Avoiding hiring hiccups
In this tight labor market, employers can’t afford to take any R&R on recruitment and retention.
From the pages of In Business magazine.
If you’re looking for a new job, now is the right time. The current labor market is as bullish for job-seekers as it’s been in quite some time, and while that’s good news for workers seeking new opportunities, it’s bad news for employers who aren’t keeping up with the Joneses and offering more than just competitive wages and benefits.
To wit: In May, the rate of American professionals voluntarily quitting their jobs hit a 17-year high. That month, the U.S. quit rate, according to the monthly Job Openings and Labor Turnover Survey, or JOLTS, provided by the Labor Department, was 2.4%, the highest level since January 2001 and higher than the 2.2% rate attained during the peak of the housing boom. While 2.4% may not sound like a lot, that equates to 3.56 million people per month quitting their jobs, or almost 43 million employees per year.
To be sure, those workers choosing to move on did so for more than money, but it didn’t hurt either. Those who switched jobs in May experienced median wage growth of 3.8% versus 2.9% for job stayers. In other words, if you aren’t paying your people to stay, someone else is likely willing to pay them to go.
Recruiting and often more importantly retaining high-quality employees has fast become a critical function of not just human resources personnel, but all company leaders tasked with maintaining productive departments with low turnover.
The problem isn’t going to go away any time soon. The generation of employees who are just entering the workforce — Generation Z, profiled in an August IB feature — are going to require even more effort to recruit and retain.
“From a recruiting standpoint, I think we have a preconceived concern about Gen Z job hopping, says Mary Moua, recruitment sourcing specialist for Fairway Independent Mortgage Corp. “Because Generation Z expects instant results and knows we always have options in many aspects of life, we tend to move on to the next option if we are not pleased with service or other expectations.
“Same goes for employment — changing jobs within one to three years is more typical than it was 20 years ago,” Moua adds. “Employees expect more these days, like better benefits and perks, to work remotely, etc. If [those expectations are] not met, they may look elsewhere. Especially with the unemployment rate being so low, it works in their favor because talent is hard to find these days.”
Recruiting Gen Z requires much more effort than the generations that came before them, notes Ashlie B. Johnson, owner of Brooke Human Resource Solutions. Gen Z is much more independent and likely to investigate a potential employer prior to agreeing to an interview.
For instance, use of apps such as Glass-door is much more common for Gen Z, explains Johnson. It is very important for employers to look at their company as a brand and market it that way. Maintaining a social media presence and keeping up to date with changing trends is more important for the recruiting department than ever before.
“Gen Z is also more pragmatic than millennials,” adds Johnson. “While millennials were concerned with open office space, bean bag chairs, and collaborative/fun working environments, Gen Z grew up during the recession and is much more keenly aware of the value of a generous 401(k) match or stock options. Gen Z’s more aggressive attitude about advancement and increasing their wages over time also requires employers to acknowledge and put training and career development programs in place in order to retain this new generation over time.”
All of this may have employers throwing up their hands and wondering what they can do about it. If an employer is already providing employees with a strong wage and benefit package, chances are they have nothing to worry about.
It’s the companies that haven’t kept up with the times that have the most reason for worry. What might that mean? Salaries that are at or above industry average for the region are a great start, but it’s really the other perks that are proving to matter most for many workers — and no, that doesn’t mean putting a foosball table in the break room.
According to “65 HR and Recruiting Stats for 2018,” an annual survey prepared by Glassdoor, an online database that features millions of company reviews, workers who changed jobs earned an average pay raise of $2,724 per year, or 5.2%. Glassdoor also provides CEO approval ratings, salary reports, interview reviews and questions, benefits reviews, and office photos — all shared entirely by those who know a company best, the employees.
Digging deeper, 83% of millennials say they are engaged at work when they believe the organization fosters an inclusive culture. Only 60% said they were engaged when they believe their organization does not foster an inclusive culture.
Diversity and inclusion rank high among workers’ priorities, as does parental leave, another area many companies still lag in. The Glassdoor report notes just 58% of employers offer at least some replacement pay for maternity leave. Of those, just 10% offer full pay. Only 15% of employers offer some paid time off for spouses/partners of birth mothers. At companies that provide paid leave to new parents, mothers receive nearly twice as many days as fathers — 41 days versus 22 days.
Paid time off is another area where employers can’t skimp. According to Glassdoor, the average U.S. employee (of those who receive vacation/paid time off) has only taken about half (54%) of his or her eligible vacation time/paid time off in the past 12 months. Employers also can’t assume that employees who don’t use their vacation time are better workers. Employees who forfeit vacation time are more likely to be low performers: they are less likely than non-forfeiters to be promoted or receive a raise or bonus.
