Take Five with QTI: Engage employees, improve employment brand

Each year, QTI Group conducts a Human Resources Trends Survey to identify top human resources challenges and offer some practical answers. Results of the 2019 survey were released this week in a report titled “QTI 2020 HR Trends Report: Your Guide to a Winning HR Strategy,” and they indicate intensification of existing labor-force trends along with some new answers. For example, it’s becoming more evident that employers are opting for an inward focus on employee engagement to drive retention and stimulate external interest in their organizations.

The findings were presented Wednesday afternoon in a roundtable program in Madison, but to learn more, we interviewed two local experts beforehand: Dennis Winters, chief economist for the Wisconsin Department of Workforce Development, and Summer Rector, chief operating officer for QTI Group.

IB: Before we launch into the questions we have, each of you can provide your main takeaways from these survey results.  The concept of employee engagement seems to be emerging as a way to kill three birds — recruitment, retention, and employment brand — with one stone, but what stood out to each of you with regard to the survey findings? What’s your main takeaway?

Winters: The main takeaway, at least from our perspective, is that it verifies what we’ve been saying for quite some time now — that we have a quantity challenge in the state of Wisconsin for workers. It’s not just true in this state but throughout the upper Midwest and in western, developed countries. I was out in Boston a couple of weeks ago and there is a “help-wanted” sign in just about every window there, too. So, it’s actually a global issue, even in China. We’re seeing it everywhere and in every which way.

Summer Rector

Dennis Winters

Rector: My main takeaway from the survey is that obviously employers are facing a lot of these challenges but some of the simpler, more obvious things that we may assume to be true in our data was found to be the case. So, for example, organizations that have higher employee engagement and lower voluntary turnover are the organizations that are able to perform better from a financial standpoint. They are also the ones that are seeing the lowest year-over-year payroll spend increase, so they are able to deal with some of the compensation challenges that face a lot of employers these days.

IB: Is there a shining example that you can cite, preferably a company that is doing the right things and getting better results?

Rector: Well, one of the things that we highlight in terms of solutions is that we suggest employers think more on the proactive side than on the reactive side. So, for example, doing “stay interviews” with employees to really understand why they stay with the organization but also what might get in their way. Through that understanding, actually try to address any of those challenges or roadblocks so that they can increase employee retention and thereby engagement, as well.

IB: I thought the findings revealed some new trends — creative new employee benefits, for example — but mainly an intensification of existing trends such as difficulty finding the right talent, meeting demands for higher compensation, and improving leadership development with baby boomers retiring. Each one of them seems to take on more importance as the labor market gets tighter. Would you agree?

Rector: Yes, absolutely. As boomers retire and as new generations come into the workforce, there is increased pressure being placed on employers to adapt to these newer generations and what it means to support the whole employee through benefit offerings such as various parental leave expansions that we’re seeing a lot of employers adopting, as well as just the acceptance of the whole employee with flexible attire and relaxed dress codes.

Some other things we’re seeing are pet insurance, as well as identity-theft insurance. Again, it’s a desire to help employees to uniquely fortify their lives by adding in these additional types of offerings. We’re also seeing more employers adding education reimbursement, which makes sense given the skills gap.

Winters: We’ve talked about this for some time. The worm has finally turned, as it were, coming out of the last recession, when the slowing of the growth in population caught up with the workforce and jobs. This is the squeeze that we’ve known was going to come on. We had the Great Recession, which actually baled us out in that area for a while, but now we’re back in more of a seller’s market. I was in a conference the other day with a panel of businesses. It was interesting that the smaller but not insignificant ones with 50 to 100 employees that are privately held companies are now offering higher wages and full benefits coverage. So, they know if they want to be the employer of choice, they have to put in the incentives to attract the workers.

IB: What about steps such as helping kids coming out of college with these large student-debt burdens? Have you seen more of that?

Winters: I don’t really know about that, but from what we hear, there is an increase in benefits across the board.

Rector: We’re not seeing widespread adoption of those additional types of benefits, such as student-loan forgiveness, because some of those can be fairly sizeable and costly for employers to undertake. We are seeing employers recognize that if they want to help close some of the skills gap, they are going to take ownership of that responsibility. So, that’s where there is more acceptance of employers investing in training and developing their workforce to help them progress, not necessarily taking on what they may have come in with.

