By Jennifer Rosenzweig
October 1, 2009
There are scattered but growing indications that the U.S. economy is slowly finding its way out of the recession. Layoffs, salary freezes and other business cost-cutting measures have peaked, according to several reports, and are expected to taper off throughout the remainder of the year.
However, buried beneath this encouraging news is a major underlying crisis. Past, present and future layoffs are expected to lead to a serious talent gap among companies when the economy does recover, and remaining high-performing employees seek better opportunities.
Many companies fail to realize that the best and brightest employees can help their businesses weather the current challenges better and recover more quickly. Regardless of labor market conditions, top talent is always in demand, and your star performers are likely being recruited by your competitors right now.
Businesses need to act now by using people-centered practices, such as mentoring and education to broaden valued skill sets, and recognition programs to recognize top performers. These efforts help ensure that their organization has the best-trained, most highly-motivated workforce available to not just weather the crisis, but also to be able to take full advantage of new opportunities as economic conditions improve. Here’s why:
Small Signs of Recovery
Last week, The Conference Board reported its index of leading economic indicators reached a 1-1/2 year high in August 2009, marking the fifth straight month of increases, signaling a potential recovery by year-end, according to some economists. Meanwhile, Federal Reserve Chairman Ben Bernanke said last week for the first time that the recession was “very likely over.”
In addition, the U.S. Consumer Confidence Index recently rose in August from July levels as consumer spending began a slight rebound. The housing market is beginning to slowly turn around, and U.S. purchasing managers said manufacturing activity expanded in August after 18 straight months of contraction, feeding hopes of economic improvements to come.
Labor Shortage: Will we be ready?
One of the most surprising facts to come out of this current recession is that even though 13 million people in the U.S. are unemployed, there are approximately 3 million jobs, says the U.S. Bureau of Labor Statistics, which have gone unfilled - jobs, by the way, which frustrated employers are actually and actively trying to fill. When the economy does improve, this is expected to create even more serious problems when companies find themselves with key positions to fill and an under-trained and under-motivated pool of candidates to choose from.
In better times, companies could easily lure talent from other regions of the country. However, the current slump in housing prices has made selling a house and moving to another job unaffordable, so even many of the best candidates are staying put — for now.
Retaining Talent: The new reality drama
This is why it is so important that companies focus their efforts now on retaining their top talent. In a new survey by Robert Half International, companies said that retaining current employees tops the list of their toughest staffing challenges. Meanwhile, in another poll, CareerBuilder found that 19 percent of employees are hoping to find a new job this year.
And the reasons that talented workers are bolting go beyond simple dissatisfaction with salaries, according to the Spherion Saratoga Institute, which found by closely examining employee exit interviews, that it’s rarely just the money anymore. It’s also about issues such as the work environment, which has become highly stressful for many who are doing the jobs of two or three people, while at the same time experiencing a lack of recognition for a job well done.
The Society for HR Management has a list of five key employee retention mistakes which include: assuming employees “won’t dare now leave due to the recession,” assuming other companies aren’t making strategic job offers, not talking with your best employees about how they are doing, not paying enough attention to the relationships between employees and their immediate supervisors, and assuming that employees will stay once the recession is over.
One key to better understanding the impact that losing your best employees can have on your business is through the Employee Lifetime Value (ELTV) concept, developed by the Forum for People Performance Management and Measurement at Northwestern University. Forum-sponsored research over the years has documented a direct link between employee satisfaction and customer satisfaction, and between customer satisfaction and improved financial performance. Effective talent retention strategies are key to improving Employee Lifetime Value, and vital to preserving and protecting 85 percent of your company’s assets - human intellectual capital and talent - your people.
To learn more about Employee Lifetime Value and its importance in retaining key talent, please visit the Forum Web site, http://www.performanceforum.org
The Forum is always interested in working with companies in partnership to research and share challenges and best practices in talent retention strategies.
Jennifer Rosenzweig is founder and principal at Dragonfly Organization Resource Group, Birmingham, Mich., and research director of the Forum for People Performance Management and Measurement, a research center within the Medill Integrated Marketing Communications graduate program at Northwestern University. A central objective of the Forum is to develop and disseminate knowledge about communications, motivation and management so that businesses can better design, implement and manage people-based initiatives for inside and outside an organization.
The Forum will be hosting its second annual Think Tank symposium, “Who’s in Charge Now? Thriving in an Employee-Led Economy,” Wednesday, Oct. 14, 2009 at the Union League Club of Chicago. To register, and for more information, call 630-369-7780 or visit http://www.performanceforum.org/Think-Tank.97.0.html