Not only does not taking vacation time reduce employee performance, which impacts the company’s bottom line, it also has a larger effect on the economy. In 2016, 662 million vacation days were left on the table. If Americans had used all of the vacation time they earned in 2016, it would have contributed $236 billion in spending for the U.S. economy, the Glassdoor report notes. Still, 47% of workers surveyed have felt shame at work for taking their well-deserved vacation, and 47% have felt the need to justify taking their vacation days.
Finally, the Glassdoor survey highlights why companies can’t overlook wellness. Eighty-five percent of employees/job seekers expect their employer to support them in balancing their life between work and personal commitments. Additionally, 88% of employees who feel they have high well-being say they are engaged at work, versus 50% of employees who feel they have low well-being; 91% of employees who feel they have high well-being say they intend to stay at their employer, versus 55% of employees who feel they have low well-being.
Wellness also affects the bottom line. According to the Society for Human Resource Management (SHRM), 77% of organizations indicated their wellness program was somewhat or very effective in reducing health care costs, and 88% rated their wellness initiatives as somewhat or very effective in improving employees’ health. A four-year study of employer group wellness programs also found that health care costs rose at a 15% slower rate among wellness program participants when employers consistently offered a wellness program to their employees. The American Journal of Health Promotion also noted in a 2015 report that every dollar invested in company wellness programs returned the original dollar plus $2.38.
That’s a lot to digest, but the reality is attracting and retaining employees doesn’t have to be an uphill battle. In fact, local small employers and staffing experts contend it really amounts to creating an environment where employees feel supported and management responds to their needs.
Taking employees into account
Bruce Berndt, owner of Berndt CPA, a Madison accounting firm that works primarily with entrepreneurs and small business owners, notes the CPA job market is very competitive. “Our team members each get contacted by recruiters over 20 times a year,” Berndt states. “To date we have maintained our current staff without turnover, [due] in part to the benefits we offer.”
Those benefits include:
- Summer hours: “We close at noon on Friday, from May through September, for all team personnel,” says Berndt. “This lets our team enjoy the best of Madison for scheduled extended weekends.”
- Maternity/paternity leave: Paid leave for up to 12 weeks for maternity and six weeks for paternity.
- Special needs schedules: Allows team members to work hours that fit into their personal and family lifestyle.
- Business-appropriate dress: “[There’s] never a tie or suit at Berndt CPA. We dress like our clients dress.”
- Firm family outings: “We understand the sacrifices family members make for our team members to be successful. Thus, we have two family functions in which we can celebrate and reward the children, such as family movie passes for the children to take their parents to a movie of their choice.”
Berndt says these policies have all been in place for at least five years, and they were enacted specifically with an eye toward keeping current employees in the fold.
His best example is closing early every Friday during the summer. About five years ago, no more than three team members would typically be in the office on summer Friday afternoons anyway, so for the past few years everyone has been able to enjoy Friday afternoons out of the office without having to take paid time off.
“I think the days of everyone walking in the door before 8 a.m. are a thing of the past,” Berndt explains. “Our team members are committed to our clients’ success, and everyone working the same hours is not the reason. We understand that team-member retention is the primary goal to growing our firm. We work very hard to individualize each team member’s experience to ensure we can answer ‘why is this important to me and my success’ for everyone.”
Insuring recruiting and retention success
Mary Jo Spiekerman, vice president of human resources for Madison-based Hausmann-Johnson Insurance, has been in HR for more than 20 years, and in that time she’s seen several cycles of labor being in ample and short supply.
“What we are now experiencing in Wisconsin is a labor shortage of epic proportions and it is affecting many facets of the employment experience,” notes Spiekerman. “Human resources professionals and business owners are continually indicating to us that hiring and retention is their number one challenge. It is limiting their ability to grow their businesses.”
Spiekerman says the leaders at Hausmann-Johnson know their employees are being approached by other companies with offers of employment. “There is increased discussion in the marketplace about how to attract passive — employee — candidates. On top of that, today’s workforce isn’t necessarily committed to the idea of longevity with a company just in the name of loyalty. People are willing to consider other opportunities if it appeals to something they value, like career growth, money, location, etc. As well, employees [now] experience pressure from friends and family who have the mindset that it is the right thing to do for your career to move frequently.”
While turnover at Hausmann-Johnson is fairly low at the moment, Spiekerman says the company isn’t resting on its laurels.
Hausmann-Johnson does things like participate in The Great Place to Work Institute’s employee survey process, as well as holding “stay interviews” with its associates.
While proud of its designation as a “Great Place to Work,” Spiekerman says this year Hausmann-Johnson engaged in a process to get at the heart of its “why” and articulate what that means.
“We’re currently revamping our performance management system to support and reflect our ‘why,’” notes Spiekerman. “We systematically work at listening to our associates. Our goal is to have an environment where our associates can thrive and are supported. That goal doesn’t change based on the economy or the job market; we see ourselves on an ongoing journey to develop a great culture.”
