British employers quickly need to get a better grip on pay and how it is delivered if they are to attract and retain top talent, according to new research from Towers Watson, a leading global professional services company. Towers Watson’s latest Global Workforce Study shows that just a third of UK employees are committed and focused in their current job and rank their salary as the number one motivation to consider leaving.
The research also provides evidence of continued money worries in the workforce, with nearly half of employees (46%) anxious about their financial future and less than half (42%) feeling what they get paid today is fair.
This news comes as a simultaneous Towers Watson global study of over 1,600 companies confirmed an upturn in the job market. In its Global Talent Management and Rewards Survey, 60% of UK employers said hiring activity has increased compared with last year. Additionally, more than half (52%) indicate that employee turnover is rising and that it is becoming increasingly challenging to retain high-potential employees and top performers.
Carole Hathaway, Global Leader of Towers Watson’s Rewards practice, said: “It is apparent that employers need to get savvier about what makes employees tick if they are to succeed in bringing the best people into their workforce and holding onto them. As churn starts to return to the labour market, this is an issue that needs addressing with some urgency before high employee turnover shifts from being today’s risk to tomorrow’s reality.
“Pay is most certainly top of mind for employees when they are making career decisions about when to stay and when to go. Mounting anxiety caused by recent headlines about stagnant pay growth is serving to re-focus workers’ minds on their salary and whether they are getting a fair deal. Lingering pressures on the pay pot caused by the wider economic climate mean that employers generally don’t have the flexibility to divert extra funds into the salary budget. However, this does not stop them from improving perceptions of fairness by ensuring effective differentiation through better alignment between pay and performance. Today’s employers should expect to communicate the facts on pay for performance to employees, in part drawing on up-to-date internal and external pay benchmarking information, providing tools to line managers and inc reasing transparency over the reward process to build more trust and confidence in the reward process among their employees. They should also ensure that employees understand the value of their total package and not forget about all of the other rewards that are part of their contract.”
Towers Watson’s concurrent studies of employers and employees indicates a wide disconnect between what employers think are the key drivers of attraction and retention and what most workers actually want from the employment deal. According to the research, as part of the recruitment process companies are underestimating the value employees put on the fundamentals such as job security and overestimating the importance of the relationship with line managers at the expense of noticing that employees are more likely to leave if leadership doesn’t live up to their expectations.
The research also shows that less than half of employees think their company does a good job when it comes to attracting and retaining the right workers. Furthermore, less than half (45%) say their organisation hires highly qualified employees, while even fewer (34%) say their employer does a good job of retaining talented employees.
Angela Paul, Head of Employee Research for EMEA at Towers Watson’s Research and Innovation Centre, said: “With talent mobility on the rise, employers must listen more closely to the voice of their employees and pay attention to the big data on attraction and retention to close the current perception gap. Offering competitive rewards remains an enduring and critical challenge for employers when attracting and retaining employees.
“Shrewd employers recognise the cost of not securing talented candidates and of high staff turnover in terms of frequent recruitment investment, but many are guilty of underestimating the impact to their bottom line from reduced productivity among employees resulting from high levels of disengagement. By taking note of how to sustainably engage their employees, UK employers can also improve their financial performance with the talent they have today and in turn improve the broader financial prospects for the UK business sector.”