IB: Correct me if I’m wrong, but one trend identified in this report seems to advocate something that sounds counterintuitive and that’s reducing or relaxing assessment testing, drug testing, and background-check requirements. Playing devil’s advocate, doesn’t that increase the risk of a bad hire?

Winters: Well, again, it’s a supply issue. It’s more important for a lot of these organizations to get bodies in, to get them trained up, and if it’s a bad hire, that’s something they have to live with. They are obviously doing better. Otherwise, they wouldn’t be doing it at all.

Rector: Just to clarify, there aren’t many respondents who are actually reducing or relaxing their assessment testing, drug-testing, and background-check requirements, and only three percent were using AI (artificial intelligence) in the recruiting and hiring process. It was a little surprising to us because there is this need to move fast in the marketplace, but it seems like employers recognize that they want to do that due diligence and to Dennis’ point, not have a bad hire and be thoughtful about that.

That said, there are some other practices that they are doing. Fifty-two percent are shortening the interview steps, 49 percent are utilizing a standardized recruitment process, and 46 percent are making their best offers to candidates out of the gate, and that’s something the QTI Group is focusing on. We’re constantly telling the employers we’re partnering with that they’ve got to start with their best offer. You’ve got to start strong because often times these candidates are in a multiple-offer situation.

(Continued)

 

IB: I’d like to get your take on two concepts that are mentioned in the report — engagement and a company’s employment brand. Starting with engagement, what are the essential elements of building greater employee engagement?

Rector: Employee engagement is one of those things that just crosses so many lines that it’s really thinking about, in various facets, how are you essentially soliciting input or requesting feedback from your employees? It’s allowing them an opportunity to weigh in on decisions, but then actually doing something with that feedback. The worst thing you can do is ask someone for feedback and then not do anything with it because that’s really going to squash their engagement. So, whether it’s manifesting itself in putting together cross-functional teams to help work on some internal initiatives the organization might be trying to advance, or starting new product or service offerings, whatever needs to be undertaken, be it from a revenue-generating standpoint or an internal standpoint, there are opportunities for employees to weigh in. A lot of it also has to deal with the quality of their manager and their leaders in asking for that feedback, respecting it, acknowledging it, and then doing something with it.

Winters: One of the things that has changed in our HR department at the DWD is something I ask them: What do you have to offer your candidates off the job? You recruit for all the talent and skills you need, but to attract a lot of people with the talent you want, you should offer other things they might be interested in and participate in and contribute to. That should be in an application, at least in an initial advertisement, that information about what is attractive about your area, not only the job.

Rector: Another thing I would add is that we looked at diversity and inclusion, as well, and part of feeling like you can be fully engaged at an organization is knowing that you can be your full and authentic self within that organization. That you have an inclusive environment, a safe environment, where you can bring your full self to work.

Winters: That’s interesting because the whole drive is toward creativity and innovation, and so that’s going to be much more forthcoming.

Rector: Yes, absolutely. They are going to be able to share their ideas, which is going to foster more creativity and innovation. A great analogy I heard was diversity might be the seed, but inclusion is the soil. Without a well-nurtured soil, you can’t grow thriving plants. So, it’s really thinking first about creating that inclusive environment if you want to succeed in regard to inclusion and diversity.

IB: Building on that, engagement appears to be an essential element in improving your employment brand, especially because happy employees can spread the word to prospective employees. So, I have a two-part question: How should employers go about assessing their employment brand. Is it limited to the internal surveying of existing staff about the brand and what motivates them?

Rector: There are many different ways you can go about approaching that. Some external methods are looking at LinkedIn or Glassdoor or some of those external sites where candidates and employees can post reviews on what it’s like to work at your organization. What is that employee experience that you’re providing? Internal assessments would also be exit interviews. So, as employees are leaving your organization, what are they saying about the organization? If you do those stay interviews, that can also be a helpful perspective. So, there is both the external and internal assessments that can be done, but ultimately the thing that matters most to the employment brand is what others’ perceptions are. You can have this perception of the employment experience you’re trying to create within your organization, but if that’s not aligned to the perception that is the reality of others, then that’s where you’re going to have those shortcomings.

