Retention is the Key

Adrian Coysh of Sigma, our executive leasing arm, ponders the impact of a recovering economy on retention rates...

This year has seen quite good confidence in the market, and this has been most evidenced by candidates registering with recruiters, or applying for advertised roles. In the past 18 months, these same candidates were quite content to stay in their current positions – “better to stay with the devil you know”. Recent polls have shown that upwards of 75% of employees are less then happy with their lot, and are looking for change. They acknowledge the pain businesses were going through and agreed with most of the measures taken, however they now are looking for some economic Panadol, which if not forthcoming will see them move on.

Finance people in particular have borne the brunt of the agony, given increased workloads to generate Management Reporting, together with being at the forefront of cost-cutting measures being adopted.

The next few months are going to be interesting as the Australian economy is powering ahead. Their unemployment rate now sits at 5.3% while NZ is down to 6.0 % in the March quarter. Australia’s growth has been driven by ever increasing commodity prices, an infrastructure boom, and record net immigration. This shortage of employees in Australia can only be fixed by immigration and importation of the skills required, from a compatible donor.

Given the ease of access for Kiwi’s to work in Australia, very soon more and more of us are likely to head across the ditch to earn 50% more than they can earn here. The National Government has some interesting decisions to make in time for the May Budget, particularly with regard to the proposed tax cuts as skills shortages here and pressure for increased wages will see candidates looking closely at moving to the Red Country.

As our unemployment tide level drops, it exposes our skills shortage which never really went away. Given the rules of supply and demand and as detailed above, employees are looking for increases in salaries, the imperative of business must centre around retention. This need not necessarily mean just paying all your existing staff more, but by looking at the lean, mean model that businesses are added assistance to the most overworked staff. Fear of losing ones job last year kept them on board, but this is no longer a viable tool of staff retention.

One thing isn’t changing - it is always cheaper to retain staff then to attract new talent to replace them. Apart from the cost of recruitment, and loss of acquired knowledge that walks out the door, you will undoubtedly be paying an increased salary to the new person.

Why not invest that money in your existing good, loyal people.