In the past three years, the number of US employees willing to go above and beyond their employers’ expectations at work has fallen by 10 percent, from 27 percent in the second quarter of 2015 to 17.8 percent in Q2 of 2018, the latest data from Gartner’s Global Talent Monitor shows. Globally, employees’ confidence in business conditions has fallen for the first time since Q1 of 2016.
One possible driver of employees’ declining levels of discretionary effort is a lack of satisfaction with opportunities to grow and develop in their careers. Nearly 40 percent of employees in the US and globally ranked a lack of future career opportunities as their main source of dissatisfaction in a previous job, displacing compensation as the number-one driver of attrition both in the US and around the world. Over the past few years, we have seen development opportunity grow to be an increasingly critical element of the employee value proposition, both as a driver of attraction for new employees and, in its absence, as a reason for quitting.
“With recent U.S. reports showing little growth year over year in real earnings, workers hope to achieve more satisfaction in their jobs through better titles and opportunities to advance and grow in their current careers,” Brian Kropp, group vice president of Gartner’s HR practice, said in a statement. “To prevent further reduction in workplace effort and to retain top talent, employers should pay closer attention to employee dissatisfaction about the lack of career opportunities, particularly if wage growth remains stagnant.”
“Leading organizations are able to use their employment brand to illustrate why their career opportunities are better than their competitors,” he added. “A company’s EVP directly correlates to employee engagement levels, as workers are more likely to work harder and stay in their current positions if they are highly satisfied with their company’s EVP offerings. Gartner data shows that organizations with high levels of employee engagement report financial outcomes three times higher than firms with lower engagement levels.”
In a session at last week’s WorldatWork Total Rewards Conference and Exposition, Taco Bell Vice President of People and Experience Bjord Erland discussed how the fast food chain has handled turnover—a major challenge in its sector—in recent years. At HRE Daily, David Shadovitz passes along some insights from Erland’s talk:
Leadership was hearing that pay was a major reason people were leaving. But in order to come up with the right game plan, HR knew it needed more data. So it brought in global consultancy Mercer to better understand the key drivers behind the high turnover and identify ways to address it. When it looked at why workers stuck around, Taco Bell, a unit of Yum! Brands, found that a flexible work environment and strong culture were major drivers. As to why people were leaving, factors such as a high level of stress, lack of training and better opportunities elsewhere emerged as a big contributors. …
Well, the big “Aha!” for Taco Bell was learning that earnings were far more important to workers than their rate of pay. Were they working enough hours, including overtime, to bring home a bigger paycheck? (Erland noted that Taco Bell’s pay was competitive with others in the industry.) In light of these findings, Erland said, the company began to increase its use of “slack hours” to increase the amount of employee take home pay. “Turnover improved when employees were able to bring home more earnings,” he said.
At Fast Company, LinkedIn’s Director of Product Management Gyanda Sachdeva points out that “the number of US workers with full-time jobs who freelance on the side is sharply on the rise”:
According to our data here at LinkedIn, the share of those users in our top professional fields has doubled in the past five years. What’s more, the number of people freelancing on the side of their day jobs is growing more than three times faster than the number of full-time freelancers on LinkedIn. …
For one thing, it’s clear that some people are more inclined than others to add part-time freelancing to their repertoires than others. We’ve noticed, too, that men are doing more part-time freelancing than women, and millennials are doing so more than any other age group. Of all the users who list freelance work on their LinkedIn profiles, 20% have a full-time job in addition to their freelance business. That means full-time freelancing still dominates, but the side-gig model is quickly catching up.
Sachdeva also discusses some of things motivating workers to take on these side gigs. In addition to the “obvious” financial motivation, he notes, freelance dabblers are motivated by personal branding & networking, future development, and independent work. Plus, there is the possibility of transitioning to a career as a full-time freelancer, which some see as a path toward flexibility and control over their schedule and work environment. I would add to that list purposeful work, or feeling connected to something you are passionate about. Basically, Sachdeva makes it clear that there are a lot of upsides for employees—especially young, cash-strapped, passionate millennials—in freelance dabbling.
But does it benefit their employers?
