Why Effective Recruitment Needs Strong Employee Retention? CNA IT Case Study
Employee retention is one of the most critical aspects of business operation. But, unfortunately, it is also one of the aspects that don’t get enough attention, and it backfires hard.
Lack of thought-through employee retention strategy can potentially throw a wrench into the proceedings. For example, employee benefits and remuneration indirectly affect recruitment efforts.
How to mitigate this factor? Part of the solution is a competitive remuneration and benefits package. However, it requires up-to-date market research coupled with insights into employee motivation factors.
This article breaks down our recent case when market research and salary surveys helped our client handle employee retention challenges.
The Set-Up: Why Strong Employee Retention is Essential for Recruitment?
Our client was a fintech product company that develops personal budget applications. They came in with the recruitment services request to fill senior and lead positions in the project.
On the surface, it seemed like a regular request. Even with the current competition for tech talent on the Ukrainian IT market – it is not that hard to find fintech specialists.
But then things got interesting.
During the requirements elicitation discussions, our consultant found considerable employee turnover during the last six months. This aspect results in low quality of hire figures as new hires simply don’t last long enough to impact business significantly.
That’s a serious challenge as it neuters the effects of the successful hires.
Because of that, we needed to investigate an issue to guarantee an effective talent acquisition and successful recruitment partnership.
What was happening?
- During Q4 2020 and Q1 2021, senior-level specialists started quitting the company. The reason – they were switching to another domain, or they’ve found another job in the segment with similar salaries and responsibilities.
- Even when employees were announcing that they are considering job offers from other companies, they were reluctant to consider higher salary counteroffers from their current employer.
- That’s a bit unusual because the general trend in the Ukrainian IT market is that employees accept counteroffers with higher salaries and better perks. Even more so, some employees get job offers specifically to facilitate counteroffers.
This situation looks like an issue with employee retention. But why were things going that way?
Why Does Employee Retention Fail?
Employee retention revolves around these primary factors:
- The ability to maintain a competitive remuneration package;
- Company culture and its tangible manifestation through perks, benefits, work environment, professional development, and career growth.
The former is about staying above the line – having a better proposition than the competition. It is the glue that keeps the things from coming apart at the seams.
The latter combines the employee’s needs and showcases the company’s culture and values by constructing a mutually beneficial relationship.
That’s what moves the employee forward in the company.
- In a way, it is a balancing act.
- Money alone can’t keep employees from leaving, while stellar career opportunities without proper compensation won’t facilitate employee loyalty.
There is also a third factor – people. Finding the right talent that fits the company’s culture and shares its values is critical for hiring success. This aspect goes beyond technical expertise and work experience. But when it comes to retention, it all comes down to remuneration and perks.
How can employee retention fail?
- Not being competitive due to a lack of understanding of what is going on in the market.
- Misinterpreting employees’ needs and failing to provide necessary workplace benefits;
- Failing to meet employee expectations regarding compensation, work environment, perks, etc.
That’s what happened.
The Case: Lack of Market Intelligence Hurts Employee Retention
While the company’s compensation package is above market average, the employee benefits were less defined.
- For instance, we’ve contacted several former employees and asked them about the reasons for leaving. One of the most common answers was the impression of the glass ceiling regarding career progression. There was no clear-cut upskilling system that explained how to get to “the next level” and described the requirements of getting there.
- The other common complaint was that the company wasn’t investing in employee’s professional development and upskilling. For example, having an on-hand knowledge base, organizing knowledge-sharing meetups, covering the certification and courses expenses. This state of things makes an impression of a company not interested in employees boosting their worth for the company. Some former employees stated that they felt like they were “on their own.”
When we asked the HR manager about that, there was confusion because the company avoided pressuring employees into career growth and professional development.
Instead, the company provided opportunities for those interested in career progression or professional development while allowing others to do their work on their terms.
This approach creates a conundrum.
- On the one hand – there are opportunities for those who ask.
- On the other hand – these opportunities are uneven.
This situation leads to a slow-burning employee frustration that eventually leads them to leave the company.
How did things turn out like that? The answer is – lack of market intelligence to stay competitive in the market.
Why is market intelligence essential for Employee Retention?
When it comes to gathering market intelligence regarding the competition – the focus is on the business side of things.
It is easy to understand why – this information helps to fine-tune a company’s value proposition and presentation.
However, it is also essential to keep up-to-date information regarding the competition’s HR side – the salary ranges, employee benefits, perks, etc.
Usually, companies only explore competition’s salary levels via custom salary surveys as it is a decisive factor for retaining employees and attracting candidates (apart from prerequisite interest for the project).
But benefits and perks are also significant as they seal the deal regarding the employment opportunity and retention.
That was the root of the problem for our client.
The Solution: Adjusting Employee Benefits with Up-to-date Market Research
Our initial goal was to provide recruitment services and find high-profile tech talent. Yet, as we delved deep into the case, it turned out that we needed to provide additional services to guarantee successful hires.
We needed to nail down employee retention factors. Because of that, we did market research regarding employee remuneration and benefits.
Our consultants formed a list of suggestions describing how the client’s competition handles retention and explores the improvement opportunities for the client.
The resulting document became a foundation for the company’s benefits and perks transformation.
What happened next?
The company adjusted its employee benefits system according to market research and feedback.
- By the end of Q2 2021 – the employee turnover was down 30% – compared with Q1 2021.
On the other hand, the transformation of professional development and career growth systems boosted employee motivation and led to a stronger team bond.
- As a result, employee motivation to achieve high results became more pronounced, and tech talent became more involved in their work.
Employee retention is one of the biggest challenges the companies face. But, unfortunately, it is one of those things that always seems to be not taken as seriously as it is supposed to be. Why? Because it usually happens to someone else until it happens with your company. But by that point, it is too late.
This case is a good illustration of the complexity of the successful recruitment process. In addition, it shows how deeply interconnected are different aspects of the company value proposition are.
Because of that, market research and up-to-date data enable its optimization and contribute to the eventual hiring success and long-term employees.
If you are looking for up-to-date market intelligence, need to adjust your remuneration/benefits packages, and strengthen employee retention – our market research consultants can help you out.