Employee Retention Emerges the Top Priority for Employers Next Year

The last couple of years saw a rapid transformation in the work landscape. Employee priorities changed during this time, and it is showing in the form of a record number of resignations and job changes. These and a few other factors affected employers’ priorities and concerns. For example, according to a Willis Towers Watson surveyOpens a new window , employee mental health became one of the top priorities for HR leaders this year.

Paycor recently surveyed over 6,000 managers, business owners/chief executives, and individual contributors (ICs) to understand the top priorities and concerns of the HR leaders over the next 12 months. A key insight was that employee retention became the top priority of HR leaders in 2023. The following are the insights in detail.

Business Leaders Have Different Opinions About the Health of the Economy

The study wanted to understand what business leaders think about the health of the U.S. economy. While about 36% of the respondents felt that the economy was very strong or strong, 32% thought it was weak or very weak. About 32% said it was average.Â

That said, more respondents were bullish about their business. About 90% felt their companies would be profitable next year, and only 10% felt otherwise. In fact, managers and above were nearly 12% more confident than ICs.

See more: 4 Key Trends That Will Guide HR Strategies in 2022

HR Leaders Are Less Concerned About Compliance

When asked whether they predict compliance would become more or less of a concern over the next year, more business leaders seemed less concerned compared to 2021. For example, 60% had said it was more of a concern in 2021, while 42% in the current survey said it was more of a concern.

What businesses think about compliance becoming more or less of concern in 12 months

Source: HR in 2023: Insights and PredictionsOpens a new window

This may be possible because more of them used HR software to reduce complexity. While only 43% of respondents used HR software in 2021, 58% used one this year.

Retention Is the Top Priority Over the Next Year for Business Owners and HR Leaders

The study asked business owners and leaders in HR and finance about their top priorities over the next 12 months. About 20% cited employee retention as their top priority. This was followed by recruiting (14%) and company culture (12%).

Top priorities of business owners, HR and finance leaders in 12 months

Source: HR in 2023: Insights and PredictionsOpens a new window

Why was retention the top priority? According to the survey, 30% of managers and 25% of ICs were actively looking for a new job. According to another survey by ResumeBuilderOpens a new window , about 23% of employees plan to find a new job this year. Many companies are also not confident in their internal talent pipeline. Only 29% agreed that if they lost their most effective managers, they could replace them with equally talented employees within one month. About 53% disagreed with this statement. Besides this, there are both implicit and explicit costs of losing talent and hiring new ones.

Further, 62% of respondents believed that talent shortage is a long-term or permanent feature, and the availability of new workers may be a challenge.

To make matters worse, many companies have a turnover blind spot. About 60% of respondents used data analytics to predict when an employee is more likely to quit, while 40% did not. And since most companies are looking to hire people, companies are also naturally concerned about poaching. About 91% of business leaders said their company would hire new employees next year.

Companies Offer Incentives To Attract Candidates

Companies are offering various perks to attract candidates. About 49% said they planned to provide increased compensation, while 30% intended to offer career growth opportunities. About 27% also said they planned to offer enhanced health and wellness benefits.Â

Incentives businesses currently offer and plan to offer in 12 months

Source: HR in 2023: Insights and PredictionsOpens a new window

What Companies Can Do To Retain Talent

To understand what companies can do to retain employees, the study asked employees their top motivators to stay at their current jobs. The top three motivators were company culture (22%), salary/benefits (21%), and flexibility (18%). These were followed by learning and growth opportunities (14%), colleagues and team (13%), and company leadership (12%).

This means higher salaries can get talent into the door but cannot make them stay as there will be an opportunity as someone else can offer more. However, one thing competitors cannot duplicate is your company’s culture â€” its beliefs, values, and attitudes about how work is done.

What Company Culture Means to Employees

Employees’ expectations are changing what we mean by company culture. To understand what company culture means to employees, the survey asked the question as to how the pandemic made the culture stronger or weaker.Â

Four themes emerged from the responses:

Trust is culture’s primary driver. Employees want to trust that employers are acting in their best interests, not just that of the business. Similarly, employers want to trust that employees are not misusing their flexibility.
Communication is the primary driver of trust. Leaders prioritizing communication and more transparency fared than those that did not.
The workplace is more polarized post the pandemic. HR leaders must balance the desire of some employees for businesses to take strong positions on hot topics with day-to-day tensions that can arise in a polarized work environment.
Managers must be trained to lead teams in today’s work settings. Companies that train leaders that adapt to evolving work dynamics fared better than those that did not.

See more: Future of Work: 10 Key Trends for the Next 10 Years

Besides these, companies communicating more transparently about pay will stand apart from the crowd. When employees perceive a pay gap, irrespective of the reality, they are more likely to quit. Trust does not exist in other areas without a trust that everyone is paid fairly. Further, HR will be critically important. Employees at all levels are looking to HR for real solutions. Delivering on people’s expectations while keeping the company profitable is the HR department’s most important mission in the next year.

Conclusion

The study shows that employee retention has become the top priority of HR leaders for the coming year. While companies may look at various ways to retain employees, the latter have already spoken about what motivates them to stay in a company. Hence, work toward creating a culture where employees feel they belong. After all, your employees are your best advocates.

As an HR leader, what is your top priority over the next year? Let us know on FacebookOpens a new window , TwitterOpens a new window , and LinkedInOpens a new window .