Suzanne Lucas at Inc. is encouraged by the trend of major employers voluntarily raising the minimum wage for their lowest-level employees, including this week’s announcements from JPMorgan Chase and Starbucks:
The reality is, when you raise wages you get a better talent pool. Years ago (1999-2000), I worked for a retail organization that is always on Fortune’s Top 100 Companies to Work for: Wegmans. I focused on making sure we paid our employees more than all our competitors. While former CEO Bob Wegman was a truly good boss (I have nothing but praise for him), he also recognized that he got the best employees when he paid the best wages.
Wages can rise and fall without government intervention. Companies compete with each other for talent. And raising wages at one big company can have a ripple effect on other companies. That’s how the free market works. When Walmart raised wages back in 2015, TJ Maxx and other stores followed suit. Why? It’s not nobility. It’s simple economics.
If Walmart pays $10 an hour and its competitor pays $9, who would want to work at the competitor? Well, some people would because they like the work better, but you’d see people fighting for the higher-paying jobs and the lower-paying companies would have both increased turnover and a limited employment pool–as the only people available would be those who were incapable of obtaining a higher-paying job. Turnover is a lot more expensive than a pay increase.
In the case of JPMorgan Chase, however, Harvard Business Review associate editor Walter Frick argues that CEO Jamie Dimon’s move could actually end up hurting the bank’s image if the public views it as hypocritical:
Screencap of Juno's Website (Talent Daily)
The rideshare service Uber and its main competitor Lyft have both been embroiled in controversy (and lawsuits) over their treatment of drivers, with critics alleging that these companies are violating the drivers’ rights as employees. Uber and Lyft, of course, counter that the drivers are not employees at all but rather independent contractors, and reclassifying them as employees would be fatally disruptive to their business models. Some other players in this market, however, have seen opportunity in these controversies; Juno and TappCar, Jordan Pearson writes at Motherboard, are using what they say are much more employee-friendly policies as a selling point—marketing themselves, in Pearson’s phrasing, as “the fair trade coffee to Uber’s Costco brand beans.” In other words, these are companies using their employer brand to bolster their consumer-facing brand. Pearson wonders, however, whether these more “ethical” alternatives are economically viable:
TappCar spokesperson Pascal Ryffel, perhaps unsurprisingly, doesn’t see things this way. His company is in the final stages of arriving at a collective bargaining agreement with a union represented by the Teamsters, he told me. “Anyone who doesn’t like a union often says that it becomes unprofitable for a private company to be unionized,” Ryffel said. “It’s the same argument that’s used by companies like Walmart. I think it’s a spurious argument.”
To TappCar, the appeal of a unionized workforce is two-fold. First, unionization and a more driver-focused environment will attract better drivers. Second, better drivers will result in a better customer experience, which will translate into more business.
As the US and global economies continue to recover, employers are being forced to compete for talent in a tighter market where candidates set the pace. Organizations need to bring on and retain more employees to keep pace with growth, and the uptick in hiring means candidates can afford to be more selective. A recent CareerBuilder study indicates that a full three quarters of American employers are looking for new jobs either actively or passively. Our research here at CEB also points to a candidate-driven market. For instance, data from one of our upcoming studies shows that 17 percent of passive candidates are declining to pursue job opportunities when initially contacted, compared to just 8 percent five years ago.
This trend has important implications for how employers attract and retain talent. Many organizations are doubling down on employee experience, making their employee value propositions (EVPs) more distinctive and innovative. Since you can’t control your competitors’ hiring strategies or rewards, crafting a unique EVP is a more productive way to differentiate your organization from its competitors than simply trying to match what others offer.
Creating an exciting EVP is particularly—though by no means exclusively—important in attracting and retaining STEM (science, technology, engineering, and math) talent, a segment of the market that’s in high demand. Our research shows that STEM roles take more time and cost more money to fill than non-STEM roles. Many job openings in STEM-heavy professions like IT and health care are going unfilled, ostensibly due to talent shortages.
Yet whereas most organizations—in a usually unsuccessful attempt to compete with the likes of Google and Facebook—think higher pay is the only way to attract and retain coders and other STEM talent, a recent article in the Harvard Business Review offers an alternative. HBR‘s Walter Frick points to a recent working paper in which Prasanna Tambe, Xuan Ye, and Peter Cappelli argue that organizations should look beyond pay and consider enticing this cohort with a chance to learn and grow instead.