Commentators: (00:00:03) Hey, I’m Paul Perry, and I’m Kim Hartsock, and you’re listening to The Wrap, a Warren Averett podcast for business leaders designed to help you access vital business information and trends when you need it so you can listen, learn and then get on with your day. Now, let’s get down to business.

Kim Hartsock: (00:00:17) Hi, everyone, and welcome to The Wrap. In this episode, we are talking about something that I know every one of our listeners has an interest in: employee retention trends.

Paul Perry: (00:00:33) Kim, you know, to really understand employee retention and how to implement it, we really have to look at the data and see why employees are quitting.

Kim Hartsock: (00:00:40) Yeah. The great news for us, Paul, is that the new data actually just came out this morning. So that’s good and helpful for our conversation. We have our very own David Salters with us today. So welcome back, David. You might be holding the record for the most times on this podcast.

David Salters: (00:01:01) Well, that’s a distinguished honor, and the privilege is all mine. It’s very good to be back with the two of you.

Kim Hartsock: (00:01:07) We’re excited to have you. Can you take just a few minutes and introduce yourself to our listeners?

David Salters: (00:01:11) Sure. Again, my name is David Salters and I’m the Service Area Leader for Warren Averett’s HR Solutions Group, and what we do is we help clients attract and retain talent. We also help them in HR consulting with issues much like what we’ll speak about today, compensation retention policies. We’ve been very busy as of late, especially the past two years. It has been a brand-new world with helping clients attract talent and retain talent because they’re facing some really unique challenges differently than ever before.

Paul Perry: (00:01:49) David, the December jobs report reported several things that I just want to point out, and I know that the new one dropped today. But, I just want to compare December to what dropped for January. So non-farm payrolls rose by 199,000 in December, obviously far fewer than the estimate of 402,000.

Unemployment rate dropped to 3.9%, which is obviously better than the 4.1% that was estimated. Wages increased more than expected, rising about 4.7% year over year. One of the biggest industries that had the largest gains was leisure and hospitality. I’m interested to see how December compares to January and interested to see what the new data says.

David Salters: (00:02:32) Paul, the December jobs report indicated what has been a trend for the entire year: a volatile job market with peaks and valleys, very extreme ebbs and flows in jobs added. The unemployment rate continues to hover somewhere around the 4% rate. But really, there’s two key metrics in the jobs report that I think are most important to us and our clients, which is the quit rate and the labor participation rate. And in summary, the labor participation rate is the civilian workforce who chooses to go to work and be active in this workforce. We are still about four million employees shy of the pre-pandemic days. So, during the shutdown and beyond, about four million people decided: “I am not going to participate in the workforce.” We’ll talk about those reasons a little bit later in the discussion.

The other is the quit rate, and that’s another data point that the BLS tracks. Ironically, in December, it marked the sixth consecutive month that more than four million people voluntarily quit their jobs. That’s an all-time high at that rate. Meanwhile, we’re facing a historically high number of job postings. So, there’s a delta between jobs posted and people quitting, and we’re all fishing from a pond with fewer fish because those four million people have removed themselves from the workforce, so it can be confusing.

Unemployment hovers between 3.9 to 4.1 percent. The real focus, though, is the movement of the workforce, all the quitting and changing jobs, which is affecting us and our clients—and then there’s how many people just we have not been able to attract back to the workforce.

Kim Hartsock: (00:04:34) So that’s a really good point, David. I know I get a lot of phone calls and questions from clients and colleagues that are just saying, “Why are so many people quitting? Why do we have these six months of consecutively, four million workers voluntarily quit their job and choose not to come back?” Can you shed some light on that?

David Salters: (00:04:56) Yeah, there are a few reasons, and this has been ongoing really since the shutdown. One of the primary reasons is what’s called a “pandemic epiphany.” If you can recall back, this seems like such a long time ago, but when we were truly in the deepest part of the shutdown, when we couldn’t even go to a restaurant and eat, people were really locked up at home, and it gave them time to think. They had maybe spent time with their family that they had not spent before they rid themselves of a commute.

