EMPLOYEE RETENTION A PRIORITY
By: Barbara Rose
The Atlanta Journal-Constitution, January 15, 2006
Chicago - Human resources executive Bruce Ralph wasn't looking for a new job when a
recruiter suggested he consider leaving his employer of 12 years to work for another
company.
"I was well-respected, I was well-compensated, my relationships with my peers and my
boss were very good," he recalled. "This just came up, and it was too good not to
explore."
Ralph, 42, who joined Zebra Technologies Corp. as a corporate vice president in May, is
among a growing number of white-collar job-changers who are seizing opportunities in
an improving labor market while creating headaches for companies that are trying to
hold onto their best employees.
Steady if not spectacular job growth in the last two years has emboldened more
employees to look around. At the same time, retention has shot to the top of the list of
priorities at growing companies that are facing keener competition for certain workers,
especially seasoned professionals in finance, sales and marketing.
The U.S. Labor Department's so-called quit rate - a closely watched barometer of
workers' ability to changes jobs - reached a four-year high in September, when voluntary
resignations totaled 2.3 percent of total employment. After bottoming out at 1.7 percent
in 2003, the rate has been higher than the year-earlier rate for 20 consecutive months.
Nearly two-thirds of human resources professionals report being concerned about the
number of voluntary resignations in 2005, according to a recent poll of 435 executives
by the Society for Human Resource Management. More companies are tuning up
retention measures, such as competitive raises, promotions and other career
opportunities, respondents said.
"The competition for good talent has heated up, without question," said Stephanie
Penner, a principal at Mercer Human Resource Consulting.
Chicago employment lawyer Laurel Bellows had a stack of separation agreements on
her desk a year ago. Now, she finds herself negotiating employment contracts as well
as severance deals.
"The employer was in the bargaining chair" 12 months ago, she said. "If you got
terminated, you took the first offer that came your way, and there was not a lot of
negotiating. Now I've got several candidates with more than one offer.
"I'm also seeing more employed people negotiating offers."
Executive recruiter Peter Crist of Hinsdale, Ill-based Crist Associates said companies
are more inclined to go the extra mile to keep executives who are considering leaving.
"Almost 75 percent of the deals we've been involved in, we've seen a counteroffer," he
said. "I haven't seen this in years. It tells you how aggressive companies are getting on
retention."
In addition to the labor market's cyclical shift is a worrisome demographic trend: the
approaching retirement of 76 million baby boomers, the oldest of whom turn 60 in 2006.
"There's a lot of talent that's going to be hitting the road, and there's not going to be
enough to replace it," said Doug Pelino, Xerox Corp.'s chief talent officer.
Corporations are spending more time devising strategies to attract and retain the types
of workers they need, Penner said.
"In the past, they might have competed for talent that said, 'Show me the money,'" she
said. "Now it's more about, 'Show me the value proposition.'
"Candidates are asking: 'What is my career path? What is my opportunity for different
types of experiences, for interacting with management? How will I learn, and how
quickly will I learn? Will I have flex time? What is the culture?
"The challenge is to not only focus on putting together the best deals in terms of
compensation but to identify the other elements that will be the most appealing to the
population they need to attract and retain."
Salary surveys suggest companies continue holding the line on raises while spending
more on bonuses and spot cash awards aimed at keeping top performers. At the same
time, raises vary widely, based on performance.
The top 22 percent of employees are expected to average 5.2 percent raises, compared
with 3.4 percent for the middle 70 percent of employees, according to Mercer's 2005-06
survey. The weakest 8 percent will average 2 percent increases.