We’re living through one of the most interesting times for employers and job seekers alike. Just like real estate has a buyer and seller’s market, recruitment has an employee or employer-focused market—and today, it’s an employee’s market all the way.
Reports from the Bureau of Labor Statistics noted that 4.4 million people quit or changed jobs in February 2022, and the reasons vary from pay to job flexibility to career growth to company values and more.
We’re witnessing one of the most significant labor churns in decades, so what does this mean for you as a small business owner? You must care about this shift because if there’s one thing that’s for certain, you can’t build a successful, lasting small business without talented and dedicated employees.
The mass exodus from the workforce, also dubbed the Great Resignation, should have employers considering how they can attract and keep their top talent. You might be asking yourself,
- What is the state of the job market today?
- How can small business owners make a concerted effort to keep their employees?
- What are actionable ways to recruit new talent in this market?
Let’s get some answers!
What’s It Like Out There?
The Great Resignation is real—many workers are voluntarily leaving their jobs in search of something better. Now, people expect more from their companies than a paycheck; they want their work to mean something and give value to themselves and others.
Workers in 2022 value their time and want to dedicate the long hours they spend at work to a company that actually cares about them and their wellbeing. That’s one reason small and family-run businesses tend to be so successful—they concentrate on values, culture, and people.
In this job market, the reality is that employees and candidates have much more power. You often think about employers calling the shots, but the roles are actively reversing right in front of you. Companies have more positions to fill than employees who can fill them, leaving candidates with much more room at the negotiation table.
Like the hot seller’s market, this employee-driven job market isn’t going away and is set to define new standards in the employment landscape far beyond 2022.
57% of knowledge workers are open to taking new positions in the next year, according to the Harvard Business Review, and numerous other industries are suffering as well. However, there are strategies to overcome this trend.
Reality Check: Recruiting Is Often More Expensive Than Retaining
If you’ve seen Hulu’s adaptation of The Drop Out, depicting the scandal of Elizabeth Holmes and her company Theranos, you might remember a line delivered by her CFO, Sunny Balwani, to the head of chemistry “everyone is replaceable.”
While that might be true, as Theranos found out, replacing people is expensive.
Bringing on a new employee costs far more than their salary on your P&L. When you start to factor in recruiting, job board fees, training, onboarding (laptop, courses, hours, loss of initial productivity), and more, those costs add up.
Recruiting is a considerable cost that many employers overlook. To put it in perspective, the average US employer spends roughly $4,000 and 24 days to hire someone new. For upper and senior-level jobs, the search often takes even longer.
This is not to say that employers should rush the process and take what they can get. While the market favors the employee, that doesn’t mean that an employer should sacrifice company goals or values just to fill a seat.
Putting the cost it takes to simply recruit aside, you must also consider onboarding expenses. When you consider training and equipment, it can take up to 6 months (or more) for a company to break even on its investment in a new hire.
Bringing on new people takes a lot of time, energy, and money. And while sometimes hiring can be an exciting and necessary process, many companies find that retaining their talent is more cost-effective than seeking out new talent. This fact is yet another reason why it’s so important to listen to the concerns of your employees and make necessary changes to keep them fulfilled.
Take A Hard Look At Compensation
One of the biggest reasons people leave their jobs is salary. If you’re severely underpaying your employees, now’s the time to look at that and get yourself as close to industry standards as possible. As a small business, you can’t compete with a company like Apple’s salary—and that’s okay—but you should still be paying a competitive wage.
A great way to up your game is to add a company match to a retirement plan. Not only will a retirement match attract new hires to your company, but it can also improve the morale and retention of your current employees.
Other options include bonus opportunities, equity ownership, or partnership tracks. While you may not be able to compete with the base salary of a larger company like Google or Facebook, you can stay competitive with these other options.
Give Your Employees Room To Grow
No one wants to stay in the same professional place forever. Your employees want to grow in serval areas like experience, responsibility, and value to the organization.
Stagnation is the antitheses of creativity, so be sure to offer your employees the chance to better themselves professionally and personally with your organization. Employers often massively undervalue the opportunity to grow and learn within a company.
How can you accomplish this goal?
- Help your employees craft a career path that’s exciting for them and makes them want to come to work every day.
- Dedicate time to employee development. Understand their goals, what they’re interested in, and how you can support those initiatives.
- Take them to conferences and other active learning opportunities.
- Invite them to networking events.
- Invest in advanced education, whether a course or a degree program like an MBA.
Focusing on career progression is a win-win. Your employees are excited and striving for more, and in return, employers get a stronger, more motivated workforce.
Invest In Benefits Your Employees Actually Want
There’s been numerous facetious commentary on trendy office perks like beer taps and free breakfast, so instead of focusing on surface-level benefits that don’t really enhance your employees’ lifestyle, consider the things that would.
Benefits like retirement, true flexible schedules, work from anywhere opportunities, generous maternity/paternity leave, daycare/family benefits, extended bereavement policies, continuing education stipends, and PTO are all benefits that affect your employees’ livelihood.
In today’s job market, the ability to work from home is highly sought after. 64% of employees who have worked from home since the pandemic say that it’s easier for them to balance work and their personal life.
Work/life balance has never been more critical than it is today. And as an employer, it’s your responsibility that your employees know about these benefits and are encouraged to take advantage of them.
For example, some companies that offer unlimited PTO mandate their employees at least take 2 weeks off so they have space to unwind and recharge.
Lead With Vision, Purpose, and Culture In Mind
It’s essential to cultivate a culture that enhances your values. Don’t just talk the talk—how are you walking the walk? How do your processes, communication, and leadership embody the values and mission of the company? If you don’t know, now’s the time to have those difficult and enlightening conversations.
At the end of the day, when it comes to recruiting for your business, focus on core values, career progression, meaning, and purpose.
If you’re interested in learning more about how Toberman Wealth can help plan your business and future, connect with us today.
Craig Toberman is the Founder of Toberman Wealth – a fee-only, fiduciary financial advisor based in St. Louis. He assists families and businesses with strategic financial planning and long-term wealth management. He has over a decade of experience in financial services and has crafted custom financial plans for hundreds of families and businesses.
Craig received a Bachelor of Science (B.S.) degree in Agricultural and Consumer Economics from the University of Illinois and a Master of Business Administration (M.B.A.) degree in Finance from Saint Louis University. He is a Certified Financial Planner (CFP), Chartered Financial Analyst (CFA) charterholder, and Certified Public Accountant (CPA).
Craig is a member of the National Association of Personal Financial Advisors (NAPFA), Fee-Only Network, and XY Planning Network.
Craig lives in the greater St. Louis area with his wife, Ally and son, Hank.