solutions to their problems.
And while they call on employers to foster better working relationships with employees, the authors also point out that unions must also address employment relationship issues. “Some unions view ‘new’ human resources management strategies that cultivate trust, commitment and employee involvement as anti-union.”
HR has been preoccupied with trying to measure their programs in recent years, said Winter. “But for many HR programs you cannot measure their effectiveness.” It is impossible to measure the effect of a work-life balance program in isolation and besides no one program reduces turnover on its own, she added.
But most executives think in terms of financial cost and benefit analysis. “If you say to them ‘We are losing people and we are paying in the 65th percentile, let’s pay in the 70th,’ the execs get that because they are ranking themselves against other companies,” said Winter.
But HR people know what the real issues are. Even without doing formal surveys, exit interviews make it perfectly clear that money isn’t the answer.
“For an HR person it is real simple, but it is a very difficult sell to management and executives.”
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