| RESOURCES
Understanding What’s on the Minds of Employees Can Help HR Meet Retention Goals in 2007
by Salary.com
It should come as no surprise to human resource professionals that many employees plan to intensify their job search in 2007. A growing job market this year could shift the balance of power to the employee, leaving the door open for potential job seekers to move on to better opportunities elsewhere. HR departments are poised to combat this potential employee migration with a primary employer goal for 2007 to bolster employee retention. Companies will be focusing on offering employees more incentives based on performance, earlier bonuses and salary increases, and non-monetary benefits such as remote access in order to stay competitive and retain top talent. Many employers are still at risk of losing their most valuable and productive employees this year, as well as missing out on new prospects if they don’t seek to understand the value systems and perceptions of their employees and focus on incentive programs that will keep them happy and motivated.
According to recent job satisfaction and employee retention research conducted by Salary.com, the leading compensation technology firm based in Needham, MA, human resource managers may be off target with some of their efforts to recruit and retain valuable employees. While most HR professionals have an understanding of what makes employees leave their organization, few understand the nuances of why they stay.
"Knowing what is important to employees can enable a new kind of dialogue between HR departments and their employees. This can significantly help to reduce employee turnover and replacement costs," says Bill Coleman, Senior Vice President of Compensation at Salary.com, and a nationally recognized expert on compensation. Knowing what is important to the employee is especially important in 2007 because 65% of employees plan to look for a new job in the next three months, according to the Salary.com survey. In fact, the number of employees who describe themselves as "very likely" to leave their current job has increased more than 50% in the past year, according to the same survey.
Taking into account that HR professionals estimate turnover costs to be about 30% of the annual salary of the person being replaced, a potential mass exodus of employees could significantly hurt a company financially. Saving these employees, and luring in more, has become the main goal of human resources for 2007. The key to retaining valuable employees will be the knowledge of what keeps them satisfied.
The Disconnects
Salary.com’s 2005/2007 Job Satisfaction and Retention Survey yielded surprising disparities between what employees actually value, and what human resource professionals perceive to be important to overall job satisfaction and employee willingness to stay or leave. The first major disconnect between HR and employees lies in the number of employees who are actually searching for a new job. While human resource managers believe that only 32% of their employees have updated their resume within the past three months, 80% of employees said that they actually have. Small organizations (less than 200 full-time employees) are slightly less at risk with 50% of employees indicating that they have recently updated their resume. In fact, 34% of employees have interviewed with other companies in the past few months, while human resource departments believe that only 18% have. These statistics point to an important gap between the perceptions of employee job satisfaction on the part of employers and the actual happiness of employees. Understanding what is making employees want to leave and taking steps to combat attrition can help HR professionals to make 2007 a better year for employee retention.
The survey results also demonstrate that companies are most likely to lose employees who have been in their jobs between three and ten years - the period of an employee’s tenure when his/her productivity is likely to be the highest. If realized, excessive turnover in this group could mean large soft costs to employers. According to Bill Coleman, “the first step in retaining employees is actually accepting the fact that some are likely to be searching for another job, and knowing that the number of employees searching is probably more than you think.” The Salary.com survey highlights that employers who generally regard compensation and benefits as the keys to employee happiness, have to realize that good relationships are actually the primary benefit that employees covet at work. The survey showed that employers are often focusing on the wrong issues while trying to bolster employee retention. Human resource professionals list the top factors impacting employee happiness as:
1. Adequate Benefits
2. Friendly Co-workers
3. Fair Compensation
4. Good Managers
5. Compatibility With Corporate Culture
However, employees rate the top five factors in overall workplace happiness as:
1. Friendly Co-workers
2. Good Managers
3. Desirable Commute
4. Adequate Benefits
5. Good Working Hours
This demonstrates that the factors employees value the most at work, such as friendly co-workers and managers, a short commute and good working hours, are far more work-life oriented than employers think. Fair compensation didn’t even make the top five in terms of employee workplace happiness. When thinking about retention and recruitment issues, HR managers should look beyond benefits and compensation to the factors employees care about most. Employers should embrace the perception gap and seek to truly understand what is on the minds of employees so that they can better tap into value systems and offer benefits that will actually impact retention.
Portions of this article are copyright Salary.com. You can download a full copy of the 2005/2007 Job Satisfaction and Retention Survey at: http://research.salary.com | 
