With the economy slowly recovering, a new survey of human resources executives reveals that employers are increasingly concerned about losing their top talent to other companies. As a result, many
employers are bringing back some of the perks that were cut during the recession, and others are introducing new ones to attract and retain the best workers.
In the survey conducted by global outplacement and executive coaching consultancy Challenger, Gray & Christmas Inc., 42 percent of respondents say they were growing more concerned about other companies poaching top talent, as the economy improves. Meanwhile, nearly 49 percent of respondents say the poaching of talent is always a concern, even in a recession.
“Even in a downturn with widespread layoffs, companies still need talent," said John A. Challenger, CEO of Challenger, Gray & Christmas. "In fact, this may be the most important time for employers to hold on tight to their highest skilled workers. However, as the economy improves, companies could be worried not only about other employers poaching their best workers, but also about their top talent actively seeking new opportunities.”
Such an exodus may be just over the horizon. A recent survey by MetLife found that nearly 40 percent of all employees hope to work for a different employer in the next 12 months. Another study, this one from the Corporate Leadership Council, found that 25 percent of high-potential employees (a.k.a. top performers) intend to leave their current employer within the year.
In order to hang on to their talent, more companies are reinstating perks that were cut or eliminated because of the economic downturn that began in late 2007. According to the Challenger survey, 39 percent of respondents say their companies were forced to reduce or eliminate perks during the recession.
With the economy starting to spring back, about 18 percent of those polled say their companies have been able to restore all pre-recession perks. Another 41 percent have brought back some of the perks that were cut or eliminated. Nearly one quarter (23.5 percent) of those surveyed indicated that they have introduced some entirely new perks.
“Whether it’s something simple, like free bagels in the lunch room every morning, or something more substantial, such as tuition reimbursement or flexible scheduling, these perks can be an essential part of worker morale and job satisfaction," Challenger said. "Companies that are frequently identified as ‘the best places to work’ typically offer a variety of unique and well-regarded perks. Nice perks alone are not enough to instill worker loyalty.
"In other words, a company can’t make up for mistreating employees with a free gym membership," he continued. "But in companies where perks are an extension of a corporate culture that views its workers as partners or team members and not cogs in the machinery, employees are more likely to feel valued, engaged and happy."
The Challenger survey found that the perk most effective in retaining top talent is the performance-based bonus, selected by nearly 80 percent of respondents. About 70 percent of respondents said 401(k) with employer contributions was an effective perk. Other effective perks included vacation/personal time (49 percent), wellness-related benefits (43 percent), flexible schedules (40 percent) and tuition reimbursement (27 percent).
“Cash is still king," Challenger said. "Bonuses are always going to be popular, because it conveys to employees that they are an integral part of the team and that their performance directly impacts the bottom line, so when the company does well because of their hard work, they are rewarded with extra money. But many companies are also finding success with low-cost and no-cost perks."
Offering employees opportunities to telecommute is one example of a no-cost perk that is popular among workers. About one in four human resource executives surveyed by Challenger say telecommuting is effective in boosting retention. And many companies find that it is not only no-cost; it actually results in cost savings, as employers are able to reduce their need for physical space.
“Other amenities, such as casual work attire, early dismissal on Fridays during the summer and pet-friendly offices are just a few more examples of perks that are extremely popular among workers and, because they add no costs to the bottom line, companies are not forced to cut them in rough times,” Challenger said.
These types of fringe benefits seem to be in line with what employees want. A 2008 survey by Salary.com found the most popular benefits outside of monetary compensation are professional development, the ability to work from home, an additional week of vacation and a flexible work schedule.
It appears that companies are listening. A January survey of chief financial officers by Robert Half found that 33 percent of companies plan to offer or already offer subsidized training and education. More than one quarter (27 percent) will offer flexible work hours/telecommuting. Another 25 percent will provide mentoring programs.
Flexible scheduling is another example of a low-cost perk that could end up benefitting a company’s bottom line. Big box retailer Best Buy recently implemented a results-only-work-environment (ROWE) at its corporate headquarters. The program gives employees much more control over their work schedules by basically saying, “We don’t care when, where or how your work gets done, as long as it gets done and the quality of the work meets expectations.”
An independent study of the program conducted by a pair of sociology professors found that implementation of ROWE reduced turnover by 45 percent—after controlling for multiple factors like job level, organizational tenure, job satisfaction, income adequacy, job security and other turnover intentions.