Employee Recruitment and Retention Update: Biggest Challenges in the HR World

Posted by Lisa Oyler on Feb. 21, 2023

It’s been quite a year, hasn’t it? Just when we thought we understood what employees wanted from their employers, it changed. And then changed again.

As an HR director with over 25 years of experience, I’ve networked with many other professionals in the field across a variety of industries. I’ve also served on the board of advisors for the Best and Brightest corporate awards, which surveys companies across the U.S. Through both, I’ve been able to keep an up-to-date pulse on what employees and employers want most from the relationship.

Priorities always have and always will shift. For example, for years during the birth of the BLM movement, diversity, equity, and inclusion efforts were a top priority. Then, the pandemic sparked an outpouring of requests for mental health services. Now, values are changing as fast as month to month or even week to week.  Never before has it been so dynamic.

The effect this has had on a company’s ability to hire and retain top talent is clear. Currently, the job market looks like a war for talent AND layoffs AND a great resignation AND labor shortages. Is anyone else starting the new year with major whiplash? Just wait until you hear what they’re predicting for 2023.

A little forward thinking can give you the edge in overcoming what we believe will be the top five hiring and retention challenges in 2023:

Retention Will Overtake Recruiting in War for Talent

The Challenge: Most people report that employee retention is harder than recruitment. (Hint: It’s about to get even harder with experts predicting that companies will soon see 50%-75% higher turnover rates.) The good news is that retention is more economical when you can accomplish it. 

New call-to-actionRecruiting will still be important in 2023, but retention is quickly overtaking the top spot. By the end of 2022, employee engagement remained a top priority for about 40% of organizations, staying about the same as 2021. On the other hand, talent acquisition fell dramatically with only 17% of companies considering it a priority compared to 40% in 2021.

Potential Solutions: With so many unknowns in the labor market, many organizations are looking to train the talent they want, instead of poaching it. Among all the priorities rising in employees’ minds, job development is among the fastest growing. People are more likely to stay when their employer provides a safe space and the resources they need to flourish. Career paths, continued education, mentorship and promotions are some of the ways you can prove that the future is bright at your company for those who put in the work. Helping employees “upskill” or “reskill” isn’t a new strategy of retention, but it could be more important than ever in the coming decade, with an estimated 1.1 billion jobs likely to be transformed by technology.

Many employers know they could do more to keep their best people. In fact, 44% of HR leaders believe they don’t provide compelling career paths. The good news is that 47% now report that refining the “employee experience” (AKA workplace culture) is a top priority for 2023. In case you need some extra inspiration to invest in your current employees, check out these recent statistics.

Organizations with great employee experience design tend to perform higher in other crucial areas as well: 2.4x DEI performance, 1.8x workplace productivity, 1.4x overall organizational performance, 2x ability to quickly adapt.

On another note, rehiring could be a good hybrid (sorta recruiting/sorta retention) strategy for companies who lost valuable employees to poaching. A recent study shows that of the 50 million workers who quit their jobs in 2022, as many as 80% of professionals regret their decision to leave. Many organizations have reacted to this perceived disloyalty by refusing to rehire “boomerang” employees. This leaves more opportunity for those with open minds to recapture talented employees who can slip back into job roles with minimal fuss (and who now know the grass isn’t necessarily greener on the other side).

Employee Motives are Changing: They Want Values Alignment

musical chairsThe Challenge: It’s been called the Great Resignation, the Great Reshuffle and most recently the Big Quit. Who knows what they’ll call it tomorrow, The World’s Biggest Game of Musical Chairs?

Whatever you call it, the idea that employees have to change jobs regularly, even yearly, is not exactly new. Millennials have long been chastised for this mindset by older generations, who were more likely to spend their entire careers at a single employer. For the last few decades, younger employees report that regularly changing jobs is the best way to increase salaries, get promotions, learn new skills, etc. They’re not wrong. Many statistics back this theory up. For example, in one 12-month stretch, employees who stayed at their current employer averaged a 3.2% wage increase, while those who switched jobs saw an average 4.3% increase.

