Skip Navigation

Speak to a consultant on +44 (0)20 3457 0894

Why employee engagement can ease the pressure on pay and reduce skills shortages





Posted by Justine Woolf on 25 February 2022

Why employee engagement can ease the pressure on pay and reduce skills shortages

Pay & Reward | Employee engagement | Employee communications | Engagement

We do naturally see ebbs and flows in pay movement, and what feels heightened now, will in time be part of a wave. Those of us who have worked in pay and reward for several years will have ridden some of these waves before – the dot-com boom in the early ’90s, Y2K in the years leading up to the millennium, and of course the financial crash in 2008.  

We must recognise that these waves have happened before, and remember to think forwards so that we can better retain our staff in challenging times. 

Often, these pinch points call for creative solutions. For organisations that can afford it, the temptation might be to hike pay up to draw in new hires to fill skills gaps and retain existing staff members with the skills they need. While some people will always follow the money, it isn’t always the case – currently, many people leaving their employers are citing a lack of connection to their organisation as a primary reason why. People want to feel valued and treated as an individual, yet many of us are relying on short term, transactional strategies to retain them.   

That is why we think the best response to the “Great Resignation, should be the 'Great Re-engagement”, by looking at the experience our employees and wider workforces have, and what this means for the work they individually do. An approach that is less one-size-fits-all, more personalised, and values everyone as an individual.​​  

Sports scientist Ben Darwin observed that when athletes move teams, their performance often dips, and it can take them three years to get back to their peak. The same goes for employees. After onboarding and learning the ropes, several months pass before employees start contributing. Depending on the role, it is then typically three years before they reach full productivity, having honed their skills, observed successful colleagues, and developed through consistent feedback. 

Organisations readily invest in recruitment, onboarding and training, but if staff leave before reaching the three-year sweet spot, then the majority of the workforce never reach peak performance. When you consider the average tenure of an employee is only 22 months, and the average cost of replacing an employee ranges from £14k - £50k depending on the level of seniority, the Great Resignation is having a huge impact on business productivity. 

If we can make marginal gains across the entire employee life cycle, by getting them up to speed more quickly with an improved onboarding experience, increase their maximum level of performance, extend the total time they stay with the organisation, and even keep them motivated once they decide to leave, means we can generate a better ROI and provide improved overall employee experience. ​  

According to Mckinsey, not feeling valued by one’s manager and not feeling a sense of belonging were two frequently cited reasons employees have left a job in the past six months. If you want to avoid the great resignation and retain talent to extend to that productivity sweet spot, you need to amplify your culture so that people don’t want to leave.  

Hybrid working and lockdowns have massively impacted a sense of community at work. In-person connectivity continues to have massive benefits for organisations, but it requires considerable management attention to get right.  

One way to do this is through social recognition and celebrating success. ​​A common theme we hear in employee surveys is “a simple thank you will suffice”, but recognition is one of those aspects of reward that is hugely undervalued and is just assumed to take place. You might have a company-wide recognition scheme or maybe a peer-to-peer thank you programme, but if people aren’t using it, it isn’t effective. Effort needs to be directed to engaging with your employees so that levers like recognition aren’t seen as a tick box activity – creating a recognition strategy that is reviewed and communicated frequently is key to truly embedding in your organisation.  

​There’s also something to be said for making the employee deal stickier. We know that the ability to work from home or adapt your hours helps retain people as they value flexibility, but now people not only enjoy flexibility – it has become an expectation. Nearly 50 per cent of people surveyed by EY said they would consider changing their jobs if flexible working wasn’t an option. 

The employee deal that was relevant before has changed – subsided lunches or free parking no longer have the same relevance. Among McKinsey survey respondents who had left their jobs, 45 per cent cited the need to take care of their family as an influential factor in their decision. A similar proportion of people who are thinking of quitting cited the demands of family care. Expanding childcare, eldercare, or other home and family-focused benefits could help keep such employees from leaving when they are fully productive in their role and show that you value them as whole people.  

But it is not just offering new or different benefits, you need to ensure employees understand and value the whole deal available to them. It’s no good having an amazing proposition with ambitious goals if no one knows about it, but that’s the reality for many businesses today. Pre-pandemic, communicating with employees was mostly done via email, posters and leaflets, or dedicated wellbeing pages on the intranet, but if we aren’t in the office regularly or are out and about and don’t have time to look on the intranet or email, we miss this messaging.  

This is where the role of tech has stepped up and is the future direction. We are using our phones for virtually every aspect of our lives now, so it makes logical sense to equip employees with the digital tools they need to take control of their well-being, facilitate recognition, and highlight the wider employee deal so it is at the forefront of their minds.  

Creating and communicating that employee deal that is truly valued and used is a critical factor in retaining employees for the longer term, and counterbalancing the impact of the Great Resignation. A more personalized approach to engaging your workforce will pay dividends in the long run. 

« Back to Insights