The labour market has changed, and this means new rules for both employers and employees. Consequently, it is necessary for organisations to consider new directions if they want to continue having the competitive advantage of retaining their skilled employees.
Rasmus Meyhoff is a partner at Compass with a focus on recruitment in the Life Science industry. In the previous blog post, his many years of experience with the development of the labour market were the basis for his considerations, experiences, and recommendations levelled at companies. Companies, that are now facing a competitive candidate market that has been turned upside down in many ways.
In this blog post, he focuses on how companies should focus on retaining the most essential employees, which can help ensure the company’s strategy is successful or not.
Consider the soft values
Rasmus Meyhoff’s recommendation to companies is that a strategy should be developed, where not only the new hires are considered, but also the retention of key employees in the company. Because if new employees are consistently “enticed” with a higher salary and, therefore, end up getting more than their experienced colleagues, it can lead to the existing employees not feeling sufficiently valued. This significantly increases the risk that they will apply for other positions. This becomes a vicious circle where new employees are needed again and again at a higher salary, while huge amounts of knowledge are lost when experienced people leave the company.
“As a company, you have to keep in mind that you can offer your employees so much more than just high salaries. What motivates your employees? What is important to them, when it comes to the softer values like development opportunities, flexibility, work-life balance, and so on? I can recommend incorporating Herzberg’s two-factor theory, which distinguishes between maintenance factors and motivational factors. What does the employees expect, and what will create extra satisfaction on the job if offered?” says Rasmus Meyhoff.
What is Herzberg’s motivation theory?
In the 1950s and 60s, the occupational psychologist, Frederick Herzberg, decided to examine well-being and employee satisfaction. It lead to his two-factor theory, where he divides motivational factors into two categories: maintenance factors and motivational factors.
The maintenance factors can create great dissatisfaction if they are not present, but they do not lead to satisfaction if they are present – The employees expect them from the employer. Examples of this include pay compared to others, the physical working conditions, and management style. Motivational factors, on the other hand, are responsible for great satisfaction when they are present, but not dissatisfaction if they are not offered. Examples of this include development opportunities, involvement, responsibilities, and exciting, varied work tasks. These will of course be subjective and vary from person to person.
Proactivity pays off
It takes a lot of preparation for an employer to find the things that matter most to the employees, as it will often be subjective and, thus, differ from person to person. The option of having weekly home-office days will, for example, be more attractive for some than for others, and the same applies to the offer of continuing education and other development opportunities in the position. But the hard work will pay off in the form of loyal employees who stay longer in the job.
In addition, Rasmus Meyhoff emphasises the importance of a change in the way many companies act: often decision-makers are reactive, waiting for employees to come and ask for changes or changed working conditions. Instead, as an employer, you should talk to your most relevant employees, offering them the incentives they find important without having to ask for it first. This will make the employees feel more valued and, thus, also make them become significantly more loyal.
That said, as an employer you cannot ignore the need for a pay raise if the relevant employees actually gets paid too little compared to their experience and areas of responsibility. Salary is a maintenance factor that needs to be in order, but it is not a motivating factor that makes employees stay in the long run.
It is a matter of prioritising costs
It may well feel like an upheaval for organisations to suddenly think proactively and offer existing employees benefits of various kinds. Which, of course, means increased expenditure. But Rasmus Meyhoff considers it an expense that alternatively would be needed in other areas of recruitment instead – for example in the form of bad hires, which can be very expensive for organisations.
“The fact is that recruitment is an expensive affair. In addition, there are the costs associated with onboarding and any failed recruitments a company may experience. If the existing employees do not feel sufficiently valued by the employer, there is a much greater risk of them wanting to change jobs. Therefore, the proactive approach of offering various benefits, quickly becomes a cheaper solution in the long run. In this way, the risk of losing valuable knowledge and experience is also minimised. But it requires a different mindset in some companies.”