Biggest challenge on road to recovery: Retention

Employers ready to boost pay, says survey
By Sarah Dobson
|Canadian HR Reporter|Last Updated: 09/18/2009

With recovery talk gaining momentum, employers in various industries are evaluating the best options and next steps. And much of the activity will involve HR, with decisions around staffing levels, compensation, benefits, productivity, attraction and retention.

“There are going to be a whole bunch of human resources-related issues as the economy recovers,” said Greg Pocherewny, vice-president of permanent placement operations at Robert Half International in Calgary.

“As we pull out of this, companies are going to have challenges, particularly with retention and tying into career development, career management with existing staff, hand in hand with the challenges of hiring whatever new staff positions they’ll be seeking. Human resources will definitely be an important part of any company that wants to take advantage of the recovery and position themselves for growth.”

Once the economic recovery is underway, 55 per cent of employees said they plan to leave their job by changing employers, making a career or industry change or going back to school, according to a survey of 505 workers and 501 hiring managers in the United States by Robert Half and CareerBuilder.

“(Fifty-five per cent) is a fairly significant number, so retention and employee morale (are) going to be key for any company coming out of the recession,” said Pocherewny. “Employees and companies have made do, and both made concessions through the tougher times but, as the recovery comes, employers are going to want to keep their best talent and employees seem to be indicating they’re looking for their next move.”

To stay with their employer, almost one-half (49 per cent) of the workers surveyed would like to see pay increases, followed by benefits and perks (20 per cent) and a promotion (nine per cent). And 28 per cent said they plan to ask for a raise while 18 per cent plan to work fewer hours when the economy recovers.

“A lot of workers said they were willing to take pay cuts to avoid layoffs, however, as we emerge from the recession, they are expecting salary increases,” said Pocherewny. “(Employers) definitely are going to have to be very proactive on that front.”

But employers seem amenable, as 40 per cent said increasing pay will be the primary method for retaining top performers, found the study. And almost two-thirds (61 per cent) of hiring managers in the Robert Half/CareerBuilder survey said they are willing to negotiate higher compensation for qualified candidates.

“They do need to deliver on that and employees are going to be a little cynical until they see that,” said Rebecca Haefner, vice-president of HR at CareerBuilder in Chicago. “As we get into the 2010 year, you’re going to see some more fluidity in terms of investments companies are making and that’ll put a lot of employees at ease.”

Hiring plans

A strong majority (85 per cent) of businesses expect to maintain or increase the staff levels in the next 90 days, according to research by David Aplin Recruiting, an Edmonton-based firm which polled more than 450 Canadian business leaders, hiring managers and decision-makers in August.

But many of the decisions going forward will depend on how organizations have reacted through the downturn, said Jim Thomson, vice-president of HR operations at Ceridian in Markham, Ont.

“For those that have let employees go and as business starts to come back, they’re going to be scrambling, so certainly there will be staffing up again for those that have thrown hands overboard in the storm instead of looking at other ways to retain the talent,” he said.

That will mean increased competition for talent and compensation, particularly when it comes to high performers.

“Companies are going to be limited in that I don’t think they’ll open up their purse strings that wide, particularly for the employees still onboard,” said Thomson.

“The heat will be on management to really differentiate compensation for the high performers. Those are the people you want to keep.”

A recent study from the Corporate Leadership Council found the intent to stay has not changed that much but the discretionary effort put out by employees has declined, said Thomson. However, the intent to stay by high potentials dropped 21 per cent between the last quarter of 2008 and the first half of 2009, he said.

“So you really have to revitalize your company now,” he said. “You’ve got to put those high performers in those A jobs and then you’ve got to get the engagement level up… It’s not the money, it’s the fairness of it all, not being differentiated even if their performance is better.”

Managers plan to hire a combination of workers, according to the Robert Half/CareerBuilder study, which found 53 per cent intend to hire full-time employees over the next 12 months while 40 per cent will hire contract, temporary or project professionals and 39 per cent will add part-time employees. Almost one-quarter (23 per cent) do not plan to hire.

“Right now, the sentiment is definitely a lot more optimistic,” said Pocherewny. “It’s still a tough market and companies are very cautious when they make their hiring decisions right now, so they’re putting every situation and every hire under more scrutiny than ever before.”

HR’s role

The recession has provided a great opportunity for companies to try different cost-saving initiatives, such as a virtual workforce, summer hours or job-sharing, and they may contemplate keeping these going, even in a modified form, said Haefner.

HR can advise the higher-ups that a recovery does not mean putting everything back together the way it was when it comes to eliminated positions or training dollars, for example, she said. The department should gather learnings from the last year and consider it a blank slate, from staffing to benefit investments.

“There’s an incredible amount of data… and the HR team can pull that back and help the leadership team make critical decisions about the organization’s investments for the next couple of years,” said Haefner.

With the recession, managers have let their focus on people slide while they focus on results, so they should get back to those basics, said Thomson. And many workers have been under incredible stress, worrying about job security, their families and retirement savings while working extra hours. So employers should also focus on initiatives around work-life balance, such as reduced workweeks or EAP programs.

“This crisis brought a lot of things to bear,” said Thomson. “A lot is going to be changing and the things you should have been doing in the good times, that the recession has forced on you, you should do as the good times are back.”

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