CEOs Must Act Now to Avoid Retention Crisis

Research by Octopus Money suggested that UK businesses faced a retention crisis, with leadership largely unaware of the scale of the problem. Despite nearly half (46%) of employees revealing they planned to look for a new job this year, 60% of the C-suite thought their workplace was prepared to meet the needs of the future workforce.

The independent study, carried out by Censuswide for Octopus Money, further illustrated how deep-rooted this issue was. By their own admission, the C-suite weren’t focused on retention, with 42% seeing the cost of running the business as their main priority. HR tended to agree, with 52% saying the C-suite was too focused on other business issues to tackle retention.

The research revealed a significant disconnect between business leadership and their employees. This had been exacerbated by the cost of living crisis, where businesses struggled to give employees the pay rises they wanted. However, the data suggested workplaces had been unsuccessful in compensating for this in other areas of their benefits strategy: 42% of the C-suite agreed that their benefits were ineffective at retaining talent, but neither they nor employees agreed on why this was. Thirty-one percent of the C-suite thought that employees didn’t even try to understand them, whereas 80% of employees said they did, but simply didn’t see the added value.

HR found themselves as the mediator in this disconnect between the C-suite and employees and said they were facing increased pressure to deliver: 62% said expectations were much higher this year. One contributor to the employee-leadership divide might be the C-suite’s overly positive view of HR’s reputation. Sixty-five percent said that HR was very useful in innovating the employee value proposition, though employees did not feel the same: as many as 63% said that they didn’t believe that HR added anything to their experience as an employee.

In a final twist to the C-suite’s retention problem, HR professionals were much more likely to look for a new job compared to the rest of the workforce (57% vs 46%), meaning that the C-suite risked losing both their top talent and their employee mediators.

Anasuya Iyer, Chief Commercial Officer at Octopus Money said: “Faced by rising costs, and employees job hopping for higher pay, I often hear from companies that they’re struggling to work out how to use rewards and benefits other than salary and bonuses, to retain their staff. The reality of the retention crisis is stark: with nearly 1 in 2 employees job searching, businesses could end up spending more on rehiring and retraining than implementing the right benefits strategy in the first place.

“They need to overlook their preconceptions of why employees won’t engage. Instead they should look at retention as something they can earn by supporting employees during key life moments that almost everyone goes through, like promotions, parenthood or divorce.  Out of the businesses we work with, the ones that see the most success are the ones that have leadership buy-in from the top for this kind of strategy, and, instead of just letting HR do the dirty work, shows employees how their benefits strategy will help them get to where they want to be in life.”