Right now the U.S. is embroiled in a national discussion about compensation, the cost of living, and employee engagement. One company took the plunge and upped their employee’s pay last February. Wal-Mart announced an increase to $10 an hour by next year for new and entry-level employees, and recently announced some managers would also see raises.
The results so far? Less employee turnover, and an increase in job applications.
But this issue affects more than just businesses with minimum-wage workers. The most recent report from the Department of Labor shows that as of the last day of business in April, there were 5.4 million positions open (the highest rate since the first report in December of 2000). Employees are beginning to feel enough confidence in the economy to switch jobs. Turnover comes with a big price tag. One theory says salary plus an extra 150 percent on top is the metric.
With compensation heading up, now is a good time to think about attracting and retraining your best talent. It’s not all about the dollars, though—keeping employees engaged goes far in retaining the best talent.
Employee satisfaction, engagement are low
Here are some more numbers to mull over: According to Gallup’s monthly employee engagement poll, only 31.5 percent of employees feel engaged with their jobs (Gallup defines engaged employees as “involved in, enthusiastic about, and committed to their work.”). Think about that while you chew on this: A report released at the beginning of this year by SABA claims that 36 percent of employees are actively job searching. (31.5 percent, 36 percent: hmmmm…).
Are you prepared to have a big chunk of your workforce leave this year? Even if you are, do you want that to happen? Didn’t think so.
Compensation goes far—until it doesn’t
Before you go throwing dollars around, think about the latest research that finds compensation goes only so far in keeping employees engaged; you can read a good overview of this subject at the Harvard Business Review. The tl;dr version: Money is a motivator but not necessarily predictive of engagement. Other non-material rewards can be equally if not more motivating. It’s worth a refresher of the Kahneman-Deaton study, which found life evaluation correlates with income, but emotional well-being tops out at around $75,000.
(About that 75K number, which you’ve probably heard before: Plenty of responses point out that that figure isn’t enough to live on in some situations and places—NYC, we’re looking at you. But the basic idea is sound: There’s a ceiling at which compensation is no longer a driving factor. It’s just that ceiling isn’t 75K for everyone).
Are you doing enough training? Nope.
According to a recent survey commissioned by Glassdoor, if you’re a guy earning top levels, you’re getting on-the-job training. If you’re not, well, not so much. Considering the value that employees place on education, there’s the first step to increasing engagement.
Here’s something else to think about: The same survey also found that 48 percent are confident they could find a new, similar job within six months.
Can you improve engagement?
Yes, and the key is empowerment by creating an environment of open communication, flexibility, and encouraging employees to voice their opinions. One way to start is to rethink your corporate training philosophy.
Read more about empowering employees to increase engagement.