?Employers are in a tough spot: Thanks to persistent high inflation, employees’ paychecks aren’t going as far as they used to, causing increased financial stress. As a result, employees want higher compensation and more help. And due to inflation, the pandemic and a tight labor market, their expectations are higher than ever.
But economic uncertainty and inflation are giving employers problems of their own. They’re facing lower-than-predicted revenues, leading to cutbacks or layoffs. That means substantial raises aren’t possible for most employers.
“We’re in a chicken-and-egg situation,” said Erika Tedesco, vice president of people and culture at Diversified Automation, a Louisville, Ky.-based industrial automation solution provider, who presented the session “Retention During Recession” on June 13 at the SHRM Annual Conference & Expo 2023 in Las Vegas. “I know my employees are hurting when they buy food or fill up their tank. But as a business, we’re struggling too.”
That leaves employers in a tough spot when it comes to retaining high-value employees. “We don’t need to retain everyone, but we need to retain people who are providing value to our organization. And we need to do it in this very complex economic moment that we have where money is not going as far as it used to,” she said. “We as employers have to be creative about how we retain during this difficult time.”
So how can HR leaders enhance their employee retention with low- or no-cost strategies? All eyes are on total rewards, Tedesco said.
“Employees care about health insurance, their 401(k) match, paid time off. They care about those things more than ever before,” she said.
Employers can get more creative with benefits that go beyond these conventional offerings, Tedesco said, noting that her firm has embraced different strategies that have made an impact. One is adding voluntary benefits—such as pet insurance, which the 2023 SHRM Employee Benefits Survey shows is growing in popularity—that employees really wanted and have appreciated, but don’t cost the employer any money.
“It costs us nothing to offer it, but it’s a big hit,” she said. “Because they trust our organization, they trust the policies we put in front of them.”
Diversified Automation also added a mental health app that offers therapy—another investment that is low-cost for the organization but high-value and appreciated by employees. In addition, the company offers low-cost learning initiative perks, from a book club where Diversified Automation pays for the books employees read as part of a learning discussion, to access to LinkedIn Learning, as well as online language courses through provider Duolingo.
Career advancement is another way Diversified Automation aims to retain employees—a strategy Tedesco says more HR leaders need to get behind.
“Employees are quitting because they want to make more money, but they want to contribute more to earn more. They are not asking for you to just blindly give them more money,” she told session attendees. “Most of them want to contribute in some meaningful way. And they want to advance. If you can’t do that in your organization, they’re going to go someplace else that can.”
Organizations should think creatively about providing workers with tools and training for upskilling, Tedesco said. Rethinking paid time off is also a good strategy, since going from an accrued amount of time off to a flexible or unlimited policy can be attractive to employees because they don’t have to wait to accrue more time to take vacation or sick time—and these policies also can be extremely cost-effective for employers.
Tedesco also recommended employers give out annual compensation statements—a detailed breakdown that tells employees what the employer is spending on them on their entire compensation and total rewards for the year. That was a tactic Yolawnda Henry, SHRM-CP, senior vice president of HR at Kampgrounds of America in Billings, Mont., who attended the session, said she was going to embrace for her employees.
“Employees don’t always realize the value of what you’re offering,” she said. “It’s a small reminder of what you’re spending on them, what you’re doing for them.”
However, Tedesco warned that behind every retention strategy, there must be an authentic reason for it.
“Employees can get paid anywhere. You have to know what your mission is, what your culture is,” she said. “Why do employees get up and come to work? If you don’t know the answer to that question, you won’t go very far.”