Hourly employees make up over 50 percent of the total US employee population and a critical segment of the workforce at many organizations. While employee engagement efforts typically focus primarily on salaried employees who are perceived as having more of a long-term commitment to the organization, hourly employee engagement and loyalty are growing concerns for HR leaders in today’s tight labor markets. According to recent Gartner research, hourly workers are more engaged in their jobs when they are satisfied with their employer’s diversity and inclusion efforts.
In the past year, we’ve seen many large companies launch new initiatives to better engage and retain their hourly employees, whether through education benefits or opportunities to work with local nonprofit organizations. HR leaders have also seen improvement of hourly employee engagement when these employees have positive perceptions of their organization’s D&I activities, our research finds. In fact, when hourly employees are satisfied with D&I, they exhibit almost twice the discretionary effort and almost three times the intent to stay compared to those who are not satisfied. However, only about half of hourly employees are currently involved with D&I efforts and HR leaders are uncertain how to use D&I to engage this population.
Our D&I research team has uncovered three ways HR leaders can leverage hourly employee engagement in D&I to make a positive impact on the organization:
Integrate D&I in Current Processes
HR leaders should integrate D&I efforts into pre-existing engagement initiatives, such as team meetings, to ensure that cultural values and behaviors are articulated and implemented consistently throughout the organization. This approach addresses a key challenge hourly employees face when connecting to D&I at their organizations: They do not feel included on their teams. By building hourly employee inclusion into existing processes, organizations can improve team performance without creating additional structures for HR to manage.
“Writing a check,” Warren Buffett famously quipped, “separates a commitment from a conversation.” This used to be true of submitting a job application as well, but not in today’s increasingly competitive, digitally enhanced recruiting environment, Gartner Principal Executive Advisor Dion Love explained at Gartner’s ReimagineHR summit in London on Wednesday. The path most candidates take through the recruiting process has fundamentally changed, which means organizations must also change their approach to recruiting in order to remain competitive.
Prior to the digital era, the typical candidate’s journey looked something like this: They researched companies to find out whether they wanted to work there, narrowed down their choices to a shortlist of preferred employers, applied for jobs, and finally spoke with recruiters. This candidate usually only made it to the interview stage with organizations they had already researched and were certainly interested in joining. Recruiters could assume that a candidate who sent in a résumé was committed to seeing the process through to the end.
Yet whereas the job application used to come toward the end of the candidate journey, it now often comes at the very beginning. Here’s what the journey normally looks like now: A candidate casually applies to a number of jobs they may or may not want, speaks with recruiters, then researches the employers that are interested in hiring them and narrows their choices down to one.
This shift in candidate behavior creates a whole new set of challenges for recruiters.
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In an opinion piece published last weekend, Bloomberg columnist Anjani Trivedi made the economic case for paternity leave, arguing that organizations too often overestimate the costs and neglect the financial upsides of offering parental leave to both mothers and fathers. “The real question,” she points out, “is what the cost would be of replacing that employee,” and paid leave is usually cheaper, Professor Jody Heymann of UCLA’s Fielding School of Public Health and WORLD Policy Analysis Center, tells Trivedi. Considering that parental leave and other family benefits can have a major impact on employee retention, and that the costs of replacing an employee can rise to as much as twice their annual salary, universal parental leave policies may well save more than they cost.
The growing number of employers offering gender-neutral parental leave benefits in recent years reflects the fact that employees, whose opinions count more than ever in the tight labor markets of the US and other advanced economies today, are more sensitive to the availability of paternity leave: Our latest benefits perceptions research at CEB, now Gartner, finds that globally, an additional two weeks of paternity leave improves employee perceptions of rewards to a greater degree than the same amount of additional maternity leave.
In the US, which unlike most countries does not legally mandate paid maternity leave, employees are still more responsive to changes in leave for mothers, but even there, Millennial men who are now starting families are more interested than their fathers were in being actively involved in raising their children. However, many of these men don’t have access to paid parental leave or feel pressured by their peers, their managers, or their own financial concerns not to take advantage of this benefit even when they are entitled to it. The absence of family-friendly benefits like parental leave and flexible work arrangements already drives many working mothers out of the full-time workforce; if fathers do the same, the case for such policies becomes even stronger than it already is.
When an employee reveals their intention to quit in favor of a better job at a different organization, it’s not unusual for an employer to try to persuade them to stay by offering them a higher salary. Indeed, such counteroffers are so commonplace that unhappy employees will occasionally solicit outside job offers just to pressure their current employer into giving them a raise. Yet new research from the global staffing firm Robert Half finds that while most US employers make counteroffers to departing employees at least some of the time, they usually fail to retain these employees for the long term.
In an online survey of over 5,500 senior managers in a variety of professional fields across the US, 58 percent said “yes” when asked whether they ever extend counteroffers to employees to keep them from leaving for another job. However, when asked how long employees who accept counteroffers typically remain with the company, the mean response was 1.7 years:
“Counteroffers are typically a knee-jerk reaction to broader staffing issues,” said Paul McDonald, senior executive director for Robert Half. “While they may seem like a quick fix for employers, the solution is often temporary. When employees accept a counteroffer, they will likely quit soon afterward.
