Employee engagement and retention can’t be looked at in isolation. The latest CIPD report on the workforce in the UK, when set against ONS unemployment figures, reveals a picture that demands some attention.
- UK unemployment has levelled off after rising steadily for a year, but still sits at its highest point since COVID-19.
- Employer hiring intentions remain at record lows.
- Redundancies are dipping slightly, but mostly because organisations are freezing hiring and relying on “natural attrition.”
Market statistics are ‘lagging’ indicators, with behavioural data like number of redundancies, telling us what has happened. While planning numbers, like those used by the ONS tell us what might happen next, if we want ‘leading’ indicators, we need to look at attitudinal data, which tells us what people think is happening now, or might happen next. For that we can look to today’s CBI data. Sentiment, at least in the services sector, continues to be increasingly negative about business prospects and remains negative about hiring prospects. That said, not only is attitudinal data a leading indicator, it is also the fastest to change.
The challenge with “the default approach”
Many organisations have hiring freezes in place and are using “natural attrition” to reduce workforce size. “Natural attrition” is a term which is up there with ‘fiscal drag’ as two of the least human-sounding ways to talk factors affecting about people at work. Natural attrition is a favoured approach for work force reduction in the UK, and seen as a less damaging to engagement. However, if it isn’t paired with workload balancing and a skills audit, it creates long-term problems. Attrition without redesigning work leaves the remaining employees overloaded, erodes engagement, and accelerates retention risk down the line.
What does this mean for leaders? A workforce under pressure, and a need to think differently. The net picture is one of organisations needing to do more, with fewer people, at a higher cost. There is a long and separate story about UK productivity data, that is one for another post. UK productivity figures are a complex topic, but perhaps this is finally the season to understand and tackle the issues that are holding back employee productivity. It is time to tackle employee engagement from another angle.
The non-obvious insight:
There is a very non-obvious conclusion from this data: This is a key moment to think about employee retention. In the midst of layoffs and negative hiring intentions, that might feel like the last thing that should be on leadership’s mind, but consider these two key points: Whenever there is a slow down in hiring, and a linked slow down in employees moving into new roles, ‘movement demand’ builds up. There isn’t a reduction in people changing jobs, there is just a redistribution in timing. COVID19 was the most recent example of this pattern, but it goes much further back in the data that that. Once the job market recovers, people move, and move quickly. Combine that with the fact that any significant initiative at an organisational level will take between 3-12 months, then now is the moment to start thinking about what is needed to retain key employees, and to be able to attract new ones that move on. When the market recovers, it will be too late.
Read more in our blog: To survey or not to survey after a Reduction in Force
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