As economic conditions change over time, an industry will experience periods of boom and bust. Consider the effects of Covid-19 on technology the one hand, and on hospitality on the other.
In boom periods an industry sees customer demand increase along with operational needs. For skilled workers in an industry where they can’t be trained in a short space of time, the number of vacancies begins to increase. Meaning higher wages are needed in order to attract workers to move from existing roles to fill these vacancies.
These conditions are great for employees, who can feel more secure in their position and also eye up opportunities to earn more, should they desire to. However, these conditions can also leave employers worried about being able to provide a reliable product or service to their customers, if they can’t rely on their employees sticking around to deliver it.
In short, retaining and attracting staff becomes critical for businesses looking to capitalise on the increased demand for their goods and services.
Of course, periods of boom are not the only thing that create labour shortages. Age demographics play a part for industries attracting fewer young workers where imminent retirees make up a large segment of the workforce. These factors can exacerbate situations further in times of fast industry growth.
What can be done to retain and attract skilled workers?
The seemingly obvious, and largely unhelpful, answer to this question is to simply match any alternative offer your employee receives. However, this approach can be problematic for a number of reasons.
Firstly, this approach might not be the most economical for retaining a single member of staff, let alone the potentially more detrimental ripple effect this solution could have.
Colleagues talk, and it is quite possible other staff members are already aware of an employee’s intention to leave — and what they have been offered — well before their employer is. If the would-be leaver then decides to stay for boosted pay, who’s to say other staff doing equal work won’t approach their employer for an equivalent pay rise? Furthermore, with this new knowledge of the going rate, an employee might seek out other offers of their own, to be taken up if not otherwise matched by their employer.
An alternative suggestion is to look beyond monetary remuneration and focus instead on the wider benefit package. What benefits are available, that you could offer your employees, which are not going to be common features of a remuneration package in your industry. Of those, which would your workforce demographic truly value.
More to the point, what would a member of your staff be sorry to give up, if they chose to leave.
A few examples, of which there are many, to consider:
- Death in service life policies – common in many industries
- Group income protection – could be particularly valuable to those in industries with higher risk of incapacity, if a little more expensive to provide
- Private medical insurance – increasingly attractive in the context of the heavily burdened NHS
Introducing any such benefits should not only generate a feel-good factor but also give your staff an additional reason to stay, if the benefit is one that they couldn’t replace elsewhere.
Ultimately, some level of staff turnover is a fact of life in business and is manageable provided it is not too rapid. However, regularly replacing staff comes at a large cost — in time as well as money — as the process of sourcing and interviewing candidates, induction, training and probationary review are carried out.
Providing an additional benefit is always going to come with a cost, but by consulting with a financial planner or other employee benefits specialist, you can determine whether that cost is less than that of having to frequently replace staff.
Author
Alex Hill
Chartered Financial PlannerAlex Hill is a Chartered Financial Planner for Quilter Cheviot Financial Planning based at their Leeds Office. He is specialised in providing financial advice to businesses alongside his personal clients.