Are Raises the Only Way to Retain Talent After the Great Resignation?

Is remuneration the only way to retain talent in our post-Great Resignation world? And is Australia really as hard-hit as the US and Europe? Let’s discuss…

Written by Nology Team - 23.08.22

Back in February 2022, the now former Treasurer Josh Frydenberg stated that Australia is undergoing a “Great Reshuffle” rather than the Great Resignation being seen in the US, Europe, and elsewhere. But how accurate is this? And how can Australian businesses attract and retain the best talent without constantly relying on raising salaries?

Countries around the world are seeing record numbers of resignations in what the media is calling the “Great Resignation”. The majority of the doom and gloom job-quitting figures are coming out of Western Europe and the US, though Australia is far from immune.

Despite how the media may negatively cover the Great Resignation, it’s actually a great opportunity for businesses to become more engaged employers, retain their best talent, and attract new employees. But is more generous remuneration the only way to do that? Should the knee-jerk reaction to “The Great Resignation” be “The Great Remuneration”?

Before we start to discuss ways that companies can mitigate the effects of the Great Resignation, and indeed benefit from the best talent on the market, we need to understand why workers are leaving – and, more importantly, put some of those employee churn figures into context…

Why is the Great Resignation Happening, Here and Abroad?

Though far from the only reason, Covid has had a large hand to play in the “Big Quit”. Figures from Gartner state that 65% of employees said that the pandemic has made them rethink work’s place in their lives.

The pressures of Covid put things into perspective for a lot of workers. Economic uncertainty, paired with the obvious concerns about health and wellbeing, spurred a lot of people to rethink their career options, seeking more rewarding work.

Those who were fortunate enough to work from home took note of just how much productivity and personal wellbeing could be gained from getting rid of their commute. Those whose positions were stood down or otherwise suspended had the time and mental space to take stock and decide how fair their work really felt. Many essential workers who worked their fingers to the bone throughout the crisis no doubt wondered if the grass was greener on the other side.

Workers were thinking “Are the salaries, working conditions, and perks really worth the mental and wellbeing costs I’m enduring? Am I getting the respect I deserve?

In this great rethink, workers may have also made big, positive decisions about their lives that naturally result in resignation, like relocation or early retirement. Many workers who were able to work from home queried employer mandates to return to the office, 8 hours a day, 5 days a week, when they’d been doing the same work from home for months.

Robert Reich, former U.S. Secretary of Labor under Clinton, provided a rather illustrative quote to Time Magazine: 

“[Employees] don’t want to return to backbreaking or boring, low wage jobs […] Workers are burned out. They’re fed up. They’re fried. In the wake of so much hardship, and illness and death during the past year, they’re not going to take it anymore.”

Though much of the coverage about the Great Resignation is rather gloomy, we actually see it as a positive thing. Workers are realising their worth and acting en masse to create a better future for themselves and their loved ones.

Reshuffle or Resignation?

Let’s jump back to Frydenberg’s comment. The labour market in Australia is incredibly tight. Unemployment is at a 48-year low. The labour market is so tight that the head of the Australian Bureau of Statistics noted that the number of unemployed people almost matches the number of vacancies. Whether the population’s skills match up with these vacancies remains to be seen.

Compare this to the US where there are 10.7 million job openings but only 5.9 million unemployed people to go around. The US is an interesting case when it comes to the Great Resignation. Around 2.6% of the working population voluntarily quit in 2021 but the Harvard Business Review highlighted that this appears to merely be a continuation of a surprisingly linear trend, implying that the amount of resignations we are seeing in the States shouldn’t really come as a great shock.

“Job-to-job” resignations in the UK skyrocketed from late 2020 to late 2021, but now show signs of stabilising. However, according to CIPD research, one in five workers said they’re likely they will quit their current role in the next 12 months. From a nation who had the second highest Covid-related quit rate in Europe, it will be interesting to see how things play out for the British workforce…

Back to Australia – the tightness of the labour market really illustrates the importance of training new, willing talent into in-demand fields like tech. With roughly the same amount of unemployed people as there are job vacancies, it will be a real concern for the new government to see whether the population’s skills match up with available vacancies. 

In terms of the great reshuffle, all in all, Australian workers have generally benefited from moving jobs. The Australian Treasury showed that workers who moved jobs typically enjoyed a pay increase of 8-10%. All of the above scenarios highlight how important it is for employers to attract and retain the right talent. Is remuneration the only way of achieving that?

How Can Employers Attract & Retain the Best Talent?

The Great Resignation hints that workers are feeling unfulfilled and undervalued. These may seem like tough issues to crack, but with the right attitude and direction it’s something companies can absolutely achieve.

Let’s strip it back and look at a few things that workers generally want:

Remuneration is important, but it’s just one of a suite of offerings you can provide to make your company a great place to work – both for retaining existing employees and attracting new talent.

Training & Development Opportunities

Roughly 86% of global employees value job training according to Survey Monkey research, yet only 52% of workers think their employer provides the right amount of training. This hunger for learning is hardly new. Back in 2019, 94% of employees said they’d stay at a company longer if it was willing to invest in training according to LinkedIn’s Workforce Learning Report.

