- Loyal employees generate more profit than those who are not;
- Restoring staff loyalty is more difficult than keeping it;
- Hiring and training new staff costs considerably more than retaining staff with a proven track record.
3 threats to companies on the labor market and 7 ways to overcome them10 May, 2017
By Ekaterina Ovchinnik, Russia and CIS HR Director
Every modern company strives to keep and improve their competitive edge, and one of the key advantages for providers of consulting services is their staff.
What difficulties have arisen on the labor market recently? Like in other industries, these difficulties can be divided in three different groups:
1Shortage of qualified personnel;
2Employee income loss;
3Business performance needs to be constantly improved.
Shortage of qualified personnel
Solution 1. Work on increasing loyalty and retention of current staffAlthough HR is not the most digitized sector, today everyone understands that:
Solution 2. Work with studentsWe often use this recruitment tool. The main disadvantage is the process which is rather long, but, oddly enough, this method offers more pluses than minuses. First, you get employees who can be completely “tailored” to your requirements. Second, after having received professional training in your corporate culture, they fully share your particular corporate mission, objectives and values. Third, companies employing students fulfill an important social function.
We consider the pros and cons and draw conclusions.
Solution 3. Focus on staff training and mentoring/buddy systemMany company executives see corporate training as part of employee benefits package because companies spend money on training, and people hired by companies offering training thus learn new professional skills that they can showcase in their resume. This is partly true, but it is important to remember that the main purpose of training is not for employees to quickly find a new job, but rather for them to think that any other workplace is not as good as theirs!
Let’s look at training from another perspective. 70 years ago people had no TVs, 50 years ago they had no Internet, 30 years ago no PCs, and 15 years ago barely anyone had a mobile phone. Today, mobile phones are used as a notebook, camera and mail service. They have become our closest assistants. And it is the same for corporate training, which today is no longer a benefit, but a way of adapting staff to a rapidly changing work environment. If you want to work in a leading company, you need to keep your employees up-to-date and let them learn new skills.
Fall in real income due to the economic situation in the countryAccording to data from Intercomp Center of Macroeconomic Research, average wage growth was 5.7% in 2016. And according to the Federal State Statistics Service, the consumer price index was 5.2% in 2016 and average inflation for the year was 7.1%. It follows that unfortunately no real income growth was observed in 2016. This is a fact that most HR specialists and company executives are a bit uneasy to recognize.
In my opinion, this unpleasant fact needs to be acknowledged and measures should be taken. Outsourcing work is different in its intensity so employees have no opportunity to do work on the side in addition to their main job because they are constantly involved in various projects. It is therefore not surprising that people expect companies to compensate them for financial loss. But no matter how large and successful a company is, resources are always limited. This situation can be addressed in two ways.
Solution 1. Introduction of changes to incentive systemOur incentive system is a living, working tool which is relatively quickly rearranged depending on the challenges faced by the company. I would like to clarify that we are a socially responsible employer and we always honor our obligations. Our remuneration system is completely transparent and understood by our staff.
If at the beginning of the year, we understand that not quantitative but qualitative indicators should be emphasized in the new reporting period, we adjust the system by introducing new and/or getting rid of old indicators. All these decisions are recorded in the relevant documents so that each employee understands what they should focus on in their daily work.
Solution 2. Retention of key employeesI consider that key employees are like the immune system of the organization they work for. Nothing can function properly without them. They provide internal stability in the team and consistency in the face of external factors and challenges. By taking care of their retention in the team, you are taking care of the health and prosperity of your company. Do not take any chances on your company’s health!
Solution 1. Cost minimization, optimization and restructuring of business processesThe constant crises of recent years have taught us to live frugally, constantly looking for more effective solutions for our business. It is now fairly rare to find places with a strict hierarchical structure. Bureaucracy is becoming a relic of the past even in the public sector. Business structures are becoming more levelled and manageable. Following these trends, we:
- Carefully monitor all financial indicators and keep our budget flexible;
- Pay particular attention to the automation of work in production units;
- Monitor the quality of services provided to clients by conducting regular surveys.