The global pandemic forced businesses to change in so many areas.
But as we emerge from the other side of two of the most challenging years in recent memory, it is becoming evident that one key consequence of the pandemic is the shift in focus for many companies to think more about retaining talent, not just attracting it.
Why waste thousands on recruiting fees and lost productivity when you can keep your employees happy, productive, engaged and progressing in a job they love? It’s good for both your employees and your business.
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Time for a change?
There is now more emphasis on employee retention and wellbeing than there ever has been.
A recent Forbes article summed it up perfectly:
“The companies that prioritize their employees and do everything in their power to make them happy and motivated will be the winners in this new upcoming era.”
The Great Resignation of 2022
This lack of focus by most industries on their employees and how to retain them is partly responsible for the advent of what has been called ‘The Great Resignation’ and the ‘War for Talent’ that we’re experiencing now.
There has been much written about it in the last year, but what’s clear is that a huge skills shortage across sectors has triggered a shift in power from employers over to employees, with staff much more confident in their job prospects. With this new-found confidence come demands for higher pay, flexible working and other benefits.
Many of the Microsoft Partners we spoke to attribute this to the higher than normal attrition rate last year.
- “The bit I am most concerned about is attrition. We’ve gone from 0% attrition to 10% in past 6 months. There is no one reason, it just feels like 2 years of attrition in one hit.”
- “We found a few people came out of the pandemic who didn’t want to work in the way we do. A few people were offered way more than we would, so they left.”
- “We had a challenge last year not adjusting fast enough to the salary increase in technical roles. We didn’t see a mass exodus but some attrition.”
“We have seen significant attrition. Some we have been happy to see go.”
Tech industry suffering more than most
Staff turnover rates in the tech sector are the highest across all industries (LinkedIn) at 13.2 percent, with, “frequent job changes now the norm within the tech industry.” A survey by IT Pro Portal also found “32.5 percent of people have changed their job within less than a year, with only 18.3 percent of respondents being in the same position for more than four years. Staff retention is now becoming the tech industry’s biggest issue.”
No wonder then most Microsoft Partners in our research had made retaining their top talent a priority and had focused a significant amount of time in understanding their employees and their needs.
- “We did a lot of benchmarking internally. People want to come in less, but they want it to be social time. Those who haven’t come into the office at all have not been properly integrated in the culture, and that is where the churn has been. How to engage the difficult to engage people?”
- “We are being responsive to people’s ideas and around flexibility about where they work.”
- “We are investing in training and rewards linked to people achieving accreditation. With people getting to develop in the areas they want, not just what we need from them.”
Employers responsive to employee demands
According to LinkedIn, ‘many studies show that the total cost of losing an employee can range from tens of thousands to 1.5-2X their annual salary,” when you take in to account the cost of hiring a replacement, lost productivity, training costs, errors by a new employee, loss of employee engagement. So the real world impact is substantial and immediate.
So how have companies tried to address the issue? Many tech firms have been at the forefront of experimenting with new types of employee benefits and addressing work-life balance. Netflix introduced their unlimited holiday allowance policy several years ago, while Facebook now offers “four months paid leave for parents, childcare and adoption fee reimbursement, plus $4,000 cash to help pay for new arrivals.” Even traditionally ‘old school’ industries such as investment banking have started to usher in newer working practices aimed at giving employees a healthier work-life balance, with Citigroup CEO, Jane Fraser, banning internal video calls on Fridays for all 210,000 employees.
It was great to see some of the Microsoft Partners in the cohort following this lead and taking a creative approach to the problem.
- “There are a lot of people who come to the office to just catch up with people. We are experimenting with a 9-day fortnight.”
- “We are putting in place a profit-share. It may end up being an EMI scheme, giving people an advance on the expected dividends. We are reviewing our salary bands to give real clarity so that employees are clear what they need to do.”
- “We cut to 4.5 days a week, then we cut to 4 days, with no impact on salaries for staff. Their mental wellbeing has been so positively impacted.”
- “We improved our benefits, such as holiday allowance. Reviewed our parental leave policy. L&D policies. Need to leverage what is good about working in a company like ours – innovative tech, a smallish team --we have to play to our strengths, being fast growing creates career opportunities.”
Salaries still a deciding factor?
Others in the group felt that when it came to retention, money talks!
- “Has definitely been about money.”
- “We have always had a utilisation bonus. OTE always aligned to achieving 14 days a month, and then every additional day, getting £X/day. That has caused problems where people don’t have guaranteed top earning. We have reduced our incentive but increased the base pay, which people seem happier with.”
