Human resource departments have numerous tasks to fulfill, but recruiting and retaining employees is arguably the most difficult. In fact, a 2012 study by the Society for Human Resource Management determined that by 2022, employee retention will be HR's greatest challenge. Here's why.
1. higher total compensation demands
Employees constantly feel pressure to provide well for themselves and for their dependents. When they feel their compensation isn't fair, they won't hesitate to speak up about the situation. In a recent survey, employees stated that pay is the most important contributing factor to their overall job satisfaction. This creates a difficult situation for any human resources manager, whose job includes keeping employees satisfied while keeping costs low. When it comes to employee retention, it's up to HR to decide who is worth keeping and who isn't.
2. tightening talent market
When the unemployment rate skyrocketed back in the late 2000s, employers were easily able to find talented new recruits because the pool of applicants was huge. Now that it's fallen to less than 5 percent in some countries, however, it's much more difficult to find new personnel. If you don't have the resources to offer the highest compensation package, your company might consider other appealing job perks like flexible hours or remote positions.
3. unappealing company culture
Younger employees (millennials, in particular) expect a different work environment than their predecessors did. Most recent grads aren't happy to sit at a desk, fulfill their job duties, and go home at the end of the workday. They're looking for jobs that offer perks like a relaxed, open communication policy; flexible scheduling; and meaningful job tasks with clear objectives. Companies that don't meet at least some of these demands will be hard-pressed to find suitable employees.
4. increased employee turnover
HR managers are constantly battling against a high employee turnover ratio. The Center for American Progress states that, on average, a company will pay approximately one-fifth of an employee's salary on recruitment costs to find a suitable replacement. This number is typically much higher for jobs that require a high level of education or specialized training. Obviously, this means that employee retention is incredibly important for the overall success of a company. High employee turnover could quickly affect an otherwise healthy bottom line.
5. lack of leadership
According to the Society for Human Resource Management, top executive positions are experiencing the highest level of turnover. This creates a unique problem for HR: a lack of leadership within the organization. To combat this problem, HR managers should talk to the current leaders to develop a plan for training new executives as old ones are replaced. It's a tough task to undertake, but the future of the company may very well depend on these proactive measures.