5 Strategies to Combat Inflation, Improve Recruiting and Retention
Learn five strategies to fight inflation and improve hiring and retention as inflation rises.
In a time when inflation is rising and candidate expectations are changing, a simple salary hike will not be sufficient to attract and retain talent. Organizations need creative solutions to differentiate themselves from competitors. Walter Sabrin, senior vice president of recruiting services, Vensure Employer Services, discusses five strategies to fight inflation and improve hiring and retention.
It is a mess out there in the recruiting and hiring world. If there were not enough going on with the pandemic, war in Europe, an aging workforce, and more external factors, we also have to deal with rising inflation. The good news is wages are increasing. The bad news is wages are not matching the U.S. inflation rate.
Inflation is rising at about 8%, while wages are increasing by about 5%, creating a new war on talent. To combat the issue, companies are throwing a few extra dollars at recruitment and retention, which has proven fruitless.
In today’s workforce, it is not all about money. Benefits, culture, and flexibility are now near the top of a recruit’s list. So while “a great salary” is probably in everyone’s top 3, other factors will differentiate your business from others in the industry.
Yet according to a recent study by Gallagher, nearly two-thirds of U.S. employers said they increased their compensation budgets this year due to inflation. For companies to stay competitive as the cost of living rises, human resource departments, especially small- and medium-sized tech businesses, must make significant changes to keep and attract top talent.
It is going to take creative solutions to stay ahead. Thus, HR departments in every industry across the United States need to:
- Be prepared to evaluate a global talent pool.
- Solicit feedback from employees and act transparently to resolve problems.
- Grant more opportunities for promotion from within.
- Consider alternative compensation structures to combat rising inflation.
Utilize a Global Talent Pool
It does not matter where you are; using a global workforce is one of the best options to maximize efficiency while remaining vigilant about business resources. Consider that professionals from other countries can give your business an edge because you can pull from a larger pool of highly qualified candidates. A global talent pool allows employers to find recruits with lower salary demands at the same technical skill level.
With modern technology, it is much easier to align your teams. For example, using project management tools, video conferencing software, and CRMs to manage client relationships across teams keeps everyone on the same page, even if most of your workforce is remote. Modern HR experts can accelerate your business with tools to make hiring and onboarding easier, expedite benefit enrollment, create reports to help management make more informed decisions, and more.
It’s critical to ensure you have the latest and greatest tools to support a global team because this will form the foundation for hiring top employees who fit your business regardless of location.
Listen to Employees and Act on Their Needs
Bonuses are great, and nobody is going to complain about receiving one. But a bonus-based retention strategy is cold and clinical, so it is not the best option to retain and recruit top talent in the long run. Simple bonuses are not personal or engaging.
Instead, solicit feedback from your employees via regular polls or surveys and then listen to what they say. Feedback is essential because it varies for every business. Cookie-cutter approaches to employee sentiment and feedback can leave leadership blind to the challenges faced by the teams executing the work day in and day out. Without asking employees directly, you cannot know what they need, and many will feel like they have no voice in the business. When employees feel minimized, throwing an extra paycheck at someone is a band-aid on a much larger wound.
If you get stuck, solicit insights from your top talent. Not only will people feel heard, but they will buy into the issue and start to see it from a business perspective while helping to resolve it.
Train and Hire From Within
One of the potential remedies for pay compression due to high inflation, especially for small and medium-sized businesses, is to do a better job of looking within for training and promotion opportunities.
Many HR departments view an outside hire as that next big shiny object, as if one employee from another business will come in and change the outlook of the entire organization. Sometimes that may be true, but it more frequently pays to focus on training your people.
Plus, bringing someone new to the team is costly, so why not invest money in training and developing the current team?
In many cases, loyalty and passion are typically present with existing employees, or they would not still be there. Helping them take the next step in their career by promoting from within and training employees who are not ready to be ready inspires employees to step up their game and capitalize on future opportunities. Additionally, recruits will have real-world examples of how their career can grow within your organization compared to competitors.
See More: Digitalization: The Key To Employee Satisfaction, Engagement and Retention
Consider Introducing an Alternative Pay Structure
On-demand pay has already been market tested by tech companies like Google and Uber and is gaining traction worldwide. It may sound strange for a traditional 9-to-5 role, but many clients already use this new technology.
Why do we get paid every two weeks, anyways? On-demand pay lets workers get the funds they have earned immediately, rather than waiting until payday to get rid of all those pesky bills.
Curiously, on-demand pay has been a pretty industry-agnostic pay structure based on what we have seen thus far. Employees can see precisely how much they have earned from any device at any time providing instant access to their own money. Forget asking for an advance; the money is already in your account!
While on-demand pay may not work for every business, it is always worth looking into how a different pay structure might perform better for your workforce.
Do Not Avoid or Suppress the Conversation
Not talking about inflation when all your employees are concerned about it is one of the worst things your leadership team can do. The concerns are there, and employees are talking about it, so it is best to control the conversation by discussing specifically what your organization is doing to mitigate the impact on employees.
Being upfront about the issue will increase buy-in, as recruits, new employees, and tenured talent will feel like they are part of the conversation and can see the connection between what is going on and what the company is doing.
If the plan is transparent and genuinely resolves employee concerns, knowledge becomes power, and people will sympathize with the company’s fight for survival. No one wants the company to go under and lose their jobs, so a clear plan will help top talent keep faith in leadership, making transparency key.
These are all tough things to do in practice. If your leadership has reached an impasse, bring HR-certified experts in to assess the business and ensure the tools and processes are cost-effective. If changes are needed, HR pros can help reroute funds to where it creates the greatest impact. Act swiftly, or employee concerns will continue to grow as they start feeling like they are giving up wages for programs they do not find valuable.
High inflation is here to stay, and it could even get worse. Your business must prepare today or risk losing your top talent tomorrow.
What strategies have you developed to combat inflation and improve hiring and retention? Share with us on Facebook, Twitter, and LinkedIn.
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