Pay rises continue to be the weapon of choice in the war to attract and retain talent. While it can be an effective tactic in a buoyant market, recruiting across industries is at an all-time high right now and simply throwing money at talent is not enough. While cash used to be king, if you are not at the very top-end of salary offerings, then the extra money is unlikely to hold much sway. US organisations in London particularly dominate salary wars and they frequently match compensation packages found in New York. So, what else can you do to offer something different if your pockets are not deep enough?
In high-intensity industries such as banking and law, money may no longer be enough to retain and attract talent. Younger employees want change and being agile can go a long way in reducing attrition amongst your teams. If companies cannot adapt to new ideas, their best talent will simply look elsewhere. In fact, many talented young employees are even switching industries. For instance, out of frustration with churn-and-burn culture, lawyers are increasingly undertaking MBAs or moving to investment banks, craving business-facing roles that utilise their skills. Meanwhile, people working in strategy or at consultancy firms are moving to the business side to seek greater flexibility. There has been a huge shift in the workforce that needs to be recognised at an organisational level if the exodus of top talent to more flexible industries is to be stemmed.
Culture used to be tied to the office and being part of a team, but with the move to a virtual environment people are looking to see what’s left on the table. If you remove money from the equation, and there’s little else on offer by way of work perks, then there’s little incentive to stay. Millennials and Gen Z want purpose in what they do, so organisations need to build purpose into their work.
Examples of change do not have to be grand or expensive – offering opportunity to do more community or pro-bono work and allowing individuals to work with a cause that aligns with their core beliefs can be helpful and will help build retention. People will feel valued and that they are contributing to a bigger cause through a platform their organisation can offer. Other examples include offering benefits that are greener or more community-driven, such as electric car leases or charity donations.
Work-life balance is of course important too for young employees. Over the past 18 months, employees have demonstrated that they can work flexibly, particularly with gruelling hours and work schedules and, arguably, in a more intense environment than the office. A recent survey completed by MLA reveals almost a third of millennials would trade a portion of their compensation for more time off and a quarter would take a pay cut for a flexible work schedule. Companies would do well to take on board what it actually is that their junior talent want from their jobs – flexibility policies will go further in attracting and retaining talent.
Organisations need to take this time to learn valuable lessons. While pay increases can be part of the conversation, neither matching market-leading compensation, nor making changes in policy will push attrition higher. Industries and companies that focus on the cravings of their junior talent will win in the long-run and therefore make savings in training and new hire costs. Those that remain blinded by simply playing bank or bust may soon wake up to a mass junior exit.