As New Jersey’s unemployment rate fell to a record low last month – 3.5 percent – most employers report that they are concerned about employees leaving for other jobs. While this concern is spread among employers of all sizes and industries, the most acute concern is among employers with 50 or more employees.
Their primary strategy to retain valued employees? Raise pay.
The Talent Retention Survey conducted by the Employers Association of New Jersey (EANJ) in October, 2019 explains.
About two-thirds of a cross-section of EANJ membership reported that being concerned about employees leaving for greener pastures. But that percentage drops substantially for smaller businesses.
Only about a third of employers with 49 or fewer employees say that they are concerned about losing employees for other jobs. Considering that 97.7% of businesses in New Jersey employ 49 or fewer workers, these employees should not expect much bargaining power even with a low unemployment rate.
For those small businesses that are worried about employees leaving, its mostly losing experienced sales people that is the primary concern. They are not easily replaceable. New recruits need to be trained on the product line and would not have the customer contacts that an experienced sales person would have.
Larger businesses depend on more talent diversity. For those businesses employing 50-99 employees, 60 percent of employer-respondents are concerned about losing technical, administrative and production workers.
For those businesses employing 100-249 employees, 75 percent of employer-respondents are concerned about losing technical, administrative and managerial employees.
And for those businesses employing 250-500 employees, an overwhelming 90 percent report being concerned about experienced managers, administrators and skilled technicians leaving.
This data is consistent with what EANJ reported in its Talent Management Insight report published in November, 2019. The most acute skills gap is faced by businesses that employ 100 or more employees. The highest demand among the employers in this cohort is for middle-skilled talent requiring technical training, often with some college, but not a college degree.
Now in a tight labor market, there is a palpable concern about losing experienced employees.
For manufacturers of all sizes, about 60 percent report a concern about losing production workers and workers with technical skills.
EANJ’s seminal Talent Management Survey published in 2018 reported that 60 percent of employers expected talent shortages to negatively impact their business. But only one in three said they had a strategy to address the problem.
The Survey found that most employers hire reactively, seeking to fill a job. As such, most employers report that their hiring is not planned or strategic. The biggest obstacles to planned hiring are lack of time and limited resources. This strongly suggests that leadership does not view talent management strategy as sufficiently important to the business. If it was important to the business, resources would be allocated. Stated another way, most employers want to fill jobs but are not competing for talent.
Consistent with this reactive, transactional approach to human resource management, most employers say they are willing to raise wages to retain experienced employees, mostly managers and technicians. Others are considering promotions and bonuses.
Half of New Jersey’s private workforce works at a small business. Even with unemployment at a record low, most of these workers are not expected to have much bargaining power for higher wages, unless they are in sales. But for managers and skilled technicians at larger firms, this may be the time to ask for higher pay. It appears that their employers are willing to bargain.