Employee Retention: The Key To Cost Savings And Fighting Inflation

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Employers around the world are facing tough choices as they weigh down inflation and the risk of recession grows. While many business leaders are struggling to keep their operations in the dark, many still have roles in place—and are expanding their contingency workforce to complement their teams and increase their resiliency and financial agility. Are. In today’s highly competitive labor market, actively tapping known internal talent from both full-time and casual pools can help organizations avoid the rising costs associated with new hires.

power of perception

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Many companies have over the years offered large financial incentives to employees seeking new positions, driving up the market rate for a wide range of employees. A 2022 Pew Research Center report showed that half of people who changed organizations during the second year of the pandemic saw their salaries increase by about 10%. Those who stayed saw their salaries decrease by an average of 2% when adjusted for inflation.

A recent review of Magnit’s comprehensive casual workforce data revealed similar differences. According to our data, organizations that rehired known casual workers increased their wages by about 10% when they renegotiated or extended contracts, compared to net-new hires in these organizations. There has been an increase of about 19% in the compensation package for

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Of course, retention-related cost savings don’t just come from salary. Losing experienced employees can reduce overall productivity, reduce stability, and increase training needs, all of which lead to higher operating costs. Finally, when you consider the material costs of attracting, recruiting and onboarding new employees, the math quickly reinforces that workforce retention should be an absolute priority.

raise your odds

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Keeping top talent on board is a sound strategy, but it can seem impossible to achieve in today’s market. However, there are some tested strategies that can help employers retain workers and thrive in uncertain economic times:

1. Re-evaluation of length of service (LOS) policies

Retaining high-quality employees can provide peace of mind because managers are already aware of their talents and work habits – and extending existing employee contracts can also make starting rates last longer. , which can result in cost savings. Thus, organizations should carefully examine policies that unnecessarily limit the tenure of casual workers. To this end, consider seeking the assistance of compliance experts to manage risk and ensure proper employee classification.

2. Strategic rate increases

With belt-tightening occurring across industries, rate increases should be based on reliable market data, company objectives and factors such as flight risk and candidate availability. Investing in technology that provides strong talent and insights can help ensure businesses are paying competitive rates that won’t break the bank.

3. Skill development of existing population

Dedicated, smart, and creative employees are worth keeping—so help them build the skills the company needs. When new projects emerge, employers may consider offering development opportunities to top performers whose skill sets are well suited to the new roles. Magnit’s research shows that offering company development opportunities is the single most effective thing you can do to boost employee satisfaction, which means more redeployment, higher retention rates and all the associated financial benefits.

4. Redeploy with a Purpose

Contingent worker management programs have traditionally paid little attention to the redeployment of employees into other roles with an organization, often due to a lack of understanding, emphasis, and resources. Monitoring assignment end dates, skills, and other internal data helps organizations identify workers coming off assignments who may be good candidates for other roles within the organization. Using this data to redeploy workers leads to cost savings, increased organizational flexibility, and fosters greater institutional sustainability.

5. Go Straight

What if there is no role to transfer talented employees to when they reach the end date of their assignment? Instead of losing touch, invite them to join your private talent pool to be considered for future opportunities. Companies can invest in technology that facilitates direct sourcing of candidates during the duration of these talent clouds and subsequently, thereby avoiding supplier mark-ups. With the average markup for contingent workers at 35% – which goes to the staffing agency that supplied the employee – direct sourcing frees up money for other internal investments (or to boost the bottom line!) worker experience, While improving the recruitment speed and quality of talent.

making it happen

With 2023—a year that is likely to bring challenges related to budget and labor management—upon us, it will be incredibly important to understand the above, and even more important to execute. The strategies outlined here can help leaders encourage workers to stick around, but they’ll only work for companies that have insight into their employees. As such, investing in an integrated workforce management platform that provides the necessary data, technology and human experience is critical for leaders looking to develop a new retention strategy.

Once leaders have these tools, they will be well positioned to execute strategies – such as thoughtful salary increases, culture-building initiatives, and upskilling efforts – that can bring redistribution and retention benefits. .

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