Among the small changes Hausmann-Johnson has made are loosening up the dress code and offering pet insurance. However, this past year the company took a bigger step and implemented a paid family leave program, though not directly with recruitment and retention in mind.
“We implemented it because our current associates asked for it,” explains Spiekerman. “It’s important to us to support and care for our associates, and that means recognizing the struggles that working people face when dealing with certain family situations. So, while offering a paid leave program has turned out to be a great perk to us when recruiting, it was implemented because it was the right program at the right time.”
Spiekerman notes Hausmann-Johnson also offers paid volunteer time, though again, not directly as a recruiting tool. “We offered paid volunteer time long before the unemployment rate dropped so low,” she says. “We have been part of the Madison community for 70 years, and our associates and our leadership want to support the community. We all feel it is part of our culture.”
What Spiekerman is really getting at is that employers can offer these programs with recruitment and retention in mind, but simply offering them because they’re a good fit for company culture can have the same effect. “As a smaller organization, we don’t have on-site child care, a fitness center, or an on-site cafeteria,” she states. “No employer can provide every type of benefit, but employers can foster a culture that supports employee well-being and allows them to thrive. Every employer can foster a culture that gives employees purpose and the feeling that the contribution they make makes a difference.”
People want to work at Haumann-Johnson because of the culture, Spiekerman continues. They want to work in a welcoming, friendly, and supportive environment that values collaboration, trust, fun, and a passion for serving clients. “Our greatest benefit is our culture. Most of our staff did not intend to go into insurance. It’s not seen as a very glamorous profession or an exciting industry. They come to us with various degrees and background, but they are attracted to the environment, and they stay for the people.”
On the recruiting trail
According to Spiekerman, great candidates are finding opportunities quickly, making it difficult for companies to hire the best candidates in a highly competitive job market. “We’ve had people secure an offer with another company before we can even get them in the door for an interview.”
In an effort to make the company more appealing, Spiekerman says Hausmann-Johnson has worked on its outreach — updating the company website and making its job advertising more engaging.
“We make sure candidates learn about our culture through our website, our Facebook page, our Great Place to Work profile, and their interactions with us,” Spiekerman explains. “Every company needs to put their best foot forward and sell themselves to applicants. The bottom line for all employers is that you need to move quickly throughout the entire hiring process. And yes, sadly, more ghosting is happening.”
Ghosting is where job candidates, fully aware that they hold the cards in this labor market, do things like blow off scheduled interviews or just vanish from existing jobs.
Employers have to work harder than ever to create an appealing employment experience, Spiekerman adds. Some employees carry significant emotional scars from layoff and unemployment experiences they or their parents had during the Great Recession. As a result, job applicants are not as trusting as they used to be.
Margaret Leitinger, vice president of operations and co-owner of Spherion Madison, a recruiting and staffing provider, says according to the company’s most recent Emerging Workforce Study, 84% of millennials say that the number of programs and benefits that an employer can offer to help them balance work and their personal life will determine if they stay or even accept a job, but there is another crucial factor in their “come, stay, or go” decision.
“The emerging workforce, they don’t want just flexibility,” Leitinger notes. “What’s really important is they want to get behind a mission. They want to do work that matters. They want to feel that the work and the organization they work for is genuine and that they have a purpose. As a matter of fact, 70% say believing in the organization’s work is a top priority, as much as flexibility, but I can tell you that according to our Emerging Workforce Study, 17% of millennials say that the ability to work from home is the greatest influence, outside of salary, on their decision to work for a company. That’s pretty big.
“About 41% of the population says, ‘I will only work for a company that offers [an agile employment arrangement], so you’re left with 60% that would consider the traditional workforce,” Leitinger continues. “It’s a big driver to work for a company that will offer some flexibility and work-life balance, but millennials are not the only ones who want flexibility. It’s baby boomers, it’s students, and now think of parents or people who are caring for elderly parents.”
People that have children and aging parents, the so-called sandwich generation, also need flexibility. “Some of our workers on the other end of the spectrum have parents they have to run back and forth to appointments and help with transportation and things of that nature,” Leitinger says. “So it’s not just millennials. It’s kind of a common theme that I’m seeing through the entire way that people prefer to work.”
Beyond that, Leitinger says one area Spherion is seeing employers setting themselves apart is through hiring bonuses, as well as referral bonuses because referrals tend to be a really good way to recruit people. Spherion has also walked employers through a relatively new concept — unlimited PTO.
“That’s kind of scary, right, to offer somebody unlimited PTO, but it’s very creative because people have, say, 20 PTO days,” Leitinger explains. “Say they have a certain number of sick days and a week of what they call personal time. That person is going to use all of those hours within that year because it’s there and they want to use it. Sometimes they are not using it because they’ll take it when they need it. It’s more about getting the work done than trying to use your time up.
