Inflation and recession are on the tip of everyone’s tongue these days, and businesses are looking for ways to keep their workforce intact — even if they can’t provide a significant pay increase. We’ve put together some suggestions to address inflation-related retention concerns.
A recent survey  noted that 80% of job seekers expect the U.S. to enter a recession next year, fueling 60% of job seekers to look for a new job before a recession hits. This means now is the time to take action to retain high-performing employees.
One retention strategy is increasing compensation, but that isn’t always an option. Even businesses that have already increased wages or have budgeted an increase in 2023 cannot keep pace with inflation. An average pay raise next year is expected to be 4.1%, which is less than half the rate of inflation reported for June 2022.
Here are some other ways to retain an engaged workforce during these unprecedented times.
Highlight Total Compensation
A total compensation statement helps employees understand the full value of their compensation — beyond salary only. Employees enrolled in employer-sponsored benefit plans often see the portion deducted from their pay but may not understand how much the organization is paying and the value of those benefits. A total compensation statement highlights the monetary value of the complete benefits package, including any perks that traditional benefits may overshadow. Showing employees the total value of their benefits often aids in retention efforts.
Provide Flexible Work Arrangements
Allowing employees flexibility in their work arrangements can be a win for the worker and the employer. It gives employees more control over their work environment, often leading to a more engaged, empowered and committed workforce. Further, employers offering more flexibility have experienced a reduction in turnover. While remote or hybrid work is not feasible for every position or industry, employers should consider partnering with employees to offer flexible work schedules or additional paid time off.
Actively Acknowledge Employee Contributions
Employers often look to formal rewards programs to show employees their work is appreciated. Yet workers are looking for a more personal touch. They want to feel that their managers, coworkers and senior leaders care about them. Gallup’s research shows that workers who feel recognized are four times more engaged and less likely to watch for other job opportunities. Specific informal recognition, such as verbally praising an employee or sending them a quick note of thanks, can be valuable, potentially boosting retention.
Recognize & Leverage Employee Strengths
Focusing on what the employee does well encourages them to use their unique skill set and is proven to boost overall performance. Research shows that a strength-based approach improves performance by 36%. On the flip side, research indicates that employees with managers who focus on their weaknesses showed a decrease in performance of more than 25%. Acknowledging what an individual is doing well helps them feel like an asset to their team and gives them a sense of purpose, both of which are key to employee satisfaction and engagement.
In the past, workers may have been more inclined to stay with a familiar employer to weather economic change. However, if the Great Resignation is any indication, employees will continue to look for opportunities that offer the pay, benefits and flexibility they want. Businesses should continue to evaluate retention efforts and have an open and transparent dialog with staff, as individuals often look to their employer for support, understanding and reassurance during uncertain times.