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Workforce Shortage and its Impact on Recruitment and Retention

I am always pleased when an industry leader "gets it." In this case, I'm referring to David Shaw, founder of Knightsbridge Human Capital Solutions and former president of Pepsi Cola Canada. Shaw was recently featured in a Toronto Globe and Mail article, which was also the subject of a For Immediate Release podcast I recently heard. Throughout the article, Shaw contends that organizations will have to make serious changes to the way they recruit and retain top talent in light of the upcoming talent shortage, including offering more flexible schedules, telecommuting options, phased retirement to retain older workers and more focus on work/life balance.

This is all music to our ears here at Spherion because we've been espousing the very same advice for years. In fact, we've conducted significant research on this topic in order to track the effects of the talent shortage, better pinpoint what employees want and need from their employers, and how companies can align their retention efforts with those. Here is bit of what we've found.

We're already seeing signs of the labor shortage:

• 23 percent of companies are already dissatisfied with the talent available.
• One-third of HR managers mention turnover/retention as a key concern.
• On average, employers expect 14 percent of their workforce to leave within the next year.
• 31 percent of workers believe there is a turnover or retention problem at their company, and 39 percent of workers themselves expect to leave in the next year.
• Less than half (44 percent) of workers believe their company is taking steps to retain its employees.

Next, when it comes to retaining talent there is no magic bullet. It is important to note that the order of importance of retention factors will shift and re-shift as the economy changes and workplace values evolve. For example, in our 1999 Emerging Workforce Study, Spherion found "training and development" to be a particularly high influencer on retention among workers. This may have been driven by pressure to gain the right skills for the digital age. Today, we have entered an age of compensation deflation, where little or no pay increases and rising benefit costs characterize the employment marketplace. Consequently, basics such as compensation and benefits have moved up as a concern for today's employees.

However, what's most alarming is the large disconnect between what employers believe their workers want in order to stay with the company, and what employees identify as retention factors. Take a look...

Employers and employees wholeheartedly disagree on what drives retention. In fact, employers and employees ranked every factor of retention differently in terms of priority. The most concerning of which relates to time and flexibility. Work/life balance was the most important career priority for 86 percent of workers surveyed. It is ranked first on the employees list of retention drivers after standard priorities salary and benefits. Employers on the other hand ranked time & flexibility last among all factors relating to retention of employees.

Shaw was right on the mark when he said employers must make serious changes to the way they recruit and retain workers.