The silver lining in a lousy economy is employee retention, but as economic prospects brighten, most firms are thinking about ways to retain talent, according to the latest study by the Institute for Corporate Productivity (i4cp) on the subject of organizational turnover and engagement. But that doesn't necessarily translate into big raises for most employees, who have seen few pay raises of late.
In this down economy, the study, the full results of which are now available to i4cp members in both standard and interactive form (a sample of the results may be downloaded here), found that higher market performing companies are more than twice as likely to offer pay raises to keep key talent from walking out the door than are lower performers.
The study showed that 18% of high-performing organizations have already taken the step of increasing compensation levels to reduce turnover, compared to 7% of lower performers. Over the next six to 12 months, the same ratio of high performers (18%) plan to implement pay raises, while almost a quarter (24%) of lower performers have plans to do so.
That doesn't mean, however, that reducing turnover revolves around reward. The favored tactic companies overall have already taken to further reduce turnover is better internal communication with all employees, 81% naming it as the top method. Increased focus on talent management (77%) was the second-highest choice, and increased focus on succession planning (59%) ranked third. Among higher market performers, a full 91% point to communication as their top method of staunching turnover, compared to 71% of lower performers.
What about the future? Steps planned within the next year to reduce turnover by higher-performing companies include increased focus on succession planning and talent management, both cited by 70% of respondents. Leadership training is being planned by 66% of higher-performing firms. Lower performers plan to focus first on talent management issues (71%), followed by 62% who plan to increase internal communication.
"Certainly, employees who are challenged to stretch their personal finances during this difficult economy will be happy to contemplate pay increases," comments i4cp senior research analyst Carol Morrison. "But our research confirms, too, that companies understand how important it is to maintain ongoing communication with their employees, along with strong talent management programs that emphasize a future focus through development and succession."
The study also asked respondents to outline their cost-cutting measures over the last year and a half, and the overall results showed that 40% have made significant cost cuts, while 14% said they have had few or no cost-cutting measures. When viewed from a market performance perspective, however, the numbers change. Twenty-three percent of higher performers said they have instituted few or no cost-cutting measures, compared to 5% of lower performers. On the other end of the spectrum, 62% of lower performers have made significant cuts, while 31% of higher performers said they've undergone steeper cuts.
Regarding steps taken to increase engagement, the study showed that higher performers are more likely to involve employees in the process. Two of 10 respondents (21%) from higher-performing companies admit they have never surveyed their employees about engagement issues, compared to 36% of lower performers. Both higher- and lower-performing companies that conduct surveys are most likely to survey their workers annually. Based on results of their most recent surveys, 49% of higher performers reported an increase in engagement, compared to a quarter (26%) of lower market performing organizations.
The Employee Turnover and Engagement Pulse Survey was conducted by i4cp in September 2009. The full results of the survey are available exclusively for all i4cp corporate members. A portion of the Employee Turnover and Engagement results are available to non-members.