Good/Bad News: Hiring Up, Engagement Down


Nearly two-thirds of employers expect a rise in voluntary turnover as the economy improves and market demand increases for specialized skills.

Beyond Money: How to Win and Keep Top PerformersWith an improving economy, employers are increasingly concerned about employee retention. The threat of a mass talent migration of workers searching for better employment opportunities is forcing more companies to evaluate and improve employee retention programs.

According to Mercer’s Attraction and Retention Survey for 2012:

  • More than 40% of respondents want to expand their workforce in 2012
  • In 2010, that number was only 27%.
  • Fewer organizations are making reductions to their workforce compared to two years ago—16% compared to 25% in 2010.
  • Almost twice as many organizations report reduced levels of employee engagement—24% in 2012 to only 13% in 2010.

In response to the economic recession, employee loyalty is eroding, said Loree Griffith of Mercer’s Rewards consulting firm in the US in a press release.

“Actions like layoffs, pay freezes and limited training opportunities have created an evolving employment deal for employees,” Griffith said, “due to uncertainty about what is expected and how employees will be rewarded.

“Meanwhile,” she added, “firms are still aggressively managing people costs while finding ways to re-energize and re-motivate engaged employees.”

The Attraction and Retention Survey included more than 470 employers across all industries throughout the US and Canada.

Employers are focusing on engagement, as a way to combat increasing turnover rates.

  • Nearly 60% of companies in the study are anticipating surges in voluntary turnover, since both business markets and the economy are showing signs of improvement.
  • Certain positions are also in demand than others, from factors like skill shortages and market demand.
  • The hot jobs include IT, R&D/Engineering and Executives/Supervisory and Top Management.

“Employees with the ‘right’ skill sets are in demand,” Griffith said. “Despite an increase in hiring, many firms are experiencing talent shortages due to critical gaps between skills employees possess and skills businesses need.”

More than ever, businesses must attract and develop top-performing employees and essential elements of the workforce.

Beyond Money: How to Win and Keep Top Performers

Rewards, both cash and other perks, continue to play a prominent role in nurturing employee engagement and retention; clearly related to reduced salaries and smaller bonuses.

According to Mercer’s survey:

  • Pay raises are making a comeback, with a majority (95%) of organizations committing to some form of expansion for 2012.

However, money is not the only incentive.

Organizations are continuing to use noncash rewards as a way to improve employee retention and participation, especially when faced with budgetary shortfalls.

The most popular noncash reward programs used by organizations over the past 18 months:

  • Communicating “total reward value” to employees (offered more by 25% of companies polled)
  • Social media as a tool to boost the employee work experience (25%),
  • Official career path development (22%)
  • Additional internal/external training (22%) and individual recognition (22%).

Many programs have been in use for at least two years. However, an increasing number of organizations use these programs—social media and team building events—as a way to advance the work experience.

Training efforts are also on the rise, with the overall development of training programs since 2010.

No matter how much a company will rely on noncash incentives, employee engagement and retention will be largely tied to base pay increases:

  • Half of companies (50%) plan on offering raises to top-performing employees.
  • Vertical career progression will be used by a slightly smaller number of companies (47%)
  • Leadership development will be used by 46%.
  • Other reward elements will have a moderate impact on employee engagement—such as variable pay, health care benefits, balanced work/life programs, performance management, flex time programs and other training.

 

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