There is a shortage of qualified workers in West Michigan, yet unemployment remains at unacceptably high levels. Improvements in efficiency and productivity within all industries have reduced the number of employees needed to meet customer demands, yet employers are struggling to find employees ready and able to work for the pay and benefits they can afford to offer.
To meet existing needs, employers are filling newly created positions by having already busy staffs do more or by paying individuals more than would be considered “competitive” to move from their current job.
Pay, however, is only one factor when trying to attract or retain talent, and not, according to most studies, even the most important consideration.
During this time of continued strong employment demand, retaining employees is much more cost effective than hiring replacement workers, yet many of the practices that retain employees will ultimately help to attract them.
To insure that you can both attract and retain a quality work force, consider the following:
Internal equity is much more important than external competitiveness when establishing compensation structures. An organization can maintain a high level of employee engagement when paying slightly below market if all employees, including the management team, receive equitable treatment. Organizations paying slightly above market rates and providing better than average benefits are at an obvious advantage when attracting new employees IF the environment fosters creativity, initiative and empowers workers to act. Dissatisfaction (causing high turnover, negative employee relations and difficulty in hiring new employees) almost always results when one group or segment of the work force receives a different “relative rate of pay” than another.
Strong merit pay systems tend to attract and retain high performers (and over-achievers) while “time in job” based systems tend to attract risk-averse employees and retain mediocre workers. When definitive performance standards that link additional pay and/or bonus to accomplishments are communicated to employees, capable employees will step forward and perspective employees willing and able to work will step in.
When allowed the opportunity to earn more by doing more – quickly, efficiently and safely – employees tend to take control of their own future. Systems that pay all individuals equally, regardless of results, tend to equalize abilities (at a minimally acceptable level) and pay (typically at an “average” rate), creating an “averages-based” structure that attracts and retains average employees.
Organizations not having an objective means to establish a job’s value or worth linking it to a defensible rate of pay tend to compensate employees based more on who they are than on what they contribute.
Whenever employers make pay decisions based on who is in the job or how long they have worked for the company rather than on what the job does for the organization and how well it is being done, favoritism and inequity (whether real or imagined) will begin to destroy internal employee relations.
If an employee’s sub-standard performance is “covered” by job redesign, with mishandled responsibilities being spread out to peers more qualified to handle them without any negative consequences, how can an organization be an employer of choice? When employees sense favoritism or inequitable treatment, they will seek outside opportunities that better acknowledge their talents OR remain working for you while complaining and talking negatively to anyone that will listen.
The best way to retain highly qualified employees is to establish and communicate achievable performance expectations linked to understandable rewards and then consistently apply them to all employees.
Consistency is MOST important. Employees who know (and trust) that you will be fair and equitable (not necessarily equal) in your dealings with them become a part of the organization’s ongoing success. When employees doubt management credibility or see the inconsistent application of policies or practices, they become more a part of the problem than the solution.
An employee who enjoys the work, is reasonably happy with the work environment and is relatively satisfied with the pay and benefits rarely seeks greener pastures. Further, happy employees serve as magnets to attract other employees sharing their abilities, values and needs, so it is critical that you retain the kind of work force you wish to attract.
Do not be fooled into thinking that business has established a “new normal” in regard to paying people at reduced rates or expecting them to be “happy” simply having a job. Paying people the minimum for their talents thinking they cannot find work elsewhere is a “penny-wise” practice that may generate a short-term profit but will prove to be “pound-foolish” when high-performers leave for different jobs that recognize their value.
It is strange how many organizations end up paying more for an “unknown replacement” than they will pay to retain a known commodity.
The secret to attracting a highly qualified work force begins with retaining the employees you already have. Identifying your organization’s unique culture, defined by its values, standards and work ethic, and then hiring individuals who will thrive within that environment will insure that your staff remains strong and stable.
As business conditions change, however, recognize that different skill sets and abilities may be required. Continually train and work with your staff so that evolving needs can be met through work force adaptations – stability that will help to attract similarly minded workers as you strive to achieve operational excellence.
David Smith is president and CEO of The Employers’ Association in Grand Rapids.