And it gave them time to think, “Where does my career fit into my life? Where does this commute fit into my life? Where does money fit into my life?” Some people just exited with the participation rate, but others have decided that “I will only participate in this workforce if I have really, really good work that pays well.” And the only way I can put this, Kim, is they’re asking you as an employer, “What’s in it for me? What can you do for me? Because I have decided now that my life is more important than my career, or certainly, my career doesn’t define my life anymore.”

Kim Hartsock: (00:06:12) Yeah, and I heard it referred to recently as the “Great Resignation,” right? But that doesn’t really tell the story. What I heard was referring to it as the “Great Awakening,” and that really speaks to what you’re saying, which is that people have evaluated their priorities, and they’ve shifted. And so, as an owner, as an executive that is running a company, we have to be paying attention to that, right? So, if our employees say to us that money is not the most important thing right now, I’m changing my priorities.

We have to understand what that means and what, like you said, what’s in it for me. We need to know how to answer that question for our team members and be able to speak to them about what’s important to them and how that does fit into our company’s culture and vision and mission. I know we’ve spoken about this before, but you know, what would you say to an owner or an executive that’s facing that question, right? Like, where do I go from there?

David Salters: (00:07:18) I think evaluating whatever your process is for production—whether it be manufacturing or service—and evaluating if there is anything that I can rethink that would allow flexibility to bring on and attract and retain the people that I have?

For example, if you have had set shifts, is there a way to stagger some of that to attract people that you are not reaching? In those numbers with the labor participation rate, the number-one affected demographic is women, particularly mothers. And there’s a loss of trust in the school system, whether the schools stay in and how my child is engaging in education. A lot of mothers have just exited. They’re a big chunk of that four million people who are out. Well, is there anything possibly you could do to allow a schedule for a mom to either work remotely or even potentially come in later if it has to be on site? Think about that. There’s an untapped labor market now that has evolved through this that is waiting. And again, they’ve had this epiphany: “I’m not going to do it if it completely disrupts my home life.”

Can you do that? And I think so many of us, as business leaders, struggle with letting go the control of: “This is my process. This is my system. This is how I oversee people. This is how I ensure that work product is good.”

We just have to reevaluate. What can we do differently? Is it completely necessary to be as rigid as we were before? I also think some leaders are struggling with: “I would like to employ a more hybrid or remote workforce. I don’t know how. I struggle with what the cybersecurity issues are, what the labor law issues are, what the wage issues are. I want to, and it can be intimidating to admit that I don’t know how to do it.”

I think we can help them with that, getting over that hump. Meanwhile, you’re losing valuable talent to your competitors in the workplace as this paralysis stalls you. But be rethinking: what can we do to become more flexible if you’re not ready to be completely flexible workforce? Well, ease into that, but you have to reevaluate and ask yourself the hard questions. What can we change to accommodate the workforce? Because four million people a month is a staggering number of people who are leaving.

Kim Hartsock: (00:09:57) Yeah, and there’s some good examples. Like for me, just hearing that, right, like: flexible schedule? Yes. Work remote? Yes. But you know, moms that maybe want off during the summer but are happy to work during the school year, or maybe they work a part time flex schedule so that they’re working while their kids are at school, right? There’s a million of those scenarios.

Paul Perry: (00:10:17) And I also think, David, that when business owners are thinking to themselves, “Why is it that people do not want to come back in? Why? Why do I have to now adjust to hybrid or a remote?” And you’ve talked a little bit about culture. And I’ve even heard business owners say, you know, “I just want them to come back in. We did it right before the pandemic. Why do why do we have to go to this now hybrid approach?”

And I think the pandemic forced us to make hybrid work, and all the employees said,
“You know what? It now works. Why do I have to go back?” Right? So that’s that. I think that’s part of that mind shift that you’re talking about. I’d be interested to hear some of the companies who have gotten it right, some of the companies who have said, “You know what? This is how we’re going to do it,” and it’s been successful for them. Do you have any examples of those that you’ve either talked to folks about or seen over the last couple of months?

