Over the past few years, companies have struggled with the looming prospect of a volatile job market. So much so that employee retention has become one of the most significant HR challenges faced by multinational companies in recent memory.
On average, a whopping 4 million Americans quit their jobs each month in 2022. On top of this, 40% of employees are considering leaving their roles within the next three to six months.
This continuous mass exodus of employees has been dubbed “The Great Attrition,” or “The Great Resignation.” However, it would be more accurate to refer to this phenomenon as “The Great Renegotiation.” Here’s why.
The Great Renegotiation
In this somewhat bizarre post-pandemic world, new trends and forces have emerged in the job market. Companies can no longer rely on traditional incentives or loyalty to keep their best talent around. Rather, employees are increasingly becoming more independent and proactive in taking control of their own career paths.
However, unlike the term “attrition” suggests, this large-scale departure of employees is not a forced or involuntary process. Rather than simply leaving their positions in frustration or out of necessity, employees are leveraging their skills and experience to renegotiate better deals with their current employer or seek out higher-paying positions elsewhere.
Indeed, rather than simply walking away from jobs and sailing off into the sunset, the vast majority of those who leave (or threaten to leave) their jobs still require some form of income.
As such, savvy employers are increasingly becoming open to making concessions in terms of salary and benefits in order to keep their prized employees, thus retaining their most valuable asset: their talent.
The primary drivers of The Great Renegotiation
There are a number of factors that have contributed to the rise of The Great Renegotiation. Let’s take a look at some of the more prominent ones.
Rising levels of inflation
The financial instability brought about by the pandemic has resulted in a sharp rise in prices for goods and services. This, coupled with the fact that wages have failed to keep up with inflation, means that employees are now feeling the pinch more than ever before. As a result of years of stagnant pay, employees are now looking to renegotiate their current contracts in order to get a more equitable package.
Mobility and work/life balance
The emergence of remote work and flexible working arrangements has given employees a newfound freedom and autonomy that was previously unimaginable. This in turn has given employees the confidence to seek out better opportunities and positions that are more suited to their desired lifestyle.
Improving career prospects
Professional growth opportunities and career advancements have also become increasingly important considerations when it comes to job satisfaction. As such, employees are now more likely to renegotiate or leave their current positions in search of better job prospects, rather than simply settling for the status quo.
Record demand for talent
At the end of October 2022, there were over 10 million job openings across the U.S. This record demand for talent means that highly-skilled individuals are now able to command more generous salaries and benefits than ever before. The leverage is well and truly in the hands of the employee, which is why employers are now having to be more flexible and accommodating during negotiations.
What can employers do in response to the Great Renegotiation?
It goes without saying that employers need to be proactive in order to stay ahead of the curve when it comes to retaining their best talent, especially in this current climate of change. This means understanding the underlying forces driving The Great Renegotiation and using that knowledge to inform their recruitment, retention, and employee engagement strategies.
Here are some steps employers can take to ensure their organization is best positioned to weather the storm of The Great Renegotiation:
- Offer competitive salaries – As mentioned earlier, wage stagnation has left many employees feeling undervalued and underpaid. Employers must be willing to offer competitive salaries in order to attract and retain the best talent.
- Be open to negotiation – Employers should recognize that their employees will likely want to negotiate their salaries and other benefits, and they should be prepared to meet them halfway in order to reach a mutually beneficial agreement.
- Offer flexible working arrangements – Remote work and flexible hours have become increasingly popular, and employers should be open to accommodating such requests from their employees.
- Invest in employee development – Employees want to feel valued and appreciated, and one way of doing this is by investing in their development. Offering career guidance, workshops, and other training opportunities are all great ways to show employees that they are valued.
- Prioritize the employee experience – Employers should look to create a positive and enjoyable employee experience in order to foster a sense of loyalty and engagement. This can include offering perks such as free lunches, gym memberships, and other employee appreciation initiatives.
- Improve the office environment – Employees should feel comfortable and welcomed at their workplace, which is why employers should look to create an inviting environment with ergonomic furnishings and modern amenities.
Employees look for different things when evaluating job opportunities, so it’s important to get a clear understanding of what employees value in a role. Not everybody is motivated by the same things, so it pays to have a good grasp of what makes employees tick.
Once you understand the wants and needs of your employees, you can take steps to ensure your organization is best positioned to retain its star performers and continue to attract top talent. The organizations that can achieve this successfully will not only survive the Great Renegotiation but come out ahead.