When the calendar flipped from 2020 to 2021, we were all hopeful for better, easier days ahead. But 2021 has had plenty of its own challenges. While the world grappled with new variants of the coronavirus and the resulting social upheaval, businesses and their HR departments struggled with record-level job turnover and job creation coupled with an evolving concept of work and the workplace.
In order for companies to cope with the issues that they faced in 2021, they needed to be agile and quickly adapt to shifting labor market trends. That is a skill that will continue to serve employers well in 2022. The new year will see many of 2021’s key trends continue to hold sway, including:
- The Great Resignation and the increasing influence of employees in redefining the workplace;
- Focussing on retention;
- On-going salary adjustments;
- Remote and hybrid work arrangements;
- Vaccination mandates;
- The increasing reliance on gig workers;
- A renewed commitment to diversity, equity, and inclusion (DEI); and
- Investing in upskilling/reskilling workers.
Like 2021, the coming year promises to be hectic, stressful, and full of challenges. But, having already weathered 2021, honing in on the issues that are most important to their workers, employers have a significant opportunity to create rich, meaningful workplaces that employees are loyal to.
The Great Resignation
Within the employment sphere, little introduction is needed for the Great Resignation. Coined by Anthony Kotz, the term refers to the significant uptick in job turnover that began in April 2021 due to employee burnout and shifting attitudes about work.
The Great Resignation shows no sign of slowing; in fact, it appears to be accelerating. In April 2021, four million people left their jobs, which was the highest number recorded since the Bureau of Labor Statistics began reporting on job turnover in 2000. But, in October 2021, April’s record was toppled as 4.2 million Americans gave their resignations. And, a piece by Suzanne Lucas warns that the worst is yet to come. She urges employers to brace themselves for January 2022 as workers take their leave after year-end bonuses and raises are paid out.
The shockingly high numbers reflect a massive shift in the work/life balance of American workers and what they choose to value. Thrust into a remote work environment and isolated by pandemic lockdowns, many people discovered time previously lost to commutes, lunches eaten at desks, and unpaid overtime. As Derek Thompson explains in an excellent piece at The Atlantic, as people used that newly-found time to pursue activities meaningful to them, they redefined their values and their own identities as workers. And that redefinition led to the recognition that there is a deep dissatisfaction with the traditional role of workers and the entrenched workplace structure.
Workers reacted to that realization by quitting their jobs in droves, in search of work that is both more meaningful and more closely aligned with their own values.
In order to attract and retain those who are seeking greener pastures, employers need to closely examine their company culture, paying particular attention to:
- Work/life balance;
- Whether remote and/or hybrid work arrangements are feasible for those employees who request them;
- Employee well-being, particularly mental health supports and resources;
- Community involvement; and
- Meaningful interpersonal connections in the workplace.
Experts predict that the Great Resignation will last into 2023. During that time, employees will have unprecedented influence in shaping their workplaces.
Focus On Retention
It seems intuitive to focus on hiring in order to fill open roles. But a key to riding out the Great Resignation is to not let those roles open in the first place. Focus on retention instead of on recruitment. An insightful piece at the Harvard Business Review makes the point that “recruitment and training costs and the time it typically takes for new hires to reach the same level of expertise as the people they replaced make it imperative that employers focus immediately on retention.”
In order to develop a retention plan, Ian Cook suggests that you start by quantifying the problem by determining the scope of turnover and the impact on your company. Next, explore metrics to determine what’s causing the turnover. And, finally of course, develop a retention plan that targets the specific reasons why people are leaving.
For a long-term retention plan, it’s important to focus on the things that people seek at work: a sense of value, purpose, certainty, and belonging. To create a company that people want to stay at, consider:
- Incentivizing loyalty by doing things like paying off student loans and providing work-from-home stipends;
- Providing opportunities to grow and to learn new skills;
- Elevating your purpose to something beyond the bottom line;
- Prioritizing culture and connection in the workplace;
- Investing in your employees’ well-being by doing things like improving access to mental health supports and providing daycare subsidies; and
- Embracing flexibility in the workplace.
On-Going Salary Adjustments
As employers struggle to fill positions and employees exert their newly-found influence to shape their own roles, pay rates and compensation packages will continue to be defining factors.
While the average salary budget increased to 3 percent by the end of 2021, the Society for Human Resource Management (SHRM) is projecting a 3.9 percent increase for 2022.
Of course, for most people, salary has always been one of the most important factors in deciding whether to accept a new job. Employers have been rapidly adjusting their pay rates throughout 2021 as a way to attract new talent. But it’s important that wages be adjusted for existing employees as well. The SHRM points out that:
When more experienced workers feel that their pay advantage is no longer significant, they may seek new jobs in the tight labor market, which leads to high labor turnover of more experienced workers … Employers faced with extensive departures of experienced workers will raise wages faster for current employees in order to maintain an effective workforce.
