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The job market has found a new normal, again. After the dramatic swings of the Covid-19 pandemic, as well as a series of buzzwords, the market has stabilized in a pattern never seen before. If it lasts, businesses will have to think about human resources in a completely new way.
First, we had “The Big Resignations,” then “The Silent Resignations,” quickly followed by “Silent Hires.” And now we find ourselves in an unprecedented situation that some economists call “the great permanence.” It’s an unusual time, given how workers are holding on to their jobs and companies are holding on to their workers.
In February, new hires amounted to just 3.7% of existing payrolls and terminations amounted to just 2.2%. The last time the sum of these two percentages was this small was in December 2017, when the unemployment rate was 4.1%. Seeing this small dropout in the labor market with an even lower unemployment rate – just 3.9% – is unprecedented in our data, which goes back to 2001. Typically, dropout declines as the unemployment rate increases. But right now we are still near an all-time low for the unemployment rate.
One reason for this lack of churn is the uncertainty that still plagues the economy. Trends in interest rates, upcoming elections, wars in Gaza and Ukraine, and the possibility of corrections in financial markets are all on the minds of managers, workers, and investors. Businesses also fear that if they let workers go in such a tight labor market, they will have trouble hiring them when they need workers again. Meanwhile, experts’ opinions on the future of the economy also do not carry much weight, as many forecasters were wrong about the arrival of the recession last year.
So what’s a business leader to do? The best approach is to take the job market literally and adapt your strategy accordingly. This means thinking of new hires and existing workers as long-term partners. Here are some ways to do it.
Related: Where will the economy go next? What to watch out for in 2024
1. Plan your recruiting efforts to account for lower attrition
Workers keep their jobs longer. According to the most recent data from the Bureau of Labor Statistics, the average length of employment of American workers has bottomed out at 4.1 years, after a long decline. With fewer people walking out the door, there’s no need for as many to come in. You may spend more time searching for candidates for a particular position, but that doesn’t mean you can be more selective: There’s still stiff competition for the best hires.
2. Invest more in training
The longer your workers stay with you, the more benefits you will receive as they gain knowledge and skills. To obtain these benefits over the longest period of time you need to start investing in training as early as possible.
You can also be savvy about the types of training you offer; Increasing workers’ ability to use your company’s specific equipment, software and processes increases their value to you, but doesn’t necessarily make them more likely to change jobs. But if you’re having trouble attracting workers, you may want to offer training in skills that are in high demand in the job market. Then you can figure out how to make them stay, which might help you discover why you’ve had trouble attracting them.
3. Change the mix of benefits
Training is not the only way to invest in workers. Helping them build their human capital through education subsidies also makes them more valuable. Again, you can be savvy about the type of education you’ll support, such as part-time MBAs for prospective managers or skill-specific degree programs for individual contributors.
Investing in workers also means keeping them healthy and happy. Comprehensive medical benefits, including exercise programs, mental health services and wellness care, can make a big difference, as can free healthy meals and paid time off. Companies that offer support for growing families, such as paid parental leave, are also more likely to retain workers longer.
4. Structure loyalty incentives differently
Retaining workers has been such a challenge in recent years that some companies have offered retention bonuses after just three months. Because workers are less likely to leave, these incentives may be rejected. Laddering incentives can also encourage workers to stay longer. For example, if a worker’s bonus for staying two years was 50% higher than the bonus for staying one year, then the worker might be more likely to stay at another company rather than start at the bottom rung.
Related: Don’t miss out on talented team members. 3 ways to hold them back.
5. Explore long-term options in all areas
Workers increasingly think of their job offering as a portfolio of different types of work and flexible work, and business leaders can do the same, especially in this labor market. Just as there are ways to benefit from long-term relationships with permanent employees, there are also great benefits that come from commitment and consistency among temporary and flexible workers. Reducing turnover and deepening expertise in these groups can increase productivity. Our surveys of workers on the Instawork platform suggest that more than half can commit to staying at the same company for at least three months while working full time.
Matching these workers with companies looking for long-term staffing – in all its forms – is a critical task in today’s job market. It’s also an approach that will bring benefits far into the future, as workers deepen their skills and receive more stable incomes through more engaging relationships with businesses.