4 Ways to Retain Employees During an Economic Downturn

Talent management professionals have navigated 3 years of upheaval. From the sudden onset of hybrid and remote working models to major fluctuations in the labor market and the current global economic uncertainty, change has been the only constant. In addition to these challenges, there remains the enduring conundrum: how best to support, engage, and retain talent.

Snack pantries and foosball tables may have appealed to employees in the past, but the modern workforce wants a more substantive approach to engagement. Included below are four key human capital management strategies for companies to follow and if they get these areas right, they’ll know they’re delivering what truly matters to their employees.

1. Learning and Development (L&D) Opportunities Are a Top Priority

L&D opportunities are critical to improving employee engagement and retaining talent. Successful organizations recognize the value of robust employee L&D programs, and their implementation demonstrates leadership’s commitment to employee fulfillment and long-term growth.

Some organizations have approached L&D simply as another box to check rather than a real investment in growth. But those companies should be warned that employees increasingly view learning opportunities as vital to their work and career development. In fact, 83% of workers identified skills improvement as a top priority in 2023. The same study found that 3 out of 4 millennial and Gen Z employees would willingly leave a role that didn’t offer skills development or career mobility opportunities.

But not all L&D programs are created equal. Three out of four employees are more likely to stay at a company that offers continuous training. Workers expect more than a few hours of onboarding and the occasional lunch-hour training session—and a one-size-fits-all approach to L&D won’t cut it either. Personalized learning is the ultimate goal.

This isn’t easy, though. Many businesses have data on what their employees achieve—sales calls, closure rates—but how many have data on what their employees can do? On their potential; aptitude; aspirations; and, above all, their skills? What they need is the right data—data that will enable companies to understand the skills employees have now and empower them to identify, learn, and achieve new accredited skills that are essential to both their career today and their career in the future.

Another key to employee retention? Recognizing employee achievements. Verified digital credentials let employees share their learning accomplishments with internal and external networks and build momentum by celebrating their skills development. When given the tools to grow within a company, employees are less likely to seek a new role elsewhere.

2. A Lack of Flexible Work Options Can Be a Deal Breaker

According to the Harvard Business Review, 80% of respondents would choose a job with a flexible schedule over a job without one. Another 76% would be more likely to stay at their current job if it offered flexible hours. Some employees value flexible work because they can work from the location that’s best for them. Others value flexible work hours that give them a better balance and focus on home life, such as dropping kids off at school.

Flexibility can also come via work policy updates, such as designating a specific day of the week as meeting-free or incorporating more asynchronous communication. Setting aside a day gives employees more uninterrupted time to focus on tasks requiring higher-level thinking and concentration. This approach also allows team members to work during times that suit them best without missing an important client meeting or internal discussion.

In addition to their practical advantages, flexible work options tell employees your organization cares about them as individuals, not just their work output.

3. Employees Pay Attention to a Company’s Values—and Actions.

An organization’s commitment to values can go a long way toward promoting employee retention. Nearly 40% of millennial and Gen Z workers have rejected a position because the role didn’t align with their values. Likewise, these generations are more likely to stay with an organization for more than 5 years when the company takes steps to create a diverse, inclusive culture and makes a significant societal and environmental impact.

Demonstrate your company’s values to team members by:

  • Inviting leaders to explain your values and connect them to ongoing organizational initiatives.
  • Using internal communication channels to reinforce your values.
  • Presenting the results of values-driven programs, such as progress on diversity, equity, inclusion, and belonging (DEIB) goals.
  • And, most importantly, ensuring leaders live your company values every day. People will notice if they don’t!

4. Salary Is Still Important, but Overall Benefits Matter More

Despite economic conditions, salaries continue trending upward. Nearly half (46%) of employers have increased starting salaries to more effectively recruit skilled professionals. Over 80% of managers who raised base compensation for new hires in the past year also adjusted current staff pay.

But salary alone is not enough to attract and retain employees. Employees expect a total package aligned with their overall life needs. In a survey of 9,000 global workers, 83% said well-being was equally as important to them as salary, and 77% said they would consider leaving a company that fails to prioritize employee well-being.

Well-being comes in many forms, but Gen Z prioritizes work/life balance and personal well-being over salary. These new workforce members highly value benefits such as paid time off, mental health days, or company-planned activities designed to create a sense of community.

The Bottom Line

Today’s employees are looking for an organization that declares its values and follows up with action. Workers expect to be compensated fairly for their work, but their view of what that compensation includes has broadened. Employees enjoy the freedom, efficiency, and work/life balance that flexible work and hybrid work models offer. And more than ever, employees want their employer to partner with them in pursuing personal development and career goals.

Incorporating one or more of these strategies into your overall talent management approach will help your organization engage and retain your workforce through uncertain economic times and beyond.

Mike Howells leads Pearson’s Workforce Skills agenda, with a focus on data-driven upskilling and reskilling that support career progression, drive growth for employers, and help people unlock their potential. Before joining Pearson, Howells was HM Consul General in Los Angeles, promoting trade and investment, scientific cooperation, creative and media collaborations, and educational partnerships between the United Kingdom, California, Arizona, Nevada, Utah, and Hawaii. He has more than 20 years of international business and global affairs experience, having held senior leadership positions in the British diplomatic network and the U.K. Foreign, Commonwealth, and Development Office, as well as working in international development, human rights law, and the U.K. tech sector and at HSBC.

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