Staff retention: Is cash the answer?

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New Zealand businesses are facing a flight risk from their employees as they seek out higher wages, according to Hudson’s Salary & Employment Insights Guide 2014.

Results from the study showed that 58.2% of employees are either actively or passively seeking new roles – and higher remuneration is the top reason why. Other main motivators for seeking new employment include finding a role they are more interested in and an organisational culture that will make them happy.

The results, along with encouraging economic indicators, have prompted Hudson to warn organisations to take immediate steps to retain staff.

“With employees feeling restless and the labour market tightening, the time is now for organisations to act, to scale their businesses, secure the best talent and take advantage of the opportunities that an improving economy offers,”  Roman Rogers, Executive General Manager, Hudson New Zealand, stated.

Hudson’s research showed across the market there is an acceptance that base salary increases in 2014 will be required, particularly to retain high-performing staff. Seven in 10 employers intend to award increases in line with CPI growth (2-3%).

Finance Minister Bill English agrees pay rises are on the table for workers after years of belt tightening.

Speaking after announcing a May 15 budget date today, English told media employees were entitled to think they could be seeing salary increases this year.
"I think a lot of households will be looking for benefits through more job security, which they haven't had [and] through pay rises, which households haven't had much of through the last three or four years," he told Stuff.

He added that if businesses wanted to keep skilled people and be attractive places to work "then increased pay is going to be part of that package".

While salary was the top motivation in keeping employees in their current role, a promotion (17.0%), increased professional training and development (13.3%), greater flexibility around working hours (11.4%) and increased leave (5.5%) would also entice them to stay according to Hudson’s research.

The study also found in regards to package benefits that are most valued by employees, bonuses ranked highest (68.9%), followed by increased annual leave (48.6%), flexible working arrangements (37.4%), increased superannuation (35.7%) and private health insurance (35.4%).

Rogers, however, said organisations don’t necessarily have to start emptying the coffers to keep staff.

“Employers have options beyond salary, but they need to assess their retention strategies and act now to retain talent,” Rogers said. “We know strong leadership impacts engagement, driving productivity and increased employee retention, so having strategies in place to ensure managers and leaders are able to lead effectively in the rapidly changing marketplace is a must-do in 2014.”

Hudson recommends enabling employees to develop their own career paths via options such as stretch assignments, secondments to other business functions, taking on new projects, training and development to help retain staff along with flexible working arrangements.

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