This year’s instalment of the same report makes a great point about training as a retention tool:

“The number 1 reason people managers recommend learning opportunities for direct reports is ‘to grow their career.’ Just as telling: Employees without an L&D (learning and development) department are significantly more likely to find it more difficult to change roles internally than to get a new role outside the company.”

You can learn more about how we’ve supported our clients in retraining, and retaining, their staff here.

Generous, Transparent Remuneration

Receiving honest recompense for an honest day’s work is the most important job perk out there. However a large pay packet shouldn’t be the only factor at play here – transparency about pay practices should also play a part.

Payscale’s Fair Pay Impact Report shows that “very opaque” pay practices result in workers who are 183% more likely to look for another job compared to those with more transparent pay. And, on the flip side, employees of companies with “very transparent” pay practices were 65% less likely to look for opportunities elsewhere compared to those kept in the dark.

When workers are being paid different salaries for the same work, perhaps due to a lack of established consistency, or perhaps due to different market factors at the time of employment, it naturally leads to a lack of morale for those being undervalued.

The simple answer to this is to establish transparent pay bands and differentials throughout the organisation. The same work or level of seniority should get the same compensation, and any efforts to suppress employees talking about their salaries is likely to be treated with significant suspicion.

Flexibility and Autonomy

Flexible working practices can be instrumental in creating a more productive workforce, and for multiple different reasons. Gartner’s Digital Worker Experience Survey found that workers cited flexible working hours and reduction/eradication of commuting time as the main reason for increased productivity.

In the same research, 59% of workers agreed with the statement “I would only consider a new position or job that allows me to work from a location of my choice”, and 64% were more likely to consider a job with flexible hours than one without.

However, Harvard Business Review makes an excellent point about flexibility. Though their hybrid working study reported that 59% of knowledge workers valued “flexibility” higher than salary or other benefits, the data also showed that workers want to exercise this flexibility in a way that suits them – employees want the autonomy and independence to set their own working practices.

So, without internal learning opportunities, employees are likely to find it easier to climb the career ladder elsewhere. 

Strong Work:Life Boundaries

There are countless valuable resources online about how to set better boundaries as an employee, but why should the onus of boundary-setting always fall to the worker? Why shouldn’t employers seek to create a culture of healthy boundaries?

MindBodyGreen counts physical, emotional, time, intellectual, and material boundaries amongst the crucial relationship boundaries we need as humans, and so many of those are important at work, too. Employers should seek to respect these boundaries wherever possible.

This can be done through fostering a positive environment for workers, hiring carefully around internal culture, and asking remote workers to clearly communicate the times they’re usually at their desk. Create policies and guidance around how to respect each other’s boundaries and how to approach the subject of boundaries when you feel yours are being disrespected.

Implement Corporate Social Responsibility (CSR) Policies

This may seem a little left-field, but contributing to positive change doesn’t just impact those outside of your company – it benefits your employees, too. When employees can see that a company is trying to positively contribute to the world, they are more likely to feel committed to the company, the cause, and to their teammates.

Younger generations are especially drawn to companies that adopt CSR. Nearly 85% of Millennials said making a positive difference in the world is more important than professional recognition. The same research found that CSR is particularly important to women and can help retain female workers. CSR can also increase workers’ sense of identity as a part of the organisation.

CSR can actually be a reason why people leave jobs too, with Gartner’s Global Labor Market Survey discovering that 61% of tech workers would jump ship to be part of an organisation with a higher level of social responsibility.

Be Inclusive

Employees aren’t just like any other assets. You can’t just throw money at them and expect them to work. Employees nowadays need to be treated as a whole person, with potentially complex responsibilities and lives outside of work.

Employers need to know – and more importantly, care – about what each employee is battling with outside of work. Some workers need to care for children or for vulnerable family members. Some may be struggling through the loss of a loved one. Some may be battling health problems – be they physical or mental. Some workers may need tools, accessible spaces, and protocols that help them manage their condition in the workplace.

When companies dismiss these stressors, workers feel reduced to mere robots – put money in, get work out.

Employees facing many of the above issues would likely welcome some opportunity to work flexibly – or completely remotely at times. Ensure your policies around compassionate and sick leave are generous. And be ready to make allowances for neurodiverse employees and those with disabilities or chronic conditions.

While you’re at it, also take a look at how your company approaches cultural and religious diversity. Ensure that your team are not just “allowed” but encouraged to take time off around holidays relevant to them spiritually and culturally.

Conclusion

Remuneration isn’t the only way to attract and retain talent – not by a long shot. Gartner put it quite bluntly: “money won’t fix all of your talent problems”.

Yet the Great Resignation isn’t something that companies should be afraid of. With a strategic attitude to talent acquisition and retention, and a hefty helping of empathy towards workers, businesses can use this as an opportunity to be a better employer.

In such a tight labour market, companies need to think less about how interviewees answer the immortal question “why do you want to work for us?” and more about how to answer applicants’ equally important question: “why should I want to work for you?”

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