How to Keep Employees From Leaving in a Hot Job Market

My son has worked for a national computer software firm for three years and has had some success with promotions and pay increases. He has also experienced a workplace that has made some strange and unpopular decisions.

At one point, during the middle of the pandemic, his employer realized that so many of their employees were accumulating unused vacation time because the pandemic had made travel impossible that it arbitrarily insisted everyone take one week of vacation during the same week last summer.

The worst part of that maneuver wasn’t just the timing; it was that senior management told the employees they were acting in the employees’ best interest and wanted to reward them with time off when there would be no pressure to respond to emails from other staff: Everyone would, after all, be on vacation at the same time.

Needless to say, the employees knew the forced holiday (and loss of vacation days to take when they wanted to take them) was manipulative and left many starting to think about an exit strategy. When headhunters began to recruit workers for other firms, it quickly became clear that other employers were less heavy-handed with rules. They were also more than willing to pay my son a 20 percent higher salary.

When his boss asked him if he was thinking about leaving, my son said "Yes," and they offered him a 10 percent raise. Once again, the gesture was too late, too little, and smacked of manipulation.

How different it would have been if the business had been doing its research on wages and knew it would have to increase salaries and improve working conditions before large numbers of employees had left.

All of this suggests some important principles for organizational and corporate resilience. There is confusion between doing what we need to do to persist under stress with little change to business-as-usual, what we need to do to adapt, and what we need to do to transform a business into something better.

My son’s employer was stuck in the trap of persistence. They were not going to make any changes on their own. Their perception was that the workplace and the economy were the same as they had always been. My son would stay with the company because it offered a steady salary, reasonable benefits, and hope for a promotion.

They missed the changing economic environment beyond their front lobby. More companies were moving to town, paying better salaries, and offering fascinating work opportunities. Where persistence is a strategy for resilience when a business is protected from change by a weak economy or geography (it used to be that work had to take place in the office, not at home), adaptation and transformation are better strategies when the world around a business is quickly changing.

My son made a great career decision to move to a new job. He wasn’t the only one; three-quarters of his co-workers did the same. Last he heard, his previous employer was hiring new grads desperate for a toe-hold in the industry. Without a change in corporate culture, they are likely to train these new hires and then lose them to the competition within months.

Adaptation can help a company survive. Transformation is even better. When the Fortune 500s with which I work do more than respond to changing social and economic conditions and instead position themselves at the leading edge of change, they are likely to retain market share or, even better, grow.

An employer can anticipate the changing landscape for employees by conducting "stay" interviews, also known as retention interviews. The idea of asking employees about their experience on the job and what they need to remain, before there is a crisis, makes a lot of sense when we think about resilience. Exit interviews are much like diagnosing psychopathology.

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It tells us what is wrong. Stay interviews are preventative and reflect the principles of prevention science. Building up the protective and promotive factors that keep employees engaged is critical to success.

While I’ve been writing a lot about the factors that keep us resilient on the job, retention in a hot labour market seems to come down to offering employees at least two of these three things:

1. Meaningful work. Work must inspire employees to see their contribution as important while giving them opportunities to use their talents and be recognized by others for what they have to bring to a business. This can be as simple as being great at folding sheets in a laundry or as complicated as being the person on the team most familiar with tax codes. In both cases, employees that understand that their work is needed and the quality of what they bring is helping a business thrive are more likely to stay in a job even when there are opportunities to move.
2. Sense of community. People who feel connected to their colleagues, their community, and even the people working in the food truck on the street outside their office are much less likely to look for new jobs, even if the benefits are a little better elsewhere. While our heads tell us to pursue the money, our hearts tell us to remain close to those we feel connected with. A business that facilitates community is more likely to keep its employees.
3. Compensation and benefits. Money is important. So too is vacation time and an HR department that offers people opportunities to train and grow their skills. A suite of incentives that demonstrate a business's value on its employees will retain its employees in a hot job market.

There are plenty of other reasons people stay in a job when there are other opportunities. It could be they are unmotivated to try something new. They may be dealing with a heavy burden of caregiving at home and don’t have the energy to jumpstart a new career path. They may be stuck where they are because their spouse is committed to their work, and a change of position would disrupt their family life.

Regardless of why people stay, businesses need to anticipate employees’ needs if they are going to keep people when jobs are plentiful. More resilient businesses actively create conditions for continuity. The less resilient do well during recessions but become vulnerable when unemployment rates drop.