IB: How do you handle a reputation problem? Reputation isn’t necessarily truth, it’s just an outside perception, so if there is something negative being spread, especially online, how do you deal with that?

Rector: I don’t know if there is a one-size-fits-all answer to that because there can be so many different causes and specifics to it. We talk about owning your story. One part of it is just having awareness of what story is being told out there, but then also working to actively manage it. So, if there are some misnomers or falsehoods out there, if they are blatant lies, then maybe there is some direct communication to try to get around those. But if it’s just a misunderstanding, try to increase communication around it. So, for example, one thing we talk about a lot in the total rewards consulting practice that I lead up is around pay brand. PayScale has done some really interesting research and they found that only 22 percent of employees believe that they are fairly paid. They have dug deeper into it to figure out that the majority of those employees actually are fairly paid, but they just don’t understand how pay is administered within their organizations. So, educating employees when you do regular market compensation studies, and here’s what a market compensation study means and what it entails. Here is how we determine pay within the organization. Here is your pay range. Here is why you’re positioned within your pay range the way you are. So, again, that education can be really helpful.

Winters: One of the datasets we [DWD] carry is our occupational and employment statistics that lays out wages by occupation. There are some 800 occupations in the state of Wisconsin, so I’m hoping they are using some of that data to do their market analysis.

IB: Even before that assessment takes place, are their things that organizations can do immediately to start improving their employment brand?

Rector: If an organization is not already doing surveys of their employees to gain better understanding on where they fall in regard to a variety of these things, what are their perceptions of pay? Are they accurate or not? What are engagement levels within the organization? What are their turnover rates like? Some of those internal reflections can be really informative as the organization is trying to prepare its next step. So, I would encourage organizations to immediately start doing that fact finding, seeking that understanding, and then prioritization. If we had to pick three things to focus on when improving over the next year, what are those three things going to be? Just focus on the biggest win opportunities.

Winters: Key resources in my particular bureau are going to be data — all kinds of data on jobs and workforce characteristics and skills is primarily where we’re trying to go, along with emphasizing transferrable skills because occupations and the duties change fairly rapidly these days. We have all kinds of labor market information data out there, by industry and by occupation, and those are the things we offer and bring to the table in our analysis based on the data, the public data we have, and any private data we can bring in and compare to that.

Rector: I was curious, Dennis, if you had any reaction to the year-over-year payroll spend increase. We found an average figure of 7.3 percent, which is compared to what most organizations are budgeting — around 3 percent — so that’s quite high. Is there any information that you had in the data that DWD is tracking that would be of interest?

Winters: It depends on how you aggregate it and how you split it up. So, yes, we get calls all the time about what should our pay increase be for next year? We look at the average and it’s usually in the 3 percent range. We do know that highly skilled employees are becoming more coveted, so we’re seeing the wage rates go up more for that than lower skilled. And then just anecdotally, we have some jobs that are in high demand that are getting 10 percent and even 20 percent wage increases from year to year, depending on the talent they want and how they attract them. It’s kind of all over the map from what we’re seeing, but the increases are concentrated in the higher-skill professions. That tell us as economists that there is still a relative scarcity of talent and skills in the workplace.

Rector: What about strategies for bringing more skilled workers into Wisconsin?

Winters: That’ s more of a marketing thing than anything else, a little out of my bailiwick. Again, it’s what have you got to offer because we’re not the only ones in this quantity problem. Ohio, Illinois, or Michigan, they are not just going to let their workers flow into Wisconsin. We’re battling the same incentives and work scales.

Maybe one dichotomy we see is that if you are a local business with a local market, you’ve got more ability or elasticity to raise wages, whereas if you’re a company that is in the global environment and you have global competition, there is a little less leeway there because you’ve got to match global costs and global product offerings. So, you’ve got much more of an external, global competition — an influence on how you manage your costs.

About the survey: QTI’s 2020 HR Trends report is based on data submitted by 207 primarily Wisconsin-based employers across a variety of industries from Aug. 13–Sept. 5, 2019. The majority of these employers are privately held and have between 10–250 employees.

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