It is a great time for organisations and their teams.
They face the ‘great resignation’, the ‘great attraction’, the ‘great attrition’ or perhaps the ‘great re-evaluation’.
These terms have become the new vocabulary to help us understand the most significant movement in the workforce for years. Although terminology is not as important as what we as leaders can do to navigate turbulent times.
What does this mean for our business?
What levers are at our disposal to stay afloat?
This turbulent labour market impacts our ability to attract the talent needed to do business (both quality and quantity) as well as our ability to engage and retain those we rely on to get the job done. Take a look at your LinkedIn feed…how many posts are celebrating new jobs?
Let’s consider attracting talent. In mid 2022, with an unemployment rate of 3.5%, ABS statistics confirm we are experiencing the lowest unemployment rate since 1978 (WA hit sub 3% levels for the first time in history!). Job ads are the highest in living memory and this means demand for labour significantly outstrips supply. Candidates can afford to be choosy – it is a worker’s market. Recently, two clients lamented that although they each had finally secured a much sought after staff member – with a job offer made and contract signed – only to have the new hires not show up to start their role. No communication provided. Similar stories are all too common.
If we turn to retention, staff turnover has never felt higher. One in ten Australian workers have changed their employer in the 12 months to February 2022 – the highest annual rate since 2012. While it has often been considered the role of HR, traditional engagement and retention strategies are having limited impact. Bonuses, gym memberships, bring your dog to work days are being thrown at staff in desperate measures to keep them, with, in most cases, limited impact. In reality, retention is not a HR function, but a leadership and culture function.
So, what’s really going on here?
Is it more than just an opportunity for workers to try something new? Current research from recruiters Michael Page and global consultants Deloitte and PwC confirm that leaders are getting it wrong. Employee engagement looks and feels different for many workers today. Possibly as a response to two years of constraint, lock-down and uncertainty, people are placing increased importance on connection and purpose. They are re-thinking what is important, and in many cases, leaders have not kept up.
Research shows that what attracts candidates to new roles, while including financial benefits, are most strongly linked to organisation culture, purpose, and leadership. This is counter to senior leaders strongly held beliefs that candidates are attracted to company brand, promotion, and salary. It is estimated that currently, 66% of Australian workers will willingly sacrifice an increase in pay, in favour of a more supportive workplace culture, including greater work flexibility, strong, engaging leadership, connection to purpose, and mental health and happiness. Given cost of living rises, this is a pretty compelling story.
There is clearly a gap between what workers want and what senior leaders think people want.
The good news for those leaders who have nurtured and invested in their people and their team’s culture over a long period, they are now reaping the benefits and experiencing less turnover than their counterparts. PwC Global Culture Survey acknowledges that the majority (69%) of senior leaders’ credit much of their success during the pandemic to culture. For those leaders who have not placed a high priority on creating and maintaining a strong, positive culture…it is never too late. Now is the time for leaders to change their focus towards what workers want, rather than leaving them feeling undervalued and underestimated.
In tight economic times, an investment in culture may seem a luxury, but consider the cost of losing valued staff. What is the cost of doing business without the quality and quantity of talent you desire? What is the cost of losing staff and recruiting new staff? Culture does offer a competitive advantage.
In the late 1960s, an American psychologist Frederick Herzberg developed a theory that helps explain this mismatch between what leaders believe drives staff and what really does drive them. His “Two-factor Theory” acknowledges that two very different drivers impact our motivation and performance. Hygiene factors (things like pay, conditions of work, workplace equipment) are very important elements of work, but do not tend to drive performance over time, but they do prevent staff being dissatisfied. They are a base requirement to get the job done. Motivators on the other hand (things like praise, recognition, purpose, meaningful work) are the drivers that really push staff to go the extra yard.
So, what does this mean for us as leaders in such a volatile labour market? First, get the hygiene factors right – ensure staff are appropriately paid and well supported to do their job. Next, spend time on the culture aspects – recognize a job well done, link job to a bigger purpose, create connection among the team, led by example, with integrity and consistency. It is important to note: don’t get these the other way around! You will not do yourself any favours by heaping praise on workers and creating great connection, but still supplying impoverished working conditions and pay.
Unlike trendy engagement strategies, creating and maintaining a strong culture is a long process. It requires constant attention and relentless effort. It is not something that can be delegated. Great cultures often flourish with the support and guidance of external specialists, just like any other specialty investment (financial, legal, social media). Now is the time to make your organisation’s culture great again.
Like most investments, it pays off when we need it.
Jenny joined Leading Teams after a varied career working with organisations and individuals as they undergo change, growth, and innovation. Jenny is based in Perth.