David Salters: (00:11:10) Yeah. Let me share some examples. We’re talking about retaining talent, but this this entire workforce is dynamic, so it’s also about acquiring talent. You know, we’re adding jobs at about six million a month. We’re losing people at about four million. So that’s a hectic pace, to say the least. But you know, there was one executive at CBS who likened the onboarding and hiring process to that of the pit crew of a race car and evaluating every piece of equipment on that vehicle. If it did not directly affect the production on the racetrack that day, it had to go. And so, several companies are moving in terms of speed.

The old saying, “time kills all deals,” that is very true in recruiting. We’ve seen some of these companies that are on the front lines. You saw leisure and hospitality as front gainers in the job market. Well, they have to move at a quick pace because there’s such a high demand for their employees. This would go for all of our clients who have any type of production or manufacturing facility. You need to move quickly. So, remove any unnecessary assessments, any unnecessary paperwork. I think Waste Management—some of us have heard some of their stories—they improved the application time from like 30 minutes to three minutes by reducing clutter.

Southwest Airlines is taking jobs that do not require so much sophistication and making on-the-spot offers instead of dragging out long interview processes. One thing on the front end for our more professional positions that we’ve really seen a big issue with is assessments. A lot of them are psychological assessments, and it literally reduces the potential workforce to a fraction of what’s out there. Meanwhile, this job market is moving at lightning pace, and the idea that really we could stop and be that choosy—

Some of those assessments are really great. They really do help prevent making a bad hire sometimes. But, I don’t think most of us are in a position to be that choosy at the rate things are moving. You certainly don’t want to throw caution to the wind completely, but if you include unnecessary assessments, long application processes, multiple interviews—

CVS, in one of their improvements, they started doing video interviews for anyone that was facing a client. So instead of bringing them back in and doing a face-to-face simulation, they just did that online. It saved tremendous amount of time, and they brought people on. That was some of the ways that some of these companies are speeding up the process. They help fill the gap in the beginning.

Paul Perry: (00:14:03) I’ve heard some people say that were looking for jobs. It’s like,
“Hey, if I give you my resume, why do I have to now go on this website and enter everything that’s now on my resume?” Right? You’re talking about: just streamline it, and ask for the information once, and then go from there, and just make it a lot easier.

David Salters: (00:14:22) That’s right.

Commentators: (00:14:23) If you want to receive a monthly newsletter with Wrap topics, then head on over to warrenaverett.com/thewrap and subscribe to our email list to have it delivered right to your inbox. Now, back to the show.

Kim Hartsock: (00:14:33) What about for clients if they’re really hiring it at a high level, right? They’re hiring a controller or a CFO or someone like that that really needs a specific expertise. And a question is, you know, why do I need a consultant, right? Why do I need a specialist? Why can’t I just post a job on a on an online board or send an email out to people letting them know? How has that changed in the last two years in a very different environment? Why would they need somebody for that focused of a search?

David Salters: (00:15:19) Think of it this way if you look at the number we just saw. So in January, there are 10.8 million job openings posted on Indeed. That’s 10.8 million people. How can your job be found there? How could you possibly stand out? Even if you were fortunate enough to have a qualified Controller who, let’s say, they had a bad day and they just went ahead and peeked on Indeed to see what would happen?

The idea that you would catch the perfect storm, that your job would hit that board at the same time that they look is a pretty finite opportunity there. Furthermore, any time someone posts a job on Indeed, it’s a bidding war. And you know, you post a job, someone is going to come behind you and post a job, and then they just fall down the page, and eventually they’re gone. Meanwhile, Indeed is raking in money through this.

People who have companies who have premium subscriptions can bid on those jobs. Not everyone knows that. So, people can buy higher space. But there’s no limit to that. If someone with really deep pockets decides to sponsor that job, there’s just no way you can keep up. So the Controller, for example, of all the Controller searches that we’re working on now, it takes a lot of production hours to search the databases and the information and the referral base that we have to find those individuals.

