For all I know the economic upturn may be, as many economists have stated, a “jobless recovery”. Just like climate change, the long-term trend of the earth’s global temperature is rising. But from where I live in St. Louis, Missouri I just experienced one of the coldest winters in years. Thus, should I conclude that there is no global warming? It is always difficult to interpolate macro trends to micro events.
From the unemployed job seeker’s perspective it is easier to believe that a jobless recovery is happening. The longer someone has been unemployed the more likely they will attribute their lack of hiring success to this macro trend.
On the other hand, from the employer’s perspective, and especially that of HR staffing professionals, they may take an opposite view. Hiring is occurring. It may not feel like it, compared to the heady days of recruiters trying to desperately fill new and vacated positions when the unemployment rate was 60% lower than it is now, but it is happening. The Conference Board’s Employment Trends Index™ rose in February for the sixth consecutive month. The index increased by 13.4 percent (annual rate), the highest six-month growth rate since 1994. So, the economic indicators are setting up this employment season to be one of the hottest in the last 15 years.
It’s a Buyer’s Market for Talent
These trends are comforting, but employers focus on their own micro situation. If you are not adding jobs, or your employees are not jumping to your competitors, or you have hundreds if not thousands of applicants for each job opening (thanks to the ease of applying through web job boards), you may still feel that it is a big, big buyer’s market out there. The cautionary tale is to not overreact to this favorable situation.
Here are some tips to keep in mind about overreacting to a buyer’s labor market:
Don’t assume because your top performing employees have not found other jobs they are satisfied with their current position and your company. Although satisfaction and turnover are related, it is certainly not a 1:1 correspondence. There are different drivers for taking the action of leaving a job from those that formulate an attitude about the job. Systematically understanding what drives retention, satisfaction and employee engagement in your organization is needed before you can take action that will have the desired effect.
Don’t assume that rewarding people with small or no wage increases and/or bonuses is something that they understand and tolerate. A lot of communication is needed. More than you are probably doing. Educating your workforce on the economics and finances of your business are critical. Communicate to them the value of their total compensation package, including the monetary value of benefits and other employer funded perquisites. If possible, put a plan in place to share your financial gains with your workforce as your business returns to normal levels.
While those that are employed may feel fortunate that they at least have a job, don’t think that they are not actively looking for a new opportunity. Consider creating retention incentives for those key personnel for whom you do not want to leave. This can go beyond monetary rewards and can include professional growth and development in preparation for future challenging assignments. Now is the time to enhance your performance evaluation and long-term succession plan programs and processes.
Just because job candidates are willing to take a new job for less pay and less responsibility, don’t assume that they will be dissatisfied and unproductive working for you and will leave at the first opportunity. Not all people place the same importance on the various aspects of work and employment. Older workers are changing their career aspirations and rethinking what is really valuable to them. Many are trading off money and power for just doing meaningful work, which allows them to use a full array of skills and provides enough autonomy to make their own decisions. Now is a good time to hire highly experienced people at a fair market rate.
Just because job candidates are willing to take a new job for less pay than their previous job, don’t low-ball the starting salary. This is a short-term strategy. People strive to be treated equitably. People not only compare themselves to others in the company but to colleagues in similar jobs in other companies. It is important to constantly monitor wage rates to continue to pay highly competitive wages to attract and retain top talent.
In short, don’t assume that what motivates you and what you value in work is the same for the people you hire and don’t take excessive advantage of them for a short-term gain. This combination will come back and hurt your business as the economic pendulum swings in the direction of a labor seller’s market.