Now we’re seeing that Gen Z are still extremely willing to change employers, but it’s for a completely different reason. They’re not necessarily looking for more money or fancy job titles. They want something much vaguer and harder to define. They’re looking for purpose, inspiration, personal fulfillment. In short, they want to feel good about the job they do, not just about the paycheck they earn.

This poses quite the challenge for employers. It’s simple to know if you can match salary expectations, or convey if you have a career path, they’re interested in. It takes a much deeper conversation to discover if your value systems complement each other. This topic is deeply personal, and not exactly appropriate for interview questions.

Potential Solutions: The best place to start is by being clear about company values, and by consistently upholding a workplace culture that fosters those values. Employees who share those values will be drawn toward you and will be more content to stay.

People who are able to “live their purpose” at work are more productive, resilient and healthier than those who don’t. If that sounds improbable, consider that 70% of employees feel their overall sense of purpose is defined by their work.

Many organizations have worked toward this end by being clear about their political stances. Others have provided paid time off for employees to pursue volunteer opportunities that they find fulfilling. While these are all wonderful steps, the real magic happens when employees find purpose in the daily tasks that make up their jobs. Statistics show us there’s some work to be done here. While 85% of executives believe they can live their purpose in the day-to-day grind, only 15% of frontline managers and employees agree. Even more disconcerting, 50% of them actively disagree. There’s a lot of room for organizations that put in the effort to gain the loyalty of people aching to find fulfillment at work.

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Employee Burnout is on the Rise, Requiring Better Management

The Challenge: Employee stress skyrocketed in 2020… and it hasn’t really come down all that much in the years since. Stressed employees are more likely to come in late, clash with coworkers, take days off or refuse new challenges. They may even burn out. Burnout happens when an employee’s stress reaches a point of causing physical and emotional exhaustion.

Much of employee stress comes from outside the office. Competing responsibilities of parenting or caregiving for aging parents (sometimes simultaneously), for example, can lead to reduced motivation and productivity in the workplace. Financial worries are another biggie for 2023. Many people were barely surviving paycheck to paycheck even before high inflation made the cost of basic necessities hit the roof. Add to that rumors of a (maybe, maybe not) recession.

Other stressors originate inside the office – and the list of potential problem situations is long. Stress can build fast when:

  • Employees feel overworked, especially when they also feel undervalued or underappreciated.
  • Managers use passive-aggressive tactics that sow dissention among their subordinates.
  • Lack of advancement opportunities leads to feelings of discouragement, purposelessness or boredom.
  • Lack of adequate resources or time prevents them from completing their job requirements.
  • Employees fear that their wages/raises won’t be enough, or worse that they could be laid off or let go.

Stress can take years to build up (during which an employee shows progressively worsening signs of burnout while on the clock) or it can compound all at once. Either way, good leaders can recognize the symptoms and take action before it’s too late.

Potential Solutions: While managing day-to-day employee stress is traditionally the role of managers and other leadership, certainly HR can have a huge influence, too. This is especially true when it comes to managing the leading causes of stress inside the workplace that can lead to burnout. This could mean preventing toxic situations, emphasizing recognition of work well done and watching for signs of overwork.

This could also mean taking a stronger hand in ensuring that managers are leading effectively. (By the way, don’t forget to watch for burnout among middle and upper management, who are just as susceptible as any other employee.) 
Whereas good leadership can help manage stress before it reaches burnout, bad leadership strategies have the power to push good employees over the edge. That’s one reason why leader and manager effectiveness is a top priority for 60% of HR leaders in 2023. Unfortunately, 24% of them say their current approach doesn’t adequately prepare management for the future of work.

burnout gifburnout gifLeadership is a huge element of workplace culture and can massively affect how invested their employees are in company outcomes. This is important because employees who reported a high sense of purpose were 1.8x less likely to report feeling burned out.

