According to the Incentive Research Foundation, 81 percent of corporate leaders believe their company will deliver a strong financial performance in 2022*. Up 17 percent from a year ago, this marks a strong uptick in private sector optimism and represents an economic rebound many believe will be automatic once the COVID-19 pandemic subsides.
However, if you dive deeper and look at what most employees are saying about their companies, you uncover a discrepancy that could turn this balmy outlook quite bleak and extend private sector struggles well beyond any COVID-19-related obstacles.
According to recent Gallup survey data, nearly half of employees are currently searching for a new job. Of these employees, 74 percent say they are “actively disengaged” in the workplace. 46 percent of employees also feel less connected to their company than they did last year. With numbers like this, you would think part of corporate optimism for the new year would center around new investment in company culture and employee engagement.
You would be wrong. And this is the crux of the expectations vs. reality gap that could deliver a rude awakening for businesses in 2022.
Amid an ongoing labor shortage and increased preference for remote work, and in an environment with bolder employees willing to walk away or go without a job until their expectations are met, companies have quickly settled for short-term solutions that only delay the inevitable turnover tidal wave. From increased signing bonuses to one-time “pandemic” bonuses, companies across the country are doling out employee retention bonuses (ERBs) in a variety of forms, hoping a little extra cash will do the trick.
But recruitment and retention numbers are just getting worse.
Sadly, there is no data to support the effectiveness of ERBs. In fact, all evidence points to a contrary, unsustainable pattern that employers can’t afford long-term and which only “buys off” employees until their real source of discontent—lack of engagement and cohesive culture—sets in. According to HR expert, Dr. John Sullivan, “money may not be effective in getting [employees] to stay because it is not one of the primary factors that is forcing them to leave.”
So in a world where just 38 percent of employees identify as “enthusiastic stayers” at their current organization, how can employers retain talent that feels appreciated and engaged in the workplace? After all, the Society for Human Resource Management (SHRM) estimates that it costs a company 6 to 9 months of an employee’s salary to replace him or her. And sinking money into one-time bonuses will just increase this cost.
The answer lies in changing how we think about rewards. For example, consider noncash, points-based recognition programs.
If you leverage peer-to-peer recognition where teams award each other points for contributions or accomplishments, collaboration and cohesiveness increase. If you replace unnecessary retention bonuses with years-of-service point awards, you save yourself from a costly, dangerous cash precedent while maintaining employees’ incentive to stay. If your current training program is stale and has more buck than it does bang, points-based benchmarks would incentivize knowledge retention and motivate new hires to hit the ground running. And if your sales team isn’t motivated by your traditional compensation structure anymore, point awards can be inserted at each stage of the sales pipeline or for different types of new business.
Now more than ever, there is a need for creativity in the workplace when it comes to engagement and culture. While the overall economic outlook might look bright to business leaders in a post-COVID-19 world, the reality on the ground is that the pandemic accelerated changes that cannot be overlooked. Employees are bolder and engagement and culture are directly impacting bottom lines. With recruitment, training, and replacement costs ballooning, companies can’t afford to shell out money in a desperate attempt to keep their workforces intact.
Instead, business leaders can learn the lessons of the past two years and adapt to survive, or they can fulfill the definition of insanity by trying the same failed tactics over and over again. 2022 can be a year of recovery or a year of missed expectations and more pain. This go-around, the solution starts with employees.
Let’s hope employers are listening.