December 12, 2023
By Chris Harvey
Can your organization break out of the leaky bucket cycle?
The Leaky Bucket Cycle
The "leaky bucket cycle" symbolizes the constant need for hiring, not driven by business growth but to counter employee turnover. As soon as a new hire joins, news of another employee leaving surfaces, resulting in a one-in, one-out scenario. While the business may stay afloat, it isn't performing at its best. Breaking free from this cycle necessitates creating a work environment where employees feel valued, challenged, and inclined to stay.
The Current Labor Market
Although the economic slowdown temporarily slowed talent outflow, the imminent economic recovery is expected to bring about an increase in turnover. The persistently tight labor market demands a renewed focus on retention strategies.
Shift in CHRO Priorities
The 2023 HR Technology Advice CHRO Insights & Trends Report reveals a significant shift in priorities. In 2023, 53% of CHROs planned
to hire primarily to replace employees lost to turnover, with only 38% anticipating net new hiring for business growth. This data underscores the urgent need for organizations to pivot toward robust retention strategies in the coming year.
Advancing Employee Skills
Consider that the best candidate for your open position
likely already works for you. This is the powerful value of a comprehensive retention strategy. Outside candidates can bring years of expertise and specific skills, but they often lack industry or organizational-specific knowledge. This can lead to a steep learning curve and extend the amount of time it takes for them to have an impact in the new role. In contrast, organizations that invest in employees who have the aptitude to upskill and reskill can transfer to new internal roles, and you have the added bonus of having those organizational contacts, industry insights, and operational knowledge to have a faster business impact. Reskilling may seem counterintuitive initially when hiring for a specific skill, but the realization that the greatest value from that skill lies not just in the skill itself but in how to execute those skills in your industry and organization makes it evident that this strategy leads to faster value for your organization.
What is the largest impact of employee turnover? Is it the
lost skills? 64% of CHROs identified that their biggest risk associated with employee turnover was not the skills but the loss of industry and organizational knowledge. Once that is lost, it is extremely difficult to replace.
CHRO Insights & Trends Report
The HR Technology Advice CHRO Insights & Trends Report captures HR Leader priorities for their people and organizations
Navigating the Hybrid Work Landscape
As hybrid and remote work arrangements gain momentum, 56% of CHROs believe these options enable them to attract highly skilled individuals, while 36% observe increased productivity. Challenges arise, especially in industries with higher on-site requirements. Frontline managers play a pivotal role in managing hybrid and remote teams, yet only 29% of organizations have provided specialized training to address the unique challenges they face.
Rethinking Work for Greater Productivity
A thought-provoking concept from global talent thought leader Josh Bersin suggests rethinking work/job design to align with employees'
strengths and interests. This approach aims to increase productivity, reduce burnout, and enhance engagement. Thirty-six percent of CHROs express interest in exploring this innovative approach, recognizing its potential value in reducing turnover and burnout, aligning work with employee strengths, planning for future workforce needs, and ensuring equitable distribution of workloads.
Prioritizing Mental Health
Acknowledging the prevalence of burnout, anxiety, and stress, 63% of CHROs have implemented mental health services and programs.
These initiatives, including Employee Assistance Programs (EAP), wellness programs, mental health days, and fostering open communication, not only support employees' well-being but also contribute to higher engagement, productivity, and job satisfaction.
Building Workforce Resilience
Recognizing the significance of a happy and engaged workforce, CHROs are increasingly investing in teambuilding activities and formal mentorship programs. Forty-six percent of CHROs are prioritizing teambuilding to foster a sense of community, while 44% are expanding formal mentorship programs to provide guidance and support for career development. These initiatives contribute to creating a positive work environment, strengthening employee relationships, and ultimately enhancing job satisfaction.
The Laws of Attracting New Talent
Of course, you will still need to hire external talent. CHROs are benchmarking compensation packages and enhancing benefits to ensure
competitiveness in the market. However, the research highlights that 36% of CHROs consider employee referrals as their most successful recruitment method, reinforcing the importance of maintaining a strong company culture to encourage employee advocacy.
In conclusion, as organizations navigate the challenges of a tight labor market, it is evident that employee retention is no longer merely
an HR concern but a critical concern for business success. By investing in internal mobility, L&D, teambuilding, and mental health initiatives,
organizations can build a resilient workforce that not only attracts top talent but also retains and nurtures existing employees, driving long-term success in a competitive landscape.