How to beat the rise in employee flight risk

Employee flight risk

Australian organisations are facing a serious business risk with nearly two-thirds of employees actively or passively looking for a new job, with a similar amount of them looking to move within the next six months, a recent research report has found.

Higher remuneration is the main reason people are assessing their options, followed by a more interesting role and an organisation that will make them happy, while six in ten employees believe a higher income would provide motivation to work harder.

Pay & performance
The quest for higher salaries comes despite the fact that most employers reported that they awarded modest pay increases in 2013 with 73.9 per cent increasing salaries in line with CPI (2-3 per cent) primarily to retain high-performing staff, according to Hudson’s Australian & New Zealand Salary & Employment Insights 2014 Guide.

Demands for higher salaries present real challenges for employers with most (77 per cent) believing they are facing tougher market conditions than a year ago, pressure on budgets is greater (76 per cent), and more than half have stricter headcount approval processes.

That said, three quarters of employers expect to award a pay increase of 2-3 per cent this year and two-thirds of employers believe their organisations will meet or exceed their targets within the next six months.

Longer working hours
Demands on employees are also greater with 46 per cent working longer hours than 12 months ago, while only 47 per cent feel the same level of security in their jobs. Interestingly, while just over half of employers reveal that stress levels are up, 30 per cent said morale is more positive compared to a year ago.

“Many employees are working longer and harder, feeling less secure in their current role and are looking for new opportunities. Businesses could be facing a potential triple cost scenario: the costs of a disengaged workforce, the costs of staff turnover and the costs of losing key talent,” said Mark Steyn, CEO Asia Pacific, Hudson.

“Our findings clearly demonstrate that the workforce is willing to move, and move quickly. The impact to the business and cost of replacing, training and up-skilling new workers is likely to be much higher than retaining and developing staff that are already performing well; particularly when high performing individuals leave the business.

What employees want
“Employers need to remember that the majority of people are seeking an opportunity to advance their careers, skill sets and experiences,” Steyn said.

“Along with financial rewards, we recommend that organisations consider revisiting engagement strategies for all staff and enable employees to develop their own career path via options such as stretch assignments, secondments to other business functions, taking on new projects, training and development.

“We know that strong leadership impacts engagement, driving productivity and increased employee retention. This is something that cannot be ignored, particularly in a climate where there is increasingly high potential for movement within the workforce.

“Revisiting leadership and development strategies for managers and leaders to ensure they are able to lead effectively in the rapidly changing marketplace is key,” he said.

Adapting to change
Higher salary demands come as organisations attempt to transform to succeed in ongoing challenging and changing market conditions. Seven out of ten of Australian employers surveyed said that they carried out a large-scale internal change program in the last 12 months. The main reasons for doing so were to become more efficient (73 per cent), to reduce costs (72 per cent) and to develop new capabilities (37 per cent).

“Although nearly three-quarters of organisations in Australia have gone through large-scale organisational change programs in the past year, it’s important to note the depth and breadth of talent organisations require is constantly changing,” Steyn said.

With the need to adapt to rapidly changing markets greater than ever, contractors provide an immediate fluidity in skill sets and this is driving increased use with 28 per cent of employers surveyed using more contractors than a year ago. They are primarily doing so to fill a short term need (52 per cent) or to give them flexibility of staffing (51 per cent).

“Organisations require flexibility in their skills sets and talent mix in order to stay competitive and innovate to keep pace with an ever changing market. Employers are increasingly turning to contractors to meet this need, while more and more people are willing to consider contract work for the flexibility, exposure to new things and variety of work it can offer,” Steyn said.