This may come as a surprise, but organizations can also help with stressors outside the workplace too. For example, flexible schedules can help people better juggle priorities instead of having to choose between work and personal responsibilities. As far as financial woes go, there are a lot of economical options for employee benefits that can help them stretch their paychecks, from financial planning resources and debt relief to employee discount programs.

The Right Balance of RTO & WFH is TBD

The Challenge: When it comes to balancing RTO “return to work” with WFH “work from home” strategies, the solution could change based on many factors like industry, organization size and global events. Pre-pandemic, among the employees who had the capability to perform their jobs fully remote, only 8% did so. Now that they’ve got a taste, they’re not really keen on the idea of returning to the office full time. However, only 39% want to would prefer to stay fully remote, with a much larger percentage (59%) hoping for a hybrid schedule.

At present, a high percentage of employees who currently enjoy full or partial remote work would start looking for another job should their employer take that flexibility away. On the other hand, 38% of fully remote workers would prefer a hybrid arrangement because they still feel that in-person interaction is the best way to stay connected with the team and feel like they are a part of company culture.

Need more evidence that companies would be wise to tread lightly when changing work flexibility? Consider Tesla CEO Elon Musk when he gave his “return to the office or quit" ultimatum. As many as 40% chose to part ways. Not surprisingly, those talented employees got snatched up by the likes of Apple, Google, and (of course) Tesla’s closest electric car competitors.

Potential Solutions: This just helps highlight the need to strike the right balance of in-office vs. remote work: not just a balance for current conditions, but a long-term solution that works for both employees and employer. For better or worse, the pandemic spurred a paradigm shift in the way people think about work. This genie won’t go fully back into the bottle; therefore, expecting employees to tolerate the return of “pre-pandemic” company operations is bound to lose you some good talent.

There is, and probably will be for some time, a lot of discussion out there about where that point of balance is. However, much of it centers on where employees are the most productive. (Hint: the answer depends on who you ask). It’s a big worry for many leaders, with 45% of organizations reporting it’s hard to track productivity and 50% reporting that remote employees are less clear about job expectations. Even more so, organizations worry that the reduced face time affects culture. 62% report that it’s hard to track morale and 72% that employees may feel disconnected.

HR Stress Index survey results

Focusing on productivity is a short-sighted approach that may lead to short-term gains, but is sure to bite you in the long run.

Instead, an organization’s decisions should revolve around their ability to create community among employees. Workplace culture can be a focus no matter where on the scale of fully in-office to fully remote your employees exist. It will probably be more difficult without the benefit of face-to-face interactions and the socializing that naturally occurs.  There’s plenty of research that shows the number of personal connections you establish at your job impacts how good you feel about performing that job. Remember that new Paychex report that showed 80% of job-hoppers regretted leaving their previous employer? Well, the number one reason they regret leaving is that they miss their co-workers (29%). This shows that personal connections and friendships also impacts employee loyalty and engagement.

At Access Perks, we’ve settled into a hybrid schedule for every position where it makes sense. We’re still adjusting to all the many factors that go into that: adjusting the ratio of days in office to days out of office, gathering more tools and technology to make it possible, initiating extra surveys and interviews to keep a pulse on how our people are feeling… The extra work is worth it to help the people who make our company great to feel like a part of the success.

Lifestyle Benefits Can Make or Break Employee Loyalty

The Challenge: Statistics are showing that job seekers are looking more closely at perks and benefits packages before accepting jobs. Some are even valuing these benefits over salary increases. This matters both on the recruitment and retention fronts. Organizations without enticing benefits struggle more to attract the best applicants AND are more likely to have valuable employees poached out from under them.

Knowing that you need awesome benefits is one thing. Building the right package from all the options available is quite another. Employee interests change all the time. (Remember when pet-friendly workplaces were all the rage?) Some benefits come with a hefty price tag. (Can any but the largest corporations really afford onsite cafes, daycares, and gyms?) Other benefits are only relevant to a select few. (Maternity leave is great, but do those who will never have children feel left out?)

