Labor shortages are rampant today, and high-wage employees are especially difficult to retain. Engineers, executives, and professionals in finance and marketing were already difficult to attract and keep, but historically low unemployment has increased churn and salary expectations.
Most managers believe the fallacy that they need to pay higher salaries to prevent churn. While wages are the main driver of churn in low-skilled workers (restaurants, hospitality, etc.), pay increases will not prevent highly skilled employees from leaving your company. That's because high-wage employees have enough disposable income to be picky about their employer. Often, these employees will choose a lower salary with a better work environment over high pay at a traditional workplace.
Here's how you keep highly skilled employees for a long tenure.
Provide career-growth opportunities
Lack of career opportunities is the No. 1 reason skilled professionals leave an employer. Growth means different things to each person, but worker expectations commonly include:
- A clear promotion opportunity in the next one to three years
- Challenging new assignments outside their past experience
- Mentorship from senior staff
- Encouragement to pursue extracurriculars (e.g., conferences or creative new projects)
Build a unique work environment
Management's relentless pursuit of efficiency makes employees feel like interchangeable commodities. Arrest the commodity mentality by building a unique work environment relative to your peers. You do not need beer on tap or a beautiful office. Here are inexpensive but high-impact improvements to your workplace:
- Empower fully remote staff. A fully remote work option builds loyalty from employees who wish to live in small towns with fewer employers. At CFOshare, one of our accountants moved to Granby, Colorado (pop. 2,039), after we created a fully remote work arrangement. Since there are no other accounting organizations in Granby, he is planning to stay here for several more years.
- Be flexible with working hours. Four-day workweeks. Weekend Wednesdays. Late starts. These irregular working hours come with challenges (like how to schedule team meetings) but offer employees a special arrangement not provided by most employers.
- Nurture disadvantaged communities. Systemically disadvantaged groups like TGD, BIPOC, or women (especially in male-dominated professions) value fair pay in nurturing communities over high pay in oppressive or even normal work environments.
Beware the common mistake of deploying the tactics of a better working environment without integrity (e.g., unlimited PTO while subliminally discouraging employees from taking time off). The result is a disingenuous policy that will ultimately create more churn. If you employ one of these strategies, do so completely and with the intention to take on short-term costs in the name of reducing long-term churn.
Outsource noncore functions to professional agencies
Small businesses cannot maintain staff in certain professions. This occurs when:
- The professional team is too small. If there are fewer than four professionals on a team, there may not be enough career advancement opportunities to keep talent around.
- The company is too small. Small businesses are unable to provide competitive benefits, such as health insurance.
- The HR team is too small. Some professions simply have high churn, and expensive HR systems must be built to always keep the talent pipeline full.
This is why marketing, financial management, recruiting, HR, and IT are commonly outsourced to agencies that have the scale to retain talent, manage churn, and ensure continuity of services.
Build competitive moats
Best-in-class businesses build competitive moats around their products and services. If your business requires highly skilled labor, you need to build competitive moats around your talent, too. Consider your company's unique labor opportunity and capitalize on it.