A new year might be an opportunity for a fresh start, but 2023 is kicking off with many of the same talent challenges employers have come to know well. The first jobs report of the year showed the U.S. added 223,000 jobs in December – a slowdown from what we’ve seen in recent months, but still higher than the Federal Reserve’s target of 100,000. The unemployment rate dropped slightly to 3.5%, returning to its pre-pandemic low.
But even if unemployment hits the Fed’s estimate for later in 2023, it will remain within the range of full employment and employers will continue to compete for top talent. As Fed Chair Jerome Powell recently said, “We have a structural labor shortage.”
Despite the economic uncertainty looming ahead, here are some things your organization can do to win the competition for talent in 2023:
Pay them to stay
According to the Society for Human Resource Management, average pay in the U.S. is expected to rise 4.6% this year. Not only will the increase continue to strain employers’ budgets, but wage compression created by higher-than-usual salaries for new employees may cause riffs in the workplace. If salary increases for everyone in your organization aren’t an option, consider giving higher merit raises to those you determine to be the highest flight risk or in roles most critical to your future success.
Get ready for Gen Z
Forbes estimates that by 2025, Gen Z will make up 27% of the workforce. Though it’s hard to lump an entire generation of workers together, studies show Gen Z cares more strongly about organizational culture and values than previous generations. These digital natives also prioritize productivity and efficiency and have reported they’ll walk away from a job opportunity if the hiring process is antiquated, overly complex or unnecessarily lengthy.
Make room for boomerangs
Employers looking to expand hiring are warming to the idea of boomerangs, employees returning to their organization after leaving to work elsewhere. Bringing back employees who know your culture and even their role can be a great strategy, but just be sure to watch for those who may leave only to return for higher pay. It won’t take long before other employees catch wind of it.
Invest in development
With business needs continually shifting, investing in the development of your high-potential leaders can give them critical skills to help navigate the change. It’s also one of the best ways to demonstrate your long-term commitment to them and help them see a future with your organization.
If you think the possibility of an economic downturn later this year will make employees skittish about leaving their jobs, think again.
The Great Resignation that raged all through 2022 doesn’t seem to be ending and Robert Half reports nearly 50% of workers say they plan to look for a new job in the first half of this year. As always, focusing on employee retention is the best way to avoid the all-too-familiar pain of having to re-hire and re-train.
This article was originally published in the Cincinnati Business Courier.