80% of employers realize that one of the most important reasons to offer employee benefits in the first place is to “meet the needs of employees at all stages of life and across the diversity spectrum.” Your audience is so diverse. Your benefits package should reflect that diversity. It should be inclusive, encompassing all their varied needs, so that everyone feels seen.  

diverse benefits blogPotential Solutions: One type of employee benefit that is quickly growing in popularity is employee lifestyle benefits. This category includes all the many benefits that help employees accomplish their personal goals outside the workplace. Some popular examples include floating holidays, flexible scheduling, health and wellness benefits and discount programs. Because they’re generally cost-effective, organizations can choose a wider breadth of benefits to ensure that every employee has access to something they find personally enriching.

Inclusivity is the magic word here. Diversity, Equity, and Inclusivity efforts help foster a positive work culture where every employee can feel valued. Lifestyle benefits help expand this inclusivity into their personal lives too.

What benefits do employees want? According to surveys, the majority of U.S. employees nationwide prioritizes employer-sponsored benefits, with health insurance cited as the most crucial benefit, especially among older employees. Retirement and pension plans come in second. That’s no surprise as these traditional benefits are a staple of workplaces everywhere.

When it comes to corporate perks and lifestyle benefits, employees gravitate toward early Friday dismissals, remote work (or at least flexible work schedules,) and onsite amenities such as concierge services or a gym. Almost half of the workers aged 18 to 24 (41%) would like their employers to offer student loan benefits.

Targeted lifestyle benefits can also tackle national pressures. We've talked a lot about inflation, which is on many peoples' minds. Did you also know that the latest GDP report showed a huge drop in real disposable income in 2022, the largest the U.S. has seen since the Great Depression. Plus, debt is rising at the same time savings are plummeting. Certain popular benefits like employee discounts can go a long way toward acknowledging and relieving this huge stressor.

Beyond that, it’s not that hard to know which benefits will best please your staff. All you have to do is ask! Surveys are a great way to stay up-to-date on your staff’s biggest needs, challenges and goals. You can use this information to tailor the program to them.

Strengthen Your Company Culture to Overcome Most Challenges

At the end of the day, it’s important to remember that your employees are the lifeblood of your organization. They are what make you successful. The solutions to all these challenges (and pretty much every other challenge you might face) revolves around providing a company culture that helps them feel welcomed, appreciated and fulfilled.

Unfortunately, “culture” is one of those ephemeral ideas that is just as hard to define as it is to create. Great Places To Work (a company dedicated to understanding and rewarding workplace culture) defines it as, “the sum of all the formal and informal systems and behaviors and values, all of which create an experience for your employees and customers.” Some elements of culture, you can declare and direct, but others grow organically from the interplay of all the varied personalities working for you.

plant seedThat’s why many say you need to “cultivate” a positive company culture. You have to do a lot of work to prepare the land, plant the right seeds and then watch what grows.

What elements of building a successful culture can we control? Let’s take a page from the book of the highest performing HR teams. Where are they spending their time and energy this year? Nearly 80% are trying to work toward greater equity in pay, compared to less than 40% of lower performing teams. Over 55% are investing in clear growth paths for employees, compared to fewer than 20% of low performing teams. It just goes to prove that effective HR departments invest in the things that matter most to employees: equity and growth. These efforts lead to better engagement AND better business outcomes.

How do you “cultivate” your workplace culture? We’d love to hear your best and most successful ideas. Comment below! 

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Topics: HR, employee retention, Employee Engagement + Loyalty, Benefits Trends, Recruitment, Employee Benefits, work from home

Lisa Oyler

Written by Lisa Oyler

Lisa has over 25 years of human resources and training and development experience along with a passion to help others make a difference both personally and professionally in all that they do. Her specialties include: Employee Relations, Recruitment, Management Training, Coaching, Performance Management, Orientation, Customer Service Trends & Training and Strength Assessment.