Business in America is flourishing. Many organizations in the rail industry are stating growth or have returned to pre-pandemic levels, yet most organizations feel the rising costs of doing business. The most significant cost increase will be compensating workforces with a reported surge of 3-4.5% annually. According to Forbes, wages have grown the fastest in 35 years, and almost half of all employers have job openings they are unable to fill.
Industry Senior Executives collaborating with their Human Resources teams will have to focus on strategic planning and driving strategy specific to compensation. Organizations evaluating current wages, benefits, incentives, employee work locations, inflation pressures, labor shortages, candidate demands in talent acquisition and recruitment, and the Great Resignation will have to be flexible and make necessary compensation and market change adjustments. The result will help better attract talent, drive workforce retention, and meet future organizational needs. This is not a time to be slow to react.
Ensuring you have a workforce retention strategy is crucial as the cost of losing one employee, at 33% of the employee's annual compensation, is also rising. According to Gallup, if that employee is an impact player or top performer, the costs can be one-half to two times the exiting employee's annual salary. The increase in costs to replace that employee is not only hiring a replacement, but also training, covering their responsibilities in the interim, and getting a new employee up to speed, which can be lengthy. The goal is to prevent the exit and the associated costs.
What you can do to drive the best results now and post-pandemic is to look at your organization's compensation practices and the market, tackle and boost areas that need to be addressed (make sure you are at or above market), and look at driving a difference with incentives and programs. It is a great time to plan these solutions to help your organization reset from the disruptions and communicate changes that might impact the organization to drive growth and competitive advantage.
