During periods of economic uncertainty, employee retention is incredibly important — when workers feel their company isn’t stable, they’re more likely to leave. Additionally, as inflation rises, so do employees’ expectations for higher wages. A Payscale report found that 44% of companies say pay is the reason they’re losing talent.
How can employers balance these two dynamics? It’s important to reassure employees that the US economy is still strong and unemployment remains low. While sectors such as Big Tech are experiencing a strain right now, IT overall is doing well, and industries such as finance and energy have not slowed down.
With these factors in mind, here are three things business leaders can do to help employees cope with global/national economic concerns and reassure them about the strength of their own organizations.
Get smart about the economy. Inflation has an enormous impact on employees’ lives as they deal with higher gas, food and housing prices. Additionally, fear rises when staff reductions hit the news. Leaders should talk honestly about the economy and how the company itself is staying abreast of economic fluctuations. You don’t need to be an expert to have a candid discussion with employees. After all, many leading economists are uncertain how inflation and the Fed’s attempts to control it will play out.
If you haven’t been doing so already, now is a good time to become more tuned into what’s happening with the economy. One place to start is understanding the role of the Fed and the impact its past actions have made on the economy. Set aside time each day to do research and read the news, mixing in a variety of trusted sources to ensure balance and perspective.
Ease stress during uncertain times. Good leaders ease employees’ minds in difficult times. Great leaders dig deep to understand the facts and communicate a strategic path forward that safeguards every employee’s future. Doing this will help lower employee stress levels so they can focus more on their role in the company.
Encourage your teams to discuss what they’re experiencing and offer them solutions. A BrightPlan wellness survey found nearly nine out of 10 employees expect their employers to give them resources to help with their finances. Some examples include investing tools, financial education opportunities and access to financial professionals.
Heighten communication and build transparency. Share success stories and lessons learned during rocky economic times of the past. Use all-hands meetings to discuss how the company is tracking, explain what gauges the business monitors closely and offer insights employees can share with clients. Prepare for questions and acknowledge that while you may not have all the answers, you absolutely support them in uncertain times.
Focus on equalizing pay to foster retention. Market conditions are impacting salary levels for new hires. This can often disrupt pay structures and lead to retention issues with existing employees. To minimize potential wage gaps, ensure you have a system in place to evaluate rates and salaries on a regular basis. This can include reviewing job descriptions, revisiting pay and compensation metrics, and conducting market research. Use this intel to assess compensation plans and ensure they’re competitive.
The focus should always be equal pay for equal work. If you need to pay a higher salary to bring someone on board, give them more responsibilities. If you start to see issues in top pay bands, it’s time to review and reset.
Parting thought: Lead today and prepare for tomorrow. There are two kinds of leaders: those who have endured economic challenges and those who are going to experience them. During such times, business leaders who focus on operating the business responsibly, profitably and transparently will maintain an ample financial cushion and foster an environment in which external economic challenges are discussed openly. Such organizations will have the resources needed to continue nurturing and advancing their people, positioning them to come out ahead during challenging economic times.