WASHINGTON — With workers quitting their jobs in record numbers across the United States, employers are getting creative with their offerings to attract and retain talent.
Many are providing more money and benefits amid a nationwide labor shortage that has worsened supply chain shortages and hampered businesses, especially those that employ front-line workers. In Arizona, one company is even offering new employees $5,000 to quit after two weeks.
“With today's market, hiring teams have to move quickly to assess candidates and get them through the process to a competitive offer, so it's impossible to be right 100% of the time,” Chris Ronzio, the CEO of software company Trainual, told Business Insider. “The offer to quit allows the dust to settle from a speedy process and let the new team member throw a red flag if they're feeling anything but excited.”
Ronzio said the policy, which began in May 2020 at $2,500, has helped retain employees and contributed to a positive work environment. “It's a powerful thing for them to turn down the cash, opt in, and commit. And it sets the stage for a great working relationship,” he said.
The unorthodox offer is among the perks businesses present to employees as they struggle to maintain their workforces. The latest job turnover data from the Labor Department show that a record 4.5 million people quit their jobs in November, representing 3% of the U.S. workforce.
It’s a stark shift from the beginning of the coronavirus outbreak when millions faced layoffs and job losses due to shutdowns. But as the pandemic wears on and the omicron variant spreads rapidly through workplaces, many people are reexamining their relationship with work.
“There’s an organizational psychology theory called terror management, which posits that when individuals are near life-or-death situations or reflect on death or illness, they tend to think existential thoughts,” Anthony Klotz, a business professor at Texas A&M University, told Barron’s. “It struck me that probably the entire world at the same time was reflecting a little bit on their lives because of the deaths and illness the pandemic caused.”
Experts say many people are also taking a stronger stand against poor working conditions and demanding livable wages. Online, there’s a growing conversation, especially among younger generations, about rejecting the always-on attitude that has defined hustle culture, or the so-called grind, in recent years. “People are valuing their mental health more than their career right now,” one millennial who recently left a startup for a job with benefits and set hours told CNET.
Burnout is one of several reasons for the labor shortage, according to Klotz, who’s credited with predicting the “Great Resignation,” a term he coined to describe the increasing number of job quits.
“There were lots of stories about front-line workers facing long hours and difficult conditions during the pandemic,” he told Barron’s. “There was burnout in parents, especially women caregivers who were juggling educating their children while working remotely, and there were reports of burnout in organizational leaders trying to manage through the pandemic.”
Klotz added, “Burnout is a predictor of turnover: The way to deal with it is to get away from the source of the burnout. Some people needed a break, and many probably didn’t have the ability to take a month or more off to take care of their mental health.”
Industries in which workers have taken the brunt of the pandemic are those that have recently seen the most significant numbers of exits. Accommodation and food services, healthcare, and transportation were the sectors with the most quits in November, the Bureau of Labor Statistics reported in early January.
That month, there were 10.6 million job openings and 6.9 million unemployed people, according to the Bureau of Labor Statistics, giving job seekers the upper hand and forcing employers to improve their offers. And experts expect the trend to continue this year.
“Our data has tracked the clear shift in bargaining power from employers to workers over the past year,” Bledi Taska, chief economist at labor analytics company Emsi Burning Glass, said of a recent report by the firm about the labor shortage. “To compete in this environment, companies are taking proactive steps that have become increasingly visible in their job ads — from signaling the enhanced pay and benefits on offer to casting a wider net for prospective hires, whether in terms of credentials, experience, or geography.”
That report, done in partnership with The Conference Board, a labor think tank, analyzed online job postings since the start of the pandemic through October 2021, drawing upon a database that Emsi Burning Glass said pulls listings from nearly 40,000 sources, including newspapers and job sites.
The analysis found that employers were increasingly likely to include salary information in their job postings. “This shift began during the tightening pre-pandemic labor market of 2019 but truly took off in 2021 as the economy began reopening and firms scrambled to compete for workers to meet surging demand,” the report said. “Overall, more than 1 in 8 online job ads now include salary data, with blue-collar jobs … leading the trend.”
The analysis also found that the number of job postings mentioning sign-on bonuses more than doubled since early 2020, mainly for positions that don’t require a college degree. “In-person and manual services, education, and health industries have seen higher increases, an indication that labor shortages have been more acute in these industries,” the report said.
These industries were also more likely to reduce job requirements such as education levels to attract a broader range of people. “In many cases, the employer will sacrifice the ‘perfect fit’ and fill the skills gap by training people once they are hired,” the report said. “The increase in postings that indicate employers are willing to provide job training shows this, particularly for jobs that are experiencing more severe labor shortages.”
“Business leaders who are willing to revisit credentials are focused on hiring people who have core competencies, such as adaptability, problem-solving, team orientation, and communication and interpersonal skills,” the report added. “Employers will then teach these workers the specific and technical aspects of the job.”
White-collar industries were more likely to offer new employees the ability to work from home, the report found, which has likely reduced the impact of the labor shortage on those employers. In particular, online ads show that technology companies on the West Coast were more likely to recruit new talent in other parts of the country and that businesses can save on costs by hiring in less expensive labor markets. “This trend began in 2019 and accelerated in 2020 because of the pandemic and the increase in remote work opportunities,” the report said.
Experts say remote work is here to stay, even post-pandemic, and employers will need to continue adapting. “While remote work has pros and cons, it provides employees with more autonomy in terms of arranging their work and lives than working in the office does,” said Klotz, the business professor. “Freedom is a fundamental need for human beings, and when we get that freedom, we tend not to give it up willingly.”
Isabell Welpe, a professor at the Technical University of Munich who studies leadership and the future of work, told the World Economic Forum in November that work will not be organized and performed as it was before the coronavirus outbreak.
“Many companies have announced that their employees never have to return to the office full time,” she said. “I would expect to see a post-pandemic work organization as one that moves away from a one-size-fits-all approach toward one that allows individual and asynchronous organization of work and work settings. For example, I expect that companies will allow a part of their workforce to work fully remote most of the time and allow another part of their workforce to come to the office only on 1-2 days a week.”
Welpe quoted Stewart Butterfield, the CEO of Slack, a workplace messaging app, to support her argument. “If we say that everyone must return to the office, or we expect people to, and one of our competitors says you can work remotely, who wouldn’t take the second option there?” Butterfield told Fast Company. “There’s a market force at play. So I don’t know that individual companies are going to be able to opt out and say, ‘Our employees have to come into the office’.”
Welpe said successful businesses will need to create “a culture of individualized working conditions” by offering flexible work hours and locations, all while determining which employee qualities are nonnegotiable, “such as high self-responsibility and conscientiousness or ability for self-development.”
The Emsi Burning Glass report said employers also need to rethink and further the role of technology in the workplace. “The increase in automation and technology has greatly accelerated during the last 18 months as businesses have been forced to think differently about their operating models,” the report said. “Additional investment in technology and automation such as self-service check out in stores, ordering kiosks in restaurants, and use of robotics in manufacturing may be a viable solution to ongoing labor shortages.”
But employers will need to remain flexible and innovative to attract employees in a tight labor market, the report concluded, as changing attitudes around work means that offering higher salaries and benefits alone won’t suffice.
“Successful organizations will adjust to these labor force challenges, anticipate the talent they need, and proactively attract and develop workers,” the report said. “It is only by thinking differently about how to hire, engage, develop, and retain their workforce that businesses will remain agile and resilient to create the workforce of the future.”
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