4 Ways to Boost Your Employee Retention in an Uncertain Economy With workers exerting more power in the labor market, companies are going to have to get creative to gain their commitment.

By Daniel Altman

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

For much of the pandemic, the biggest challenge facing businesses was getting workers through the door. Now, with employment levels similar to where they were before the Covid-19 pandemic began, the focus for companies is shifting to retention. But the old way of thinking about retention just doesn't work anymore.

Earlier in the pandemic, the struggle to hire affected almost every industry. Business was booming in goods-related industries as consumers leaned heavily on ecommerce and delivery services. But in-person workers were confronting the risk of a deadly disease in the workplace, as well as requirements for personal protective equipment and vaccination. As a result, labor supply didn't always meet demand. And when the economy outside the home finally opened up again, millions of workers in service-related industries had moved on or left the labor force altogether.

Nowadays, the labor market as a whole is as tight as it was before the pandemic. The unemployment rate is exceptionally low again, and the share of adults with jobs is almost the same as it was in 2019. Workers have been able to pick and choose; the rate at which they quit their jobs peaked in April 2022 and is still higher than at any time on record before the pandemic. In our recent State of Hospitality Staffing report, almost half of survey respondents said they had lost 25% or more of their staff to churn in 2022.

To be sure, the Federal Reserve's high short-term interest rates have taken some of the wind out of the economy's sails, and the labor market is beginning to settle down. But retention is still difficult. It's also hugely important — no one wants to invest time and resources training a new worker, only for them to leave for another job. So here are some effective retention strategies culled from our research.

Related: The Co-Founder of a Fashion Retailer With a Nearly 100% Retention Rate Reveals the Secret to Happy Employees

1. Incentives matter

Plenty of jobs already offer end-of-year bonuses to employees, but 12 months can be a long time to wait when job tenure is steadily decreasing. Now some of our business partners are scheduling payments that workers can receive after as few as three or six months, provided they stay in their jobs. Incentives can also take the form of promotions, but it's harder to align expectations about what promotions imply in terms of pay, timing and responsibilities. By contrast, everyone understands cold, hard cash.

2. Growth is not optional

The previous section wasn't to say that workers had no interest in career progression — they most certainly do. A business that lays out a clear career path for new workers is more likely to gain their commitment, as long as they can see other workers following the path successfully. Especially today, when workers have more choices and autonomy, they need to be able to picture themselves picking up skills and responsibilities as they gain seniority.

Providing avenues for growth has become more complicated as the labor market becomes more flexible and multifaceted. Some workers may be full-time, others part-time and more might pick up shifts on their own flexible schedules. Yet these days, even flexible hourly workers like the ones on our platform are finding career paths.

Companies often offer training shifts to start, then regular shifts to workers who complete their training. Then these workers can be added to rosters, offered long-term assignments, and finally hired permanently. Workers want to move up the skills ladder, too; we see workers on our platform going from prep cook to line cook, or from entry-level warehouse associate to an intermediate position.

Related: How I Increased Staff Retention by 5% Last Year While the Nation Hit Record-High Quitting Numbers

3. Be positive

When we sifted through thousands of pieces of workplace feedback for our inaugural State of the Flexible Workforce report, we found two things that mattered most to workers besides money: the attitudes of their teams and the atmospheres that surrounded them. Workers attached enormous value to colleagues who were helpful, supportive, cheerful, and instructive. They also gave kudos to businesses with clean, well-lit, well-organized and temperature-controlled spaces.

4. Small things also count

In the past year, businesses have been raising pay, adding benefits, increasing flexibility and offering extra training, all to increase retention. These strategies can work, but they're expensive. Sometimes cheaper perks can give businesses more bang for the buck — and even make them stand out from the competition.

Many years ago, I interviewed Mark Cuban, the owner of the Dallas Mavericks basketball team, about his strategies for attracting and retaining players. He could pay big salaries, but money alone didn't make players want to come to Dallas. So he made sure his stadium had the comfiest seats on the bench, the plushest towels in the lockers and a host of other inexpensive amenities that no other team provided. These perks only cost a couple of thousand dollars per player, but they completely changed the dynamic in recruitment, turning the heads of visiting players throughout the season.

Related: Companies Need To Be Better at Hiring, Not Firing. 7 Tips To Pick And Retain The Best Talent During Uncertain Economic Times.

Most businesses can do something similar for much less. Just think about things like the quality of your coffee, the feel of your break room and even something as mundane as the ease of scheduling shifts. If you can do the big things right, then you can do the little things right as well. Workers will notice — and then you'll notice when they stick around.

Daniel Altman

Entrepreneur Leadership Network® Contributor

Chief Economist, Instawork

Daniel Altman is an expert at analyzing and sharing labor market trends, particularly within the hourly workforce. He previously served as an economic advisor in the British government and wrote for The Economist and The New York Times. He received his Ph.D. in economics from Harvard University.

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