On the surface, it’s great news. The economy is adding new jobs, and unemployment is at multiyear lows. But there’s a flipside for employers: There are fewer candidates to go around, and current employees are showing a lot more willingness to quit.
That willingness may only get stronger. There’s only about one job opening for every unemployed person, according to today's release of the closely followed Job Opening and Labor Turnover Survey (JOLTS) from the Bureau of Labor Statistics. That’s a far cry from more than six people per job opening during the Great Recession or even two unemployed people per job as recently as 2015. The percentage of people quitting their jobs has jumped 15% from 2015 as well. Taken together, it’s the strongest evidence yet that the US economy has become even more of a workers’ market, and organizations may have to work harder to find and attract top talent.
“In an environment where there are too many jobs open, employees can be choosier in whom they want to work with,” says Bob Wesselkamper, global head of Korn Ferry’s Rewards and Benefits Solutions. “Employers need to be absolutely crystal clear on their employer value proposition.”
Practically speaking, companies may have to spend more to get the best talent. With an abundance of options, job candidates may be less willing to settle for any job. The same goes for existing employees—if they aren’t paid competitively, they’ll be more inclined to seek out better opportunities elsewhere.
That said, organizations shouldn’t blindly increase compensation across the board. Experts say firms should pinpoint in-demand fields where talent is scarce, such as cybersecurity, big data, artificial intelligence, and digital marketing. “Rather than take a blanket approach and say ‘We’re going to increase pay or put retention bonuses in for the whole organization,’ target the money where it will have the most effect,” says Benjamin Frost, general manager of Reward Products at Korn Ferry. Indeed, research shows that IT and engineering roles have been the hardest roles to fill for the last three years, and have the highest rates of voluntary turnover.
An employer can do more to raise its attractiveness than just focus on wages. Experts say companies should double down on employee engagement by focusing on benefits and quality-of-life factors—such as maternity/paternity leave programs or flexible paid time off—and lead with mission and purpose. “To retain employees, you need to keep people energized and excited by the mission and give them confidence and clarity about where the organization is going,” says Frost.
Creating an engaged workforce is good not only for attracting and retaining talent, but also for improving company performance: Firms that engage and enable their employees see up to 4.5 times more revenue growth than companies that don’t, according to research by Korn Ferry.
To be sure, making these sorts of changes won’t be easy. In addition to the expense and investment, companies will have to make sure they’re targeting the right people in an increasingly diverse workforce, experts say. For example, millennials might prefer a more flexible work-from-home policy while Gen Xers might be more enticed by a job that offers a more robust 401(k) employer match. “Most companies do struggle with trying to manage these challenges,” says Wesselkamper. “The best way to do it is to focus.”