By Ted Konnerth
Last month I reported on the trends that company employees are beginning to look forward to the end of the recession and are open to the concept of leaving their current employer. In the past 30 days, there have been two surveys that have reported very similar results on the levels of employee satisfaction with their current employer.
Monster and the Human Capital Institute recently found that 84% of employers felt their employees were content, while only 58% of their employees expressed that same feeling. In more detail, 79% of employees are more likely to be seeking jobs elsewhere. 50% are concerned about top performers leaving their company and 57% believe employers exploited the recession to drive longer hours and lower pay from their employees.
The Herman Group, a futurist consulting firm recently reported that Robert Half and CareerBuilder cited that 47% of managers felt there was a shortage of qualified applicants and that 45% of employees plan to change jobs, careers or industries when the economy recovers. Additionally, the survey reported that 40% of companies plan on hiring back employees on a part-time or contract basis before adding significant full-time, permanent employees.
So, what does this mean, practically speaking? First, during the last recession of '01-'02 similar levels of expected departure were reported and the net result was actually about half of the impact of the survey results. It’s easy during a survey to say you're unhappy and are going to leave; it's far harder to actually do something about it once business returns, morale improves and the hurdle of inertia is raised. Still, if 22-40% of employees actually do leave, that is a huge turn-over rate that will affect bottom-line performance for years to come. Exempt labor inefficiency is rarely accounted for and the ROI for an individual performer and the full cost of a hire are never calculated or accounted for on an earnings statement.
Second, as occurred in the last recession, there will be a rush to hire. The biggest difference is that this recession sits on the cusp of the baby boomer retirement cycle. The labor pool of experienced, seasoned talent is smaller now and will get much smaller over the next 10 years until GenY begins to enter management. That leaves GenX as the beneficiary of the next hiring phase in the US.
And the impact of that statement is that competition for managerial talent, with the years of experience requisite for a quick learning curve will be in very short supply. GenX is roughly 10 million fewer 'bodies' than the boomers. That leaves a 15% shortage in talent that would likely be considered to have the necessary training and life experience to succeed in new management roles of director, VP or President / C-level responsibilities. The ability to attract this talent will require a strong value proposition for the hiring company. And 'value' will be very important to this next generation.
The implications of this next phase will be profound. Companies with 3-inch thick HR manuals on recruitment policies and procedures will mostly throw them away. The collapse of the housing market has already rendered most corporate relocation policies archaic, but the next wave will bring significant revisions:
1. Salaries. Gone will be the 'policy' to offer a typical 10-15% raise and to guarantee internal equity with the existing peers. The next wave will be treated as exceptions to policy for compensation. Expect the internal equity issue to become much more nettlesome for HR departments.
2. Benefits. The corporate standard policies will mostly remain in effect, but we'll see an increase in exceptions for COBRA allowances, higher insurance coverages, and expansion of tuition reimbursement and family benefit requests.
3. 'Exit contracts'. Although common today for C-level positions, we will see a significant increase in requests for separation policies built into employment contracts. The requirement to relocate a management family will ensure that they are equally protected should their employment be terminated. Look for multiple years of severance agreement requests.
4. Relocation. Companies may be forced to return to the days of buying homes, or extending extensive and expensive assurances for covering second mortgages, home repairs, 'staging' expenses, and extended temporary living expenses, etc. Relocation is the hardest issue facing new job offers today due to the loss of home equity. Despite a return to a stronger economy housing costs are projected to lag in recovery for some time. It'll be incumbent on hiring companies to find creative ways to mitigate for these expenses.
And the good news in this? If you're GenX, welcome to the new economy and your 'dues' will be fully paid up over the next ten years. If you're GenY, you'll ride the coat tails of the GenX'ers before you. And if you're a boomer... there will be plenty of opportunities to enjoy partial employment strategies as you transition your retirement into a modified version of traditional retirement.
In short, the recession is over (Editor: Really??). There will be lingering effects for some time, but the time to find the right talent is now. Prices are going to rise rapidly and the competition for the best GenX talent will be fierce.