This piece is one in a series on challenges CEOs believe will disrupt their businesses.
“Our people are our greatest asset.”
Corporate executives have said this for years. But it’s never been truer than now. Hiring and retention are an increasing concern for the C-suite. To sustain their businesses, CEOs realize they need the right people in critical positions but finding and keeping them isn’t easy.
The U.S. labor shortage rages on.
Ask hiring executives in manufacturing, construction or healthcare and they’ll tell you these industries (and others) were having difficulty filling open jobs long before the pandemic. The global crisis exacerbated labor issues, resulting in more than 30 million unemployed U.S. workers at its height.1
The addition of almost four million (3.8 million) U.S. jobs in 2021 did little to relieve the labor shortage. In July 2022, there were 11+ million job openings, but more than six million people were unemployed in August.2,3
Hiring managers are working hard to secure proper staffing, trying new incentives, and changing employment requirements in hopes of attracting a broader range of candidates. Some of these ideas are working, others aren’t. Even worse, employees are quitting jobs at record levels – aka “The Great Resignation.”
Why are so many people quitting their jobs?
Employee retention is now as perplexing as hiring. According to the U.S. Bureau of Labor Statistics, more than 47 million Americans quit their jobs in 2021.4 More than four million people quit their jobs in July 2022.5
Causes vary, but over the last year the leading reason employees say they quit their jobs is “lack of career development/advancement,” while “inadequate compensation” is a close second (see Figure 1).
Rounding out the top three reasons for leaving a company is employees’ negative views of its executives. Thirty-four percent feel leaders are “uncaring” and “uninspiring.” Interestingly, this reason scored only slightly lower than the more personal compensation.
Source: McKinsey, “The Great Attrition is Making Hiring Harder…,” July 2022
Are there worthwhile measures companies can take to stem the tide of resignations?
The workforce is a top priority for CEOs.
Seventy-one percent of CEOs believe labor shortages will disrupt their businesses.6 In what Gartner characterizes as a “radical shift in priorities” among CEOs, workforce issues rank third behind growth and technology-related concerns for 2023 – a rapid rise from the fifth spot in 2020 (see Figure 2).
Increasing hiring and retention challenges set off alarms in the C-suite earlier this year. Specifically, 49% of CEOs agreed that it is “very difficult … to find and hire the kind of people we need in our business.7
To put this in perspective, workforce issues now rank ahead of financial issues like profitability, cash flow and capital funding, as well as corporate initiatives including mergers and acquisitions in the minds of these CEOs.8
How are CEOs addressing employee resignations?
Contrary to employee beliefs, CEOs and other C-suite leaders do care about employee satisfaction. With staffing levels already at risk, executives recognize that responding to employee needs is critical to their well-being, as well as the company’s.
According to a Deloitte survey, executive leaders have extensive plans — including flexible scheduling, more training, and “strengthening the company’s stated purpose” — to address departures. These are the top three areas in which they will focus (See Figure 2).
Now a well-established practice for many companies, remote work was high on employees’ wish lists at the height of the pandemic. “Talented people can now reasonably expect opportunities to work when and where they like — and may be prepared to seek employment elsewhere if these choices are denied to them,” states a Conference Board report.9
Eighty-three percent of executives recognize flexibility is an important factor for some workers and are trying to determine the right mix of remote and in-office work to satisfy employee preferences. Some have adopted a hybrid mix of onsite and offsite days to give employees the flexibility they crave.
Source: Deloitte, “Summer 2022 Fortune/Deloitte CEO Survey,” June 2022
Staffing shortages have created an imbalance, as some leaders struggle to satisfy employee needs while meeting business objectives. For example, some worry the transition to remote work could lead to a loss of collaboration and, ultimately, company vision. This perceived disconnect may be fueling executives’ desire to restate their companies’ purposes, which 37% of respondents to the Deloitte survey cited among their top three initiatives for easing resignations. In the end, employers and staff (no matter where they work) must follow an established, well-communicated roadmap to meet company objectives.
Still, acknowledging employee needs is also a large part of CEO’s second prioritized approach to reducing resignations — training leaders to empower and better engage staff. Employees have goals just as organizations do. Work may play a large role in helping people discover and fulfill their life’s purpose.
A strategy that emphasizes better listening and engagement enables managers to extract what is truly important to employees. They can then work together to attend to any gaps related to company values and for achieving success in their roles. In doing so, leaders may also address the number one employee concern: lack of advancement.
Employees want to progress.
An obvious reason that an employee accepts a role is that it’s a good fit for their skills and experience. Of course, along with these practicalities come expectations – one of which is growth. People want to learn and be rewarded for applying knowledge to the benefit of the business.
Employees who left jobs in the last year didn’t feel they had an opportunity to advance. How they perceive “advancement” or growth depends on the individual. For some it may mean a promotion. Others may simply want to explore other roles within the company. In fact, 67% of employees indicated that they’d leave their current employment if they weren’t given the opportunity for internal mobility.10
Whatever an employee’s desired outcome, employers would benefit from providing a clear path to the next role. According to Deloitte, some companies are answering the call for movement within the company by upskilling and reskilling employees. In doing so, employees can broaden or reapply their skills and improve job satisfaction, while adding value to the company.
Better compensation is another employee must-have.
Thirty-six percent of respondents to the McKinsey survey said “inadequate compensation” is why they left previous roles. This decision isn’t unreasonable given increasing economic pressure. What might’ve been an acceptable rate of pay a few years ago is diminishing as inflation rises. Moody’s Analytics Senior Economist Ryan Sweet estimates the current inflation rate is costing consumers an extra $500 or more per month.11
Executives, themselves faced with shrinking margins and high material costs, can likely empathize with employees. In response 26% of Deloitte respondents are “increasing pay rates faster than inflation.”12 Setting appropriate compensation levels works well for both attracting and retaining employees. But compensation, necessarily, includes more than pay.
Health coverage and wellness programs are critical elements of total compensation as more and more employees seek to relieve economic-, personal-, and work-related stress. Twenty-three percent of companies are expanding benefits packages in addition to raising pay rates.13
Leaders and staff should continue working to close the divide.
The McKinsey and Deloitte surveys revealed some agreement among leaders and employees as it relates to improving work. But there are also clear distinctions. For example, some employees cited unsafe working conditions and the lack of adequate resources to do their jobs as reasons to seek work elsewhere. However, neither is mentioned as a solution in Deloitte’s executive survey. This isn’t to say employers aren’t aware of or tackling these issues. Instead, except for restating company objectives, it appears leaders are more highly prioritizing the immediate personal needs of employees.
Executives are under intense pressure to create a positive work culture. There are many reasons people leave jobs, and they are different for each person. But as leaders and employees continue to identify, acknowledge, and seek resolution for the problems that hinder job satisfaction, there is hope for a meeting of the minds.
Synovus can provide the employment insights businesses need, as well as help to develop employee benefits packages to attract and retain high-quality candidates. For more information, contact a Synovus Commercial Banker.
This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.
U.S Chamber of Commerce, “Understanding America’s Labor Shortage,” August 19, 2022
U.S Bureau of Labor Statistics, “Job Openings and Labor Turnover Summary,” August 30, 2022
U.S Bureau of Labor Statistics, “Employee Situation Summary,” September 2, 2022
Society for Human Resource Management, “Interactive Chart: How Historic Has the Great Resignation Been?,” March 9, 2022
U.S Bureau of Labor Statistics, “Job Openings and Labor Turnover Summary,” August 30, 2022
Gartner, “CEOs Turn a Sharp Eye to Workforce Issues and Sustainability in 2022-2023,” April 27, 2022
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