In this new era of work, adjusting compensation packages will be more critical than ever, not just for recruitment but for retention as well.
Remote and Hybrid Work Arrangements
Remote work is here to stay. Some workers flourished in the remote work environment and it would be a wise move for employers to allow those employees to continue to work from home.
Remote work isn’t just good for employees, though. Forbes reports that productivity, performance, engagement, retention, and profitability all typically increase when companies allow employees to work remotely.
COVID-19 vaccines and workplace vaccination mandates are contentious topics that are fraught with legal questions. Private employers with fewer than 100 employees have some leeway in how they approach the issue of workplace vaccination, but there are no easy answers. This is an issue that will continue to dominate recruitment issues in 2022.
Increasing Reliance on Contract Workers
Like remote work and virtual interviews, contract work (often colloquially called “gig work”) has long existed, even in the tech and engineering sectors. But the pandemic accelerated the adoption of gig work as a legitimate and meaningful source of employment. In mid-2021, there were already 57 million contract workers in the United States; another 10 million employees are considering joining those ranks.
Gig work allows employees to (usually) work remotely and to take advantage of flexible work hours, which many people grew to appreciate during the pandemic lockdowns. Gig work also allows people to focus only on projects that are suited to their skills and interests, while also giving them a chance to quickly enhance their skill sets in different areas.
For employers, there are a lot of benefits in hiring contractors. While an employer’s initial reaction may be worry over not building an internal pool of talented, experienced, loyal employees, contract workers actually provide a deeper, richer pool of talent. And, as Edward Segal points out in Forbes, that deep, rich pool comes without the overhead that full time employees require.
Segal further points out that many gig workers will actually be highly experienced because those workers will have an easier time finding contract work:
Many of the employees who will turn to freelancing would naturally be the more skilled and experienced ones because they would have more to sell. As a result, companies will experience a brain drain on their top talent. They would then have to choose between internally growing new talent from scratch or finding a way to leverage the growing gig economy. They would also have to pay their full-time employees more in order to stay competitive.
As more employees ditch the traditional workplace and move towards contract work, those contractors will become increasingly important to your business. If you haven’t already started to integrate them into your workplace, you should begin to do so in 2022.
Renewed Commitment to Diversity, Equity, and Inclusion (DEI)
While many companies have long had DEI policies, they may have struggled to implement them for a variety of reasons. As we discussed previously, recent social justice movements, the move to remote work, and the emergence of Gen Z in the workforce have come together to create a perfect storm for a renewed commitment to DEI policies.
Of course, boosting DEI is an ethical issue that needs to be addressed at every level. But it also makes good business sense, with clear links between a successful implementation of DEI and profitability. As well, going forward, a vigorous DEI policy will be an important tool for recruitment and retention since people are making it a priority to choose employers that align with their personal values.
If you’re struggling to bolster your own DEI policies, consider these steps:
- Create and hire for the role of Chief Diversity officer;
- Assess your current DEI policies and measure their success;
- Communicate and Champion your DEI goals;
- Hold leaders and managers accountable; and
- Ensure that your recruitment processes are free from systemic bias.
Investing In Upskilling And Reskilling Existing Staff
As people continue to change the way they think about work, it will become increasingly important that they feel valued by the organizations that they work for. Upskilling and reskilling existing staff is an excellent way to show employees that you value them. It’s also a terrific way to invest in your business. In a blog piece at McKinsey and Company, the authors point out that:
Investing in redeployment, upskilling, and reskilling shows employees that they are valued and vital to the organization’s mission. Learning new skills is a powerful source of motivation, inspiring commitment and increasing productivity. In fact, 94 percent of employees say they would stay longer at a company that invested in their development.
While both upskilling and reskilling provide employees with the tools that they need to be successful, the McKinsey and Company authors explain that they two are slightly different approaches.
- Upskilling is creating a higher level of competency in existing skills in order to perform an existing role better.
- Reskilling is learning a new set of skills in order to either move to a different, brand-new role or to adapt to an evolving position.
As companies struggle to fill roles – and keep them filled – during this new era of work, reskilling and upskilling existing employees will be an important strategy for success.
While 2021 was challenging in the extreme, it did provide a strong incentive for employers to create workplaces that employees value and are loyal to. Knowing that the same employment trends will continue into 2022 provides employers with a solid base on which to continue to redefine workplaces and concurrently improve their recruitment and retention strategies.