- “We have been proactive and given cost of living increases to some staff.”
- “We put out some polls on OfficeVibe and asked people what they valued and what they didn’t. They mainly they just wanted the money!”
- “People just want more money not the benefits.”
Flexible working is a top requirement
A 2020 Achievers report found that the, “top reasons employees are looking, or would consider leaving their company were:
to increase their compensation (52%)
an opportunity for career advancement (43%)
lack of recognition in their current role (19%)
Flexibility around how employees work has been a key battle in the ‘war on talent’. Whether that be flexibility arounds hours or in working location, if companies don’t embrace flexibility today they stand very little chance of hiring the best people.
- “Flexibility of work environment is key. People are happy to come back in, to a degree. Across tech teams, no-one wants to be back in on a 4/5 day a week basis. This is even more important to people with the fuel costs going through the roof.”
- “Candidates are selecting businesses where they can work from home. It’s an interesting paradox.”
- “From November, we introduced a flexible working guiding principle (not a policy). Companies feel the need for a form of control, i.e. say 1 day a week. We stated what was important to us. And then left it for employees to determine how they work within that.
Genuine care for their staff
It was inspiring to see that so many in the group we spoke to cared deeply about the culture they were creating and wanted to ensure their staff genuinely wanted to be part of that business culture.
- “We have two main aims – 1. To be the employer we never had and 2. To have the client-side experience to empathise with clients. We wanted HR people who were interested in talent management. We talk about ourselves as a football team – enabling them to succeed and be rewarded. Everything is built around that.”
- “We have two full time headcount on people and culture. We have done a lot of work on the people side of things.
- “It’s a combination of lots of different things. There is no silver bullet. One of my first hires was a Head of People. Since then, we have made our culture more visible. We are deliberately paying attention to it.”
- “We have done a massive chunk of work internally around our employee value proposition. We have gone to town on the employee experience…Introduced 10% matched pension contribution, 10% innovation, 10% training budget (of their salaries). If we treat people well and show we want them and to invest in them, money is less of an issue.”
- “We’ve done a lot on culture and making it a great place to work.”
It was also encouraging to hear that this proactive and considered approach to their people strategy had yielded positive results and enabled them to avoid the ‘Great Resignation’.
- “Our attrition rate is really low. Probably 5%. We have a bit of a revolutionary culture. I personally know the value of reducing stress, I have always had the desire to change the culture.”
- “We have tried to head it off [attrition] by being really good to people during the pandemic. Office vibe scores have been really high. We offered everyone an electric car. Anything green, e.g., family train fees are reclaimable.”
- “Attrition is not affecting us. We haven’t lost anyone in last 12 months.”
“With our culture we have managed to retain and prevent people from going.”
There were also anecdotal examples of employees leaving but realising they liked what they had.
- “One of the people who left came back. The grass isn’t always greener. With the big bucks comes the big expectations, and he didn’t like it. Everyone is after these amazing people who can do it all. We like to think we can offer a good supportive environment.”
Law 365 offers clients a new service to help them retain and attract staff
To improve employee retention within your company requires a shift in thinking. Businesses for too long have had an outdated view that employees are happy to work a Monday to Friday, 9 to 5 job that offers a reasonable salary. This may have been the case at some point but is no longer applicable for the new generation of employees coming through the ranks in 2022 and beyond.
We know from our research into the science of happiness that in order to build a thriving organisation with happy, motivated people you need to consider these five pillars to happiness:
Health - Healthy organisations are built on resilient happy people and a culture that champions wellbeing and optimism.
Autonomy – People need to have control over their destiny which means they need to be clear on how, where and when they work and with what rewards.
Purpose – People who understand what their purpose is both at work and in life are more driven and motivated. Being part of something bigger than yourself is fundamental to creating a thriving workplace.
Progression - People need to have clear career path ways and objectives in order to progress, learn and grow.
Your Connections - Creating a culture of positive connections which encourages people to bring their whole selves to work, where trust is high and fun is had, is fundamental to a happy workplace.
Our new client offering HAPPY 365 gives clients the best of our legal employment services and performance coaching. It provides a clear and practical framework to help you figure out which elements in your business need your attention, and in which order, whether this be developing your teams with performance coaching or embedding your work culture in all your employment contracts and policies
This is the fourth chapter of our 10 part blog series, Microsoft Partners Insights. Read chapter 1 - Benchmarking Research, for an introduction into Law 365's Microsoft Partner Insights 2022, key themes involved in the research, chapter 2 - Financial review for insights into the Financial information of the UK's top SME Microsoft Partners, or chapter 3 - recruitment.