Key considerations to attract and retain talent in a complex labor market 

Most leaders have heard: employees spent the last few years reassessing their priorities in light of the pandemic and its effects on their lives. Most leaders have also experienced the repercussions of this reassessment, a rise in turnover that’s known as the Great Resignation. According to the Bureau of Labor Statistics, a record 4.5 million people quit their jobs in March 2022.

Bringing together deep experience in employee research, labor market analytics, and talent strategy, we shed light on these questions and more. Here’s how to get started.

Senior leadership teams need to measure what’s happening. But before setting any metrics, it’s crucial to understand the root causes of turnover in different segments of your organization. That way, you’ll measure the things that truly make an impact and you can use insights from the numbers to reduce turnover.

Look at key turnover indicators, such as critical talent segments, performance, tenure, employee engagement, and diversity, equity, and inclusion (DEI). For high-turnover segments, we advise tracking these indicators at 30-day, 60-day, 90-day, 6-month, and 1-year intervals.

You should also measure retention indicators, especially through the lens of skills. Determine the types of key skills your organization requires for future success, inventory the skills you have currently, and find out where there are gaps. In our experience, organizations tend to overemphasize the importance of past roles, so keep in mind that the skills required for future success might be entirely different.

Going beyond descriptive indicators into statistical analyses of your Internal Labor Market movement can help you understand the system of effects that influence turnover, such as promotion and transfers. Once you have that data-based, statistically informed view, you can put together strategies to retain people who have the key skills you need for the future.

Turnover trends have changed among populations that were disproportionately impacted by the pandemic. Attrition and “intention to leave” metrics have increased among front line, lower income, and non-white workers, and in industries such as retail, food service, healthcare, and hospitality. Higher wage earners do not state a higher intention to leave. Turnover varies a lot by industry and job, but many of our clients are starting to put money behind turnover challenges, suggesting that they’re either experiencing increased turnover or proactively trying to prevent it.

Mercer research shows that many workers and now seeking a job that fits their lifestyle, as opposed to adapting their life to their job. With that being the case, it’s critical to understand your employees’ current life stages and associated needs. We recommend creating holistic personas of different segments of your population to better understand people’s life realities and main concerns. We’ve worked with companies where health benefits had no effect on retention. And we’ve worked with companies where promotions predicted turnover. So, it’s key to understand your own employee population.

Employee research studies, such as Unmet Needs assessments, will help you understand why employees stay, what causes them to leave, and the tradeoffs they're willing to make on benefits and rewards. In addition, Digital Focus Groups bring together up to 1,000 employees per session in an interactive dialogue about their employee experiences, needs, and preferences.

In fall 2021, we conducted a study of the U.S. workforce and found that the most critical unmet needs overall concerned physical health and safety, workload and life balance, and mental health and wellbeing. But dividing the data by income level makes it clear that compensation is the key driver of attrition for those earning less than $60k per year.

Some strategies to retain employees earning less than $60k include education on financial wellbeing, reevaluating pay frequency, and increasing access to earned wages. (But keep in mind that no number of perks will overcome noncompetitive pay; the only solution in this case is to increase wages.) For corporate employees, focus on flexibility and career growth to improve retention.

Some organizations have seen success by being transparent about their current turnover and retention goals. This messaging should be grounded in your employee value proposition (EVP); show people that you’re working hard to ensure they can thrive and be successful at your company.

If you’d like to get more insight into your employees’ unmet needs and drivers of turnover, speak to your Mercer Consultant or contact us here.