Why You Should Worry About Retention
The economic boom of the 1990s is a fading memory for most of us. Just as the competition for workers started to drive up costs, the bubble burst. Gone are the sign-on bonuses and benefits expansions modeled after Silicon Valley enterprises. We've said good-bye to on-site day care, free lunches, playrooms and more. The Talent War's last echoes have been replaced by a series of political campaign slogans about the current jobless recovery, and potential employees seem like a readily available commodity in most parts of the United States.
Given employers' apparent ability to quickly replace departing workers, why would anyone invest time, energy or resources in a retention program?
The Real Shortage Is Yet to Come
In most Western, industrialized countries, the workforce is aging and shrinking at the same time. Driven by declines in family size, which is correlated to the educational attainment of women, the top 50 industrialized countries all suffer from some form of shrinking workforce, according to the United Nations Population Base. According to "The 21st Century at Work: Forces Shaping the Future Workforce and Workplace in the United States," a study published by the RAND Corporation for the Department of Labor (DOL), the US is able to eke out a small 1 percent annual growth due entirely to the waves of immigration that hit its shores. In the 1980s, this number was 2.6 percent, says the DOL. For as far ahead as researchers can see, workforce growth will remain at this new and lower level.
There will be far fewer new workers, and the workforce in general will age and become increasingly female as a result. By 2008, the percentage of whites in the workforce will decline to 71 percent, according to the DOL, and again, they will be older and more female. Workplace diversity will become a fact of the available labor supply.
While there are enough workers to fill our needs in the current environment, it is clear economic good times will strain the country's ability to supply the required labor. In addition, advances in technology and increasing globalization are changing the very face of the workplace. In other words, the true Talent War has just begun, and it will be with us for a very long time.
Let's be very clear about this. The American workforce has begun to shrink with the sole exception of newcomers (immigrants). That means that any growth comes at the lower end of the skills spectrum. Even in our current situation (5.6 percent unemployment, according to the DOL), shortages are striking key areas -- nursing and security, to name two. As the economy begins to grow, the competition for highly skilled workers will accelerate.
Despite political rhetoric to the contrary, now is the time to prepare for the changes. As an employer, retention is the frontline in the Talent War. The RAND study describes changes in benefits, working arrangements and technologies that will quickly become the norm, including:
- A more mobile workforce and shifts to nonstandard employment relationships highlight the importance of the portability of benefits and more personally tailored benefits packages. As the workforce shifts to a more balanced distribution by age, sex and ethnicity, there may be demands for alternate benefit plans, compensation and working arrangements to reflect these new realities.
- As the labor-force growth rate slows, a tightening workforce also encourages employers to accommodate families, older workers and workers with disabilities in an effort to find and keep needed employees. Technological advances will help make this possible. As data is transferred at higher speeds, more employees will be able to participate in nonstandard work arrangements, such as telecommuting and flexible scheduling.
- "Alternative workplace arrangements may be particularly attractive to workers in the future who need to balance work and family obligations, and other groups of workers such as the disabled and older persons," says Constantijn (Stan) Panis, a RAND economist and coauthor of the study. "More attractive work arrangements may allow for faster workforce growth than what is projected."
Predictable changes in the age and composition of the workforce will rapidly come to change the way we think about the workplace. In order to keep our most valuable contributors, we will all be considering increasing flexibility in working arrangements, benefits and the design of work. Focusing on retention policy is simply good competitive practice in the 21st Century.