Are we there yet? If “there” is a recession, the answer is no. Although it may seem like it is just around the corner, the statistics are not showing we are, in fact, there yet.
However, I have begun to see more companies, mostly larger corporations and organizations on the coasts, performing more layoffs, furloughs and reductions in force. Usually, what that means for our local economy and small business is that it will, eventually, come for us.
But to further complicate things, inflation has slowed (7.7% for the 12-month period ending in October, versus 9.1% for the 12-month period ending in June), which is a good thing. However, average pay raises are not keeping up, which is a not-good thing for turnover.
The number one driver of turnover in the market right now is that compensation expectations of employees are not being met. The Social Security Administration published 2023 COLA at 8.7%, which is the highest increase in 40 years. Based on this, employees are expecting pay increases of 8% – 10% going into next year. For many of us, this is just not feasible. A recent study shows that employers plan to boost salaries by 4.6%, rather than 8% – 10%, which is another disconnect.
Even at 4.6%, employers are brainstorming methods to put in place to be able to retain talent and provide increases. Many have suggested that they are raising prices for products and/or services, limiting perks and benefits, and restructuring, to include layoffs, furloughs and reductions in force.
But we are seeing that there is something you can do to impact retention, aside from providing large increases in pay.
If you don’t already provide Total Compensation Statements, this can be very eye-opening for employees. There is so much more to what we invest in employees besides base pay. Show them that, including the company’s portion of health insurance, PTO cost, retirement plan matching, and any other benefits and incentives.
Also, employers who provide career maps, ladders and plans, are having an easier time keeping employees. Particularly the younger generations in the workforce, want to know that there is somewhere for them to go. Along with this, have a plan to promote within and communicate that to employees. This can go a long way.
I’ve said it before and I’m sure I’ll say it again. This is a crazy time when no one has all of the answers. I sure wish I did. But know that we are watching the market and all of the conditions associated with it, particularly around employment. If we can support you on any of the above ideas or anything else, please do not hesitate to reach out. Our team is ready to assist!