Professionals should avoid these offers, McDonald advised. “Money doesn’t solve everything. If you accept a counteroffer, your employer may question your loyalty to the company. And, more importantly, the root causes of why you were looking to leave in the first place may still exist.”
The staffing firm cautions both employers and employees against counteroffers for several reasons, noting that they can cause morale to suffer by sending “the message that threats of leaving are a means of climbing the ladder, rather than outstanding performance and dedication.” An employee retained with a counteroffer will often be distrusted for the remainder of their tenure with the organization, while their performance is unlikely to improve, knowing that the firm was willing to spend money just to keep them around a little longer.
The clearly superior alternative to counteroffers is to proactively identify employees at risk of quitting and give them reasons to stay before they go out looking for a job somewhere else. According to our research at CEB, now Gartner, this means creating compelling career paths for employees, including ample opportunities for learning and professional growth, so they can see a long-term future for themselves as part of your organization.
Google’s 2017 diversity report, released last week, expands on the information included in previous reports to cover the retention and attrition of underrepresented talent, as well as an intersectional analysis of race and gender at Google. Overall diversity figures were little changed from last year’s report and showed limited progress since 2014, when Google first began making this data public. Men make up 69.1 percent of the tech giant’s workforce, while its racial makeup is 53.1 percent white, 36.3 percent Asian, 2.5 percent black, 3.6 percent Hispanic or Latinx, and 4.2 percent multiracial. In 2014, the Googler community was 61.3 percent white, 30 percent Asian, 1.9 percent black, 2.9 percent Hispanic/Latinx, and 3.6 percent multiracial.
The company has made some progress in improving the gender balance of its leadership over the past four years, with its the percentage of women in leadership globally rising from 20.8 to 25.5 percent. Google’s US leadership is 66.9 percent white, 26.3 percent Asian, 2 percent black, 1.8 percent Latinx, 0.4 percent Native American, and 2.7 percent of more than one race. Black and Latinx representation in leadership have improved slightly since 2014, while the report highlights that 5.4 percent of new leadership hires in 2017 were black.
The attrition data included in this report touches on an issue that tech companies struggling with diversity and inclusion have discovered to be of critical importance: not just recruiting diverse candidates but also retaining those employees for the long term. Based on an index of US attrition, Google’s report shows that attrition rates are highest among black and Latinx employees, at 127 and 115 compared to an overall index of 100. “Black Googler attrition rates, while improving in recent years, have offset some of our hiring gains,” Google acknowledges, “which has led to smaller increases in representation than we would have seen otherwise.” On a global index, attrition was slightly higher for men than for women, however, at 103 compared to 94.
Effective onboarding often makes the difference between a successful hire and an early quit. To better understand the causes of attrition among recently hired employees, Microsoft created a survey that was given to new employees after their first week and again after 90 days to find out about their experiences and first impressions of the company. The tech giant’s workplace analytics team also compared anonymous calendar and email metadata with engagement survey data from around 3,000 new hires.
At the Harvard Business Review last week, Dawn Klinghoffer, Candice Young, and Xue Liu revealed what this investigation uncovered and how it shaped Microsoft’s decisions about how to improve new hires’ experience. One thing the survey revealed was that having a working computer and access to the building, email, and intranet on day one was important for new hires to be productive and engaged from the very beginning, making an important first impression that colored their overall experience. Their more complex analysis produced another insight: New employees who had a one-on-one meeting with their manager in week one were more successful than those who didn’t:
First, they tended to have a 12% larger internal network and double network centrality (the influence that people in an employee’s network have) within 90 days. This is important because employees who grow their internal network feel that they belong and may stay at the company longer. For example, employees who engage internally intend to stay at a rate that’s 8% higher on our intent-to-stay measure. They also report a stronger sense of belonging on their team while maintaining their authentic self.
The investment bank Morgan Stanley recently announced a set of new policies for its junior associates, offering higher base pay and a faster track to promotion, while also underscoring its work-life balance policies, Preeti Varathan reported at Quartz last week:
According to its memo, Morgan Stanley is raising base pay for associates in investment banking and capital markets by 20% to 25%. It is also speeding up its promotion timeline for high-performing analysts—the entry-level position below associate—from three years to two. The memo also reiterated the bank’s current vacation and hours policies: two mandatory one-week vacations every year and limited staffing on Fridays and weekends.
Wall Street has long had a reputation for debilitating hours, consecutive all-nighters, and frequent weekend work. But even the most competitive firms are now grappling with a new generation’s insistence on rapid promotions and better work-life balance. “The ability to recruit, develop, and retain top talent by offering attractive career opportunities is a key priority,” the memo noted.
Indeed, at a time when the labor market is tight and employers in all industries are having to compete harder for talent, it’s unsurprising to see another large employer make investments in its most junior employees. The financial sector, however, has also been grappling for several years now with a particularly difficult employer brand problem. More than ever before, prospective employees now question whether the lucrative rewards of investment banking’s traditional high-stress, high-pay model are worth the costs to their quality of life.