Organizations around the globe are struggling to retain critical talent. This research outlines benchmark data on compensation- and non-compensation-related retention tactics deployed by organizations to address employee turnover.
Retaining employees is a significant challenge as businesses and economies recover from the pandemic shock. This wave of employee attrition is being attributed to multiple factors, a critical one being employees’ pent up desire to change jobs. One in five HR leaders believe pent-up turnover that was paused during the pandemic to be a key reason for attrition. Another factorinfluencing attrition includes employee burnout in the past year. Ninety-three percent of HR Leaders are more concerned about employee burnout today compared to before the pandemic.And nine out of 10 leaders are somewhat or significantly concerned about employee turnover as economies pick up.
Organizations are using a mix of compensation-related and non-compensation-related retention tactics to retain employees.
As a part of our 2Q21 Compensation Watch Survey, we asked HR leaders about the different approaches their organization is taking to retain talent.
The three most popular strategies include:
Other compensation-related strategies HR leaders are deploying include increasing short-term incentives for current employees, increasing the frequency of pay conversations and increasing the frequency of pay (see Figure 1).
Our compensation survey indicates that about 50% of organizations are increasing the base salary of some current employees as a retention tactic. This is being undertaken in different ways. It could be either a fixed percentage or a certain amount that matches an external offer for a particular employee. These salary increases are provided in an ad hoc manner to select employees in most cases and not linked to the company’s annual merit increase cycle.
For instance, Fedex has announced it is providing a 2% pay increase for most employees, effective in October. This increase applies globally for most FedEx employees and across different FedEx operating companies.Charles Schwab is also giving its employees a special 5% raise.
Thirty-seven percent of organizations are offering ways for employees to increase their pay aside from salary. These include providing additional work opportunities such as internal gigs, freelance work for other business units that pay at an hourly rate, or a certain fee for completion. Organizations are also enabling employees to increase their pay by clarifying new and alternative career paths.
About 37% of organizations are considering bonuses (retention bonuses, spot bonuses or project-related bonuses) as part of their retention strategy. Seventeen percent of organizations are increasing the short-term incentive target amounts of current employees, while about 20% are offering a retention bonus (13% of organizations are offering a fixed amount, and 7% offer a percentage of base pay).
Organizations are also employing non-compensation-related tactics to retain talent. The top three non-compensation tactics include:
As a part of a HR leader poll conducted in June and July 2021, 74% of HR leaders mentioned their organizations are offering more flexibility options to employees as a way to address employee turnover (see Figure 2).
When we asked HR leaders the kind of flexibilities they are offering their employees, 51% mentioned the option to work remotely on certain days, while 36% mentioned the option to work remotely occasionally upon approval from the employee’s manager.
Forty-seven percent of HR leaders mentioned their organization is working on enhancing employee development opportunities. In an EVP Benchmarking Survey we conducted, 97% of HR leaders mentioned their organization provides opportunities for employees to learn skills that will be useful in their jobs, while 66% mentioned providing employees opportunities to learn skills that will make them employable outside the organization.
Career conversations with managers are another way to help employees realize and identify the real reason they might be looking for a different career opportunity and deciding whether that’s what they actually want. Managers can act as career consultants and provide insight into the different opportunities available to employees within the company. Forty-four percent of HR leaders mentioned that their organization is investing in upskilling managers to have more effective career and retention conversations.
Other nonmonetary incentives include increased recognition and access to mentors, executive coaches and the like for additional development support.
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