Once you find that individual, well, then it takes the time to tap into again, what’s in it for them? Is it the work/life flexibility, the compensation, the type of work? And you know, we have some searches ongoing where the Controller role is either hybrid or flexible. We have some that are not. They must be in-office. Just working through that, it takes so much more time and effort to locate someone who is willing to be on site 100% of the time and having those conversations.

Let’s think about that if you were posting an onsite-only Controller on Indeed. Your chances of getting what you want in that situation are absolutely miniscule because there’s going to be 10 more jobs where that job is flexible or hybrid. And so then again, that takes someone needing an advocate on your behalf to speak to these candidates to express why this job would be good for them.

Kim Hartsock: (00:18:03) Right. Goes back to the, “what’s in it for me.” So, you know, if you have all these demands but you’re not paying attention to what the candidate is interested in, it’s a mismatch.

Paul Perry: (00:18:15) David, what’s next? You know, like where are companies going? You know, is the government going to help any? What are some of the economists saying is next related to the job market? And, I know that’s a loaded question, because as we’ve seen in the past year or 18 months, they predict something and they’re way off, right? They’re not getting it right. What’s next from that perspective, in your opinion?

David Salters: (00:18:41) Well, most economists are predicting some type of slowdown with all the supply chain issues that just throttles down the manufacturing sector. Logistics—you know, there’s all types of issues with deliveries there. Obviously, labor shortages, you know. What wasn’t really reflected as much as I thought in the January numbers was just how much Omicron affected the talent market and how many days off were missed.

Economists fear a slowdown. The jobs report, while good, brought fears of interest rate adjustments. Things tend to be trending towards some type of slowdown. That said, with the employment market, there is really no end in sight. One piece of positive data that we saw—it was in the fourth quarter last year—the Wall Street Journal produced a chart, and it reflected how personal savings had grown over the past couple of years. So, if we’re at home, they’re getting government incentives. They weren’t spending as much money, and there became a point of inflection on the chart where government stimulus was stopping and the personal savings was declining, and that was going to lead more people to get back to work.

The idea was that the Christmas and holiday season would drain what’s left of that savings, and so people wouldn’t get back to work after the first of the year. Well, then Omicron hit, and people just delayed a little bit longer. Every time we think there’s a little uptick or something happening, we seem to get set back. And so, I would brace just for more of the same ebbs and flows, up and down, and continue to look at those two key metrics: the quit rate and the labor participation rate.

As long as those two numbers keep behaving like they are, then it’s more of the same. Companies who are seeking employees both to retain who they have and to attract new must understand that market. Tap into those behaviors, understand what’s in it for them, and try to find common ground. What’s in it for the employee that’s good for you? These things don’t have to be mutually exclusive, and it just takes a little time to think out: ok, what can we do here to satisfy the goals of our company and attract the talent?

Kim Hartsock: (00:21:07) Yeah. Owners and executives have got to make sure that their strategy is in alignment with their team. And we can’t do things same as we’ve always done, right? It’s a new day. The workforce has shifted, and if you are an owner that is not taking a look at your mission, values and all of those things, especially if you have struggled with retention, right, what is it that you can learn from that and say we need to make some changes here? If that’s surveying your team or having one-on-one conversations with coaches and employees—

But if you can’t answer the question to know what is important to my team, especially those A-players that you want to retain, then I think that you’re going to constantly be playing from behind. And I know we’ve seen statistics where the quitting is—sometimes people are leaving straight for money. They’re being motivated because they’re being offered a significant amount of money. But, the same percentage of people are leaving because they don’t feel like their job is in alignment with their values.

If you guess wrong, if you guess that they’re going to that, you want to retain them based on money, but they’re really being motivated by the alignment of their values, then you’re going to miss the mark and vice versa. You need to be having conversations and making sure that you know what’s in it for your team and what they’re looking for.