“So what they are finding is that because of the workload, they may not actually take more. They may not abuse it, but it’s there when they actually need it if a parent gets sick or if a child gets sick. They’ve got more flexibility and it tends to be very attractive, especially for millennials who don’t want to work in a box on a set schedule. So again, it’s about flexible, remote workplaces.”
Sustainable buildings and green programs are also really important to a lot of people and it helps makes their decision, according to Leitinger, so companies are becoming more conscious of that. People want to work for companies that have the same values they have, and employers need to get in step with that. They need to have a mission that people can wrap their arms around, and then they have to manage their brand and reputation online. “My kids will not even buy a pizza without Googling and getting ratings on the joint,” she states. “If you think somebody is going to make a career option and dedicate five to 10 years of their lives without knowing everything about that company, you’re wrong.”
Leitinger also points out that it’s not just the companies that Spherion works with that have experienced recruitment and retention woes — it’s also Spherion itself. Her employees work in a team environment, and they are recruiters that must communicate. About one year ago, she had to craft a work-from-home schedule, and it really wasn’t a recruiting strategy; it was a retention strategy because Spherion has a diverse workforce.
“We’re a women-owned, minority-owned staffing company, and we needed to practice what we preached,” she acknowledged. “It was a little bit of an obstacle because we thought you couldn’t do certain work from home. You’ve got to answer the phone, clients are calling, and you have to interview people. So we started using things like Montage for an interview. We do Skype interviews on those days, and what we’ve done is give everyone the option to work one or two days from home. We had to do it to be competitive.”
The Creative Approach to Labor
Greater Madison has long been in the top five nationally when it comes to low unemployment, so area employers have had to be creative in the search for labor. In advance of Labor Day weekend, we interviewed Margaret Leitinger, vice president of operations and co-owner, Spherion Madison, a recruiting and staffing provider, for a look at the local labor situation. As Leitinger explains, with a ridiculously low metro unemployment rate of less than 3%, the creativity of local employers has reached higher levels. Here are excerpts from our talk.
IB: Regarding the labor situation (shortage) in Madison, some say it’s caused by a skills gap; others say it’s basically a low body count. How would you characterize it?
Leitinger: I’d have to say it’s both. I really can’t categorize it into either. When it’s a 2.4% unemployment rate in metro Madison, sometimes in the HR field we kind of consider that to be zero. There is 1% that maybe doesn’t have the skill set that we’re looking for. There is 1% of the unemployed that may not be job-ready, and then we all seem to be competing and battling for that last 0.4% or that last 1% . A lot of times people say 3% [unemployment] is equivalent to zero, so there definitely is a shortage of workers.
Then there is this skill-set issue that some employers are feeling a little bit more than others. In IT and health services, specifically in Madison with biotech, we have a shortage, but we have really creative initiatives. One of them is in workforce development with the state of Wisconsin’s adult apprenticeship program where they are trying to ‘up-skill’ workers, participating and creating an adult apprenticeship, a certified apprenticeship similar to what you might see in the electrical or plumbing fields.
IB: But for adults…
Leitinger: Yes, and actually what we’re doing is looking at what are some of the skill sets, SOP (standard operating procedures) in the lab with FDA regulations requiring quality process and assurance in the laboratory environment. It’s all of those biotech companies that are working in that environment, but it’s more of a clean laboratory approach, and we don’t have enough people. So again, if we can’t find them, how do we grow them? How do we make them? How do we get people job-ready?
IB: Are there limits to what creativity can do with a labor shortage like this?
Leitinger: I don’t know, but we can’t just give up hope. As you get down to the more creative things, we talk about adult apprenticeships but we’re also involved in an initiative called Personalized Pathways. So it’s MMSD [Madison Metropolitan School District] and the high schools in the Madison area that have started this cohort of Personalized Pathways for health care. What we’re doing is getting high school students acclimated to some of the career opportunities that are available as young as freshmen, but also sophomores, juniors, and seniors.
Then they have an idea of the jobs that are available and how they can select a career path, so when they graduate high school, it’s not the idea of, ‘Okay, I’ve got my diploma. Am I going to enter the workforce? Am I going to go in the military? Or am I going to go onto college?’ They already have a lot of connections, and even if it’s something they didn’t enjoy, they know more than they would have if they had never participated at all.
The retirees are another population. I believe it was Jan. 1, 2017, that point in time, where every day 10,000 baby boomers were eligible for retirement. That doesn’t mean they were taking it. At this point, from an employee perspective, you have to look at that. So with creativity, we’ve talked to companies that say, “No, we don’t have part-time opportunities. We don’t have flexible shifts.’ Well, if you want to be competitive and attract that workforce that doesn’t want to work full time, that’s something you’re going to have to do to compete.
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