The battle for retention: What do workers want?

Facing record-low unemployment, middle market companies have placed even greater emphasis on retaining employees and establishing continuity in a time of frequent change. The pandemic has changed the modern workplace—perhaps permanently—as many organizations adopt remote and hybrid work models. And with trends like quiet quitting and the “great resignation” creating upheaval and stress in personnel departments across North America,  it has never been more important to keep existing employees on the rolls.

With the balance of power shifting from employer to employee in a tight labour market, RSM sought to gain perspective from workers. The firm conducted an online survey in the fall of 2022 of over 4,000 workers in both Canada and the United States, split between middle market businesses, which have annual revenue up to $2 billion, and large businesses. The resulting data provides a deeper understanding of how employees feel about their current employer, their role in the workplace and what factors could build greater satisfaction moving forward.

Many proud employees, but several looking elsewhere

The survey shows that about three-quarters of employees at Canadian middle market and large organizations are proud of their workplace (77 per cent  and 75 per cent , respectively), while a greater share of United States middle market employees are proud of where they work (83 per cent ) compared to those at larger organizations (78 per cent).  However, despite the level of pride employees have in their organizations, middle market employers have greater retention risks.

The pandemic environment forced many companies to adopt a more flexible work environment and the data shows that many employees want that flexibility to continue. In fact, Canadian middle market employees are significantly more likely than those working at larger organizations to wish they had more flexibility to set their own hours and schedule (64 per cent  vs. 57 per cent ). The trend is similar in the United States, with 62 per cent  of middle market employees seeking more flexibility compared to 56 per cent  of workers at larger companies.

In addition, a fairly consistent number of Canadian employees at middle market and larger organizations report actively applying for jobs outside their current company (15 per cent  vs. 13 per cent ). In the United States, though, middle market employees are significantly more likely than those at larger organizations to report they are actively applying for a new role outside their organization (26 per cent  vs. 14 per cent ). 

“Instead of waiting for your employees to ask you for a raise or a promotion, you can ask them what they need to stay at your company and grow,” commented Marni Rozen, RSM’s human capital consulting leader. “People will generally tell you what they're looking for, and even opening up that dialogue and letting people know what opportunities are available is a positive step forward.”

The (mostly) good news

While the current environment for talent retention can seem daunting, middle market companies can make the adjustments necessary to address many of the features employees are looking for in the workplace.

Not surprisingly, among those who are actively looking for a new position, salary and benefits are a top theme, according to qualitative data. And while many companies initially responded to staffing shortages by increasing compensation, that may not always be the best response.

“While compensation is obviously important, it is often not the most critical thing,” said Rozen. “It doesn't necessarily solve the other issues that we're seeing that employees may find more important, such as flexibility and more autonomy over their schedules.”

In addition, increasing compensation is not always possible. But luckily, many of the additional characteristics employees want in the workplace are not tied to finances, but rather to career development. For example, according to qualitative data, knowledge/skills/opportunity is also a leading theme for U.S. and Canadian middle market employees who are actively evaluating new opportunities.

“From a tactical and people perspective, focusing on career development is a win-win,” said Rozen. “Closing any potential skill gaps is important from a business perspective, but overall development is also what people are seeking. I think people would stay at an organization when they see opportunity ahead of them, they feel like they're working for something and they see a middle market company investing in them.”

Further, middle market employees were asked about what they have versus what they want at their current job. In both Canada and the United States, the most considerable gaps were with above-market compensation and incentive compensation arrangements. However, just below these gaps for U.S. middle market workers were defined career paths and equity/share ownership.

When asked about the elements of an ideal job, middle market workers in Canada and the United States were once again generally in agreement about what is most important. Employees in both countries believe that work-life balance, support from a supervisor/boss, fulfilling work and the potential for advancement/promotion are the most critical elements of the ideal position. Focusing on or expanding upon any or all of these characteristics presents a key opportunity for middle market organizations to stand out to employees and increase satisfaction.

“These opportunities don't have to be things that have a large dollar cost,” said Anne Bushman, RSM leader of compensation and benefits. “The survey shows there are many things your employees are likely looking for that are not purely financial. There's a way to build loyalty through items that are not necessarily all that expensive.”

Considerations for change

Changes to operations will likely be necessary on an ongoing basis to keep middle market employees engaged and satisfied, and therefore encourage more of them to stay with their current company. But in many cases, careful planning is necessary to ensure new processes and strategies align with overall business goals and any potential compliance requirements.

For example, Bushman detailed how taxes could be a compliance concern for any new employee retention strategies. “You need to make sure that you're not unintentionally increasing a tax cost that you didn't know was there,” she said. “When you do something completely different—especially when it involves compensation or benefits—you want to go in with eyes wide open about potential costs and tax requirements. It may or may not affect your decision, but it’s just another thing that you must consider upfront.”