During the pandemic, business models have drastically shifted. Due to the changing needs of employees, many are reevaluating their current career path to find positions that better fit their lifestyles. This current phenomenon has been dubbed “The Great Resignation,” and it’s causing many business owners to rethink their strategies on attracting and retaining talent.
From retail to professional businesses, resignation rates have been skyrocketing across all industries. A global survey of 30,000 employees conducted by Microsoft found that 41% of employees are considering quitting or changing professions this year—a record number. According to the U.S Department of Labor, 3.6 million people quit their jobs in May 2021. With over 9.2 million job openings available, many employees feel confident that after resigning they will find new positions that align with their preferences.
Invest in Your Talent
Employers' willingness to be flexible is an essential component of employee retention. Accommodating your team members’ individual needs and listening to their personal preferences is key. Many desire flexible schedules, paid time off, child care assistance, maternity and paternity leave. Due to the high turnover rate across industries, many employees feel confident they can find other options for work if their employer isn’t providing what they’re looking for. Finding ways to accommodate your employees can make the difference between applicants choosing to work for your business over a competitor.
Pay increases are also at the top of employers' minds. According to data from the Federal Reserve, hourly wages for private sector employees grew from $28.80 in March 2020 to $30.17 in April 2021. Adjusting your budget to increase employee salaries is an investment to consider in order to avoid future turnover.
Increasing employee training is another way many small and midsize businesses are addressing staffing issues. Increased manager coaching was reported as the most common tactic for companies with over $100 million in annual revenue. While not as prominent among small and midsize businesses, coaching is one of the tools being used to address staffing issues among all revenue bands.
To supercharge your recruitment and retention efforts, and help boost efficiency and profitability, read The Cost of Talent and Its Financial Impact on Your Business.
Claim Employee Retention Credit
Take advantage of the IRS Employee Retention Credit (ERC) program, which offers tax credits to qualifying businesses that have made efforts to keep employees on the payroll. These credits are providing substantial financial relief to organizations of all sizes that are struggling to keep a full team on staff. The ERC program was originally scheduled to end at the beginning of 2021, but has since been extended through the end of 2021, and has also been expanded to include SBA Paycheck Protection Program recipients as eligible. Even though these tax credits are scheduled to expire in less than six months, there is still time for eligible businesses to claim the credit toward the 2020 or 2021 tax year.
To learn more about the ERC program, read our blog Employee Retention Credit: The Financial Relief Program You May Not Have Heard Of. Reach out to your accountant or tax preparer to get personalized information regarding your eligibility.
Cut Costs Where Possible
While accommodating employees’ desires could prove too costly for your business, it’s important to keep in mind that employee well-being can make your business money, too. When well-being is prioritized, employees become more creative and committed to their roles, allowing you to get higher return on your talent investment.
That said, providing accommodations may require adjusting your business's budget. Strategic cost cuts allow business owners to reimagine the future of their company, pouring resources into new areas of business while drawing back funds from other areas. For example, due to the increased interest in remote work, many business owners are paying rent or mortgage to run empty office spaces.
If the majority of your team has expressed interest in working remotely indefinitely, and the building owner has concluded that this is the right long-term solution for the company, it may be time to reevaluate your need for a permanent office space. If your team is working under a hybrid model, consider downsizing your space to accommodate your new work model. If there is a substantial term left on your lease, subleasing sections of your office to outside businesses that are similarly rethinking their workspace may also be a way to reduce costs.
Cutting labor costs is another option when adjusting your company’s budget. Downsizing may seem counter productive in terms of employee retention, but reevaluating your team to remove non-essential roles can allow you to pour extra funding into the remaining core employees on your team. Business owners may consider reducing the size of their workforce through attrition by not replacing employees who retire or resign rather than laying off staff members. Finding software to automate your business process or investing in project management tools can help your team avoid becoming overwhelmed when removing roles.
Although the current turnover rates may cause doubt or discomfort, it is an opportunity to look ahead and be intentional about how you want to shape the future of your business. To learn more strategies your business can embrace to navigate the changes happening in your industry, read Three Economic Recovery Trends That Affect Your Business to help your team of advisors get aligned on how you plan to proceed as the economy recovers.