In today’s complicated and tumultuous labor market, it can be hard to make sense of the factors driving today’s most significant trends. While it would be easy to over-simplify and say that the COVID-19 pandemic is entirely to blame for the mass exodus of workers and lingering unemployment, the whole truth is far more complex.
We’ve seen several consecutive months of record numbers of employees quitting their jobs; in September alone, 4.4 million Americans quit. There continue to be more open jobs than there are unemployed people. The Bureau of Labor Statistics reported in early November that there were 10.4 million open jobs in the U.S.; this compared to the 7.4 million Americans who are currently unemployed. What’s behind this trend? Likely a number of factors, including:
- Differences in the number of highly technical job openings and number of unemployed, skilled workers
- Lack of opportunities for affordable upskilling and job training for those whose jobs have been permanently eliminated due to the pandemic
- High levels of burnout across our culture, and especially among frontline workers
- Some individuals choosing not to return to work due to fears of COVID-19 exposure
- Disparities in geographical locations of job opportunities. Not everyone can afford or is willing to move to find work
But even if those factors partially explain why so many Americans are still unemployed when there are plenty of jobs that remain unfilled, they don’t explain why millions are choosing to leave their jobs in the first place. For HR teams to prevent turnover, it’s vital that they understand exactly why so many people are choosing to leave.
That’s where the results of a recent survey conducted by LinkedIn become useful. They surveyed almost 5,000 people in their October Workforce Confidence Index. Let’s take a closer look at what LinkedIn learned from their survey.
Compensation is the most common reason employees are seeking a change
When asked why they are looking to change industries, 54% of respondents said that they were leaving to seek better compensation. People quoted compensation as their reason for leaving more often than any other reason. It appears that the majority of folks who are planning to leave their jobs see more lucrative offers and better benefits with other companies. This makes sense, as compensation is a compelling reason to make a career change.
As we’ve discussed already, today’s labor market is so competitive that employers are raising starting salaries to attract eligible candidates. Employees who are considering leaving their current jobs likely find themselves in the desirable position of being able to negotiate a higher salary and benefits, and because employers are desperate for qualified talent, they can be reasonably confident that their demands will be met.
Also important to consider is the recent rise in inflation. Inflation hit 6.2% over last year in October of 2021, even higher than economists predicted. Supply chain challenges thanks to the pandemic are behind much of the increase in prices, with demand far outstripping supply and severe shortages looming in advance of the holiday season. As labor shortages cause employers to offer signing bonuses and higher pay to lure job seekers, they increase the cost of goods to account for the extra expense. Consumers get tired of paying higher prices without a raise to account for the change in cost of living, they leave their jobs to seek new ones, and the cycle continues.
For hiring teams, it’s key to remember that compensation is the number one motivator for job seekers right now. If you have the budget to increase starting salaries, now is a good time to do so. You might also consider being transparent about job salary and benefits in your job postings— many who are seeking better opportunities might pass you by if they don’t realize what you have to offer financially.
Corporate and personal values the second most common reason employees are moving on
The second most frequently cited reason for wanting to change industries was employees seeking “better alignment with [their] values” at work. 48% of people surveyed said that was one of the reasons they wanted to find a new job. This is a fascinating development. Company values have always been important to employees. Still, compared to several years ago, when only 15% of workers said they were either “somewhat” or “very” dissatisfied with their jobs, we’re seeing a significant turnover rate due to differences in values.
Essentially, many workers now see work as an extension of their personal value system, and therefore it’s important to them that they work for a company that shares their values. This is especially true regarding young people. Workers between the ages of 21-29 were more likely than all other age groups to say that they want their employer to prioritize brand reputation and social/DEI action.
Moving forward: transparency, values, and higher salaries
Employers can take this information under consideration to stay competitive in the current labor market. Here are a few key action items for HR teams:
- To address candidates seeking better compensation: If you are able, consider offering higher salaries. Take recent inflation under consideration when setting salaries. If you need to persuade leadership of the importance of higher starting salaries, talk to them about the scarce labor market and how candidates prioritize switching jobs for better pay. If you can’t offer better compensation, consider sharing salary expectations for each position from the start. This can eliminate those who are looking for something that pays better before they get through the hiring process.
- To address candidates seeking positive company values: Often companies are socially and politically active, but they don’t do a good job of publicizing their commitments! Or worse, they publicize their commitments but don’t show how they follow through on them. Work with your marketing/PR staff to share your company’s commitment to values in action. Consider transparently stating your values in your job postings.
- To offer other things candidates are looking for: After compensation and values, the next few most important factors to candidates are opportunities for growth and flexible/virtual work options. Be transparent with candidates about company policies and what they can expect. Transparency will weed out uninterested candidates early and incentivize motivated candidates to stay.
If you’re still struggling to fill your open roles even after reworking your recruitment process, contact us. Here at Tech Talent South, we’ve successfully placed hundreds of candidates in tech roles with some of the largest employers in the country. Contact our recruiting team today to see how we can help you!