David Salters: (00:22:45) We spent several years from 2012 to 2020 talking a lot about employer branding. A lot of people spend a lot of time, money and effort on marketing. It seems sometimes that all the brands were the same, right? We want to have great place to work, good benefits, social impact, et cetera. And that quickly shifted after the pandemic.

You mentioned: “The company no longer aligns with my values.” And we spent all that time with an official employer brand—you know, what do we want to appear to the outside world? And I think the employee is saying: “You didn’t ask me what’s important to me.”

When they got that new opportunity, they were gone, and they felt disconnected from that identification of what are our values. Another stat on the reasons for leaving was burnout. This becomes a compounding issue. So, you have staff issues. Well, what about all of those who are left behind to carry the full load? And so, they become overworked. They’re exhausted. They see their peers getting remote jobs or better opportunities or flexible schedules. And it just weighs on that person. Right now, we may all can think of certain people or departments where that’s happening, and it should make you feel uneasy that this is unaddressed, that it’s going to continue to hurt your retention.

There’s an old saying that people don’t necessarily leave their employer, they leave their boss. Within that, there’s this middle management stress that occurs that I think some of our clients could address—investing in that middle manager. Below them, they have production goals, deadlines, they have employee management, they have staffing issues.

Above them, they’re reporting to executives. Their volunteer life at home is probably at a higher level than some other people. And in this day and age, they could easily be taking care of their parents and their children. And so, if you think of that in an hourglass shape—the squeeze of that middle manager—we need to be paying attention to those people and investing in them. They’re your front-line cheerleaders for recruiting. They will influence who stays and goes more than anyone at your company. Safeguarding, investing and developing those people will help stymie some of this turnover that that some of us are experiencing.

If you think about a production manager, this poor soul probably gets up every morning and checks their phone to see how many people called in sick, how many people quit today, how many raw materials I did not get in today. Now, they go solve that puzzle. That’s a lot every day for those individuals to deal with.

Paul Perry: (00:25:47) Culture eats strategy or brand for lunch, right? We’ve heard that so many times. We’ve said it so many times, but I think that if you can start to fix the culture, then you can start to make headway into trying to solve all the other problems.

So here on the Wrap, we like to wrap it up in 60 seconds. David, what would you leave our listeners with on attracting and retaining the talent that you want in this uncertain, uneasy, uncomfortable market?

David Salters: (00:26:13) Don’t be afraid. Everyone is facing the same issue. Don’t be afraid to reexamine your procedures and your staffing. Can you find common ground to address this market, yet meet your goals? You’re not in this alone. We’re in this together.

We can help you walk through these issues. Seek out that untapped talent base. I can’t stress enough—the mothers that are on the sideline. If you have a shortage of production, would four or six hours every day from some of these individuals to help you meet your goals? Why deny that just because it doesn’t fit the model that we had before? Lastly, remove any barriers to hiring that you can. Your hiring process and your onboarding process is not static. It should not be. It should be ever evolving. Review it frequently to see what you can do to expedite the process.

Remember people in this day and age? They shop online, they buy food, they do everything they want with a phone. Ok? If you can’t compete time-wise with bringing people on digitally and quickly, that’s going to set you behind to not only miss that individual, but you appear that you are not up to the date with how you run your organization. Just keep fighting, and keep your eye on the labor participation rate and the quit rate that will tell you where the market’s moving.

Kim Hartsock: (00:27:40) Thank you so much, David. It’s always so insightful to have this conversation with you, and I’m certain that as the year goes forward and things start to shift, we and our listeners will have more questions. I look forward to having you on again.

Paul Perry: (00:27:54) I think this time when he comes back, we’re going to have to give him like a five-timers mug or something. He would be the first one to get it. David, it’s always a pleasure.

David Salters: (00:28:03) Thank you very much. Have a great day.

Commentators: (00:28:05) And that’s a Wrap. If you’re enjoying the podcast, please leave a review on your streaming platform. To check out more episodes, subscribe to the podcast series, or to suggest other topics you want to hear visit us at warrenaverett.com/thewrap.