Competing in an Employee’s Market
Posted on October 26, 2018 by Jonathan Mills
This is an Employee’s Market
As of September ‘18 the national unemployment rate is less than 4% (the lowest in almost twenty years). Job candidates are more likely than ever to have their pick of opportunities, which means that employers have less power over the negotiation process and it is harder than ever to recruit and retain employees. Newer generations are also less likely to accept traditional employment requirements or even stay with an employer for more than three years: the average employee moves after about 4½ years, and employees between 25 and 34 years old move after less than 3). This is an Employee’s Market, but you don’t need to be a Google or Zappos to compete. Instead, consider Michael Burry. He defied norms and chose to contradict conventional wisdom – something we need to be willing to do if we want to compete.
Between 2007 and 2010, the US economy was hit by a destructive financial crisis – something very few people were able to anticipate. One person in particular, a doctor turned money manager named Michael Burry, understood the market in a way that other investors and analysts couldn’t. He saw that our housing market was a bubble, a stark contradiction to the financial industry’s position, and chose to bet AGAINST the market. Burry’s keen eye paid off, and when the market crashed, he earned himself $100 million and his clients $700 million.
BLS Data on Unemployment | BLS Data on Tenure | Summary of the 2008 Financial Crisis | Bio on Michael Burry
What Burry shows us is that norms and conventional wisdom can be dead wrong, and if we pay attention then we can catch it. But what “norms and conventional wisdom” are pertinent to recruitment and retention; and how will course correcting pay off? Consider three misconceptions that we often take at face-value.
Misconception #1 Recruitment is our first impression.
Conventional wisdom describes first impressions as something unavoidable and irreplaceable. On those notes society is absolutely correct, which has helped recruiting teams prioritize first contact and HR organize the onboarding process. However, we have misunderstood when and how first impressions occur.
The employee market is more driven by open access to information than ever before. Networks like Instagram, Facebook, Twitter, and Glassdoor are repositories for opinions about your company; and they facilitate conversations between candidates and current/past employees. By the time your recruitment team contacts these candidates, they have already researched your employment brand. In effect, your employees supersede the recruitment team.
“Employment Brand” is a way of describing how attractive you are as an employer. It also describes what type of employees you attract.
It would be tempting to artificially improve employee reviews or create policies to control social output; but candidates can sniff that out and you could do long-term damage to your employment brand. The key to managing first impressions is to take strategic action to influence the employee experience, because current employees generate the employment brand. Start thinking in terms of corporate culture and make work-life a priority. Happy employees say great things about their company.
Misconception #2 Employees are ok with compromise.
Conventional wisdom champions the idea that employees understand when compromises need to be made. If they are asked to work late hours or push an incomplete product to approval then they understand that it is necessary – they’re ok with it. On the surface employees will agree with this assumption, but it isn’t an exchange that aligns with reality. The truth behind these compromises is that employees are subject to a strong desire for processes to be quality. Regardless of the outcome (promotion, profit, or accolades), compromise leads to a negative outlook and low morale.
Employees are subject to categorically irrational needs, one of which is called procedural justice. They tend to give a disproportionate weight to the process regardless of the outcome. Their experience affects whether an outcome like pay, promotion, power, or recognition leads to greater performance and loyalty. In fact, even a drop in salary, if part of a quality and sincere process, can generate trust and loyalty. Creating a culture of quality processes can be so powerful that an employee would choose to stay rather than leave for a higher paying competitor.
Consider a survey that researchers conducted with hundreds of convicted felons in Baltimore, Detroit, and Phoenix. What they discovered was that despite the sentence issued (a fine, probation, or prison time), what affected their outlook on the process the most was how much time their lawyer spent with them. In other words, did they feel like the process was fair and that their voice was heard? Was it quality? Those who experienced a high quality process believed the outcome to be more fair (Procedural Justice in Felony Cases, Law and Society Review)
Misconception #3 Money is the best way to motivate.
The shortlist for creating loyalty includes a lot of externally motivating programs (e.g. pay-for-performance, spot bonuses, and public accolades). These methods tend to create a temporary motivation, but are ineffective for creating high levels of performance. In fact, pay and benefits only need to supply a healthy lifestyle. Anything beyond that basic need has a diminishing return. The key to reaching higher levels of performance is to foster intrinsic motivation. It is the type of motivation that drives self-efficacy, innovation, and sincerity. But how? By creating a genuine shift in culture toward three ideals: purpose, autonomy, and mastery.
- Purpose: Draw a line from the employee’s task/role to a substantive purpose.
- Example) “I may be hamming data into a spreadsheet, but this info is going to help us serve the community.”
- Autonomy: Allow employees to govern themselves as much as possible. Minimize management.
- Example) “My manager just asked how they could support me. I expected to be ‘monitored’, but I can tell they trust me now.”
- Mastery: Create or facilitate opportunities for employees to learn and practice.
- Example) “HR just sent me a list of free workshops from around the city. They said I could use core hours to attend a few!”
Summary: Culture Attracts, Retains, and Creates Talent
Correcting for these misconceptions will help your organization thrive, but doing so needs to be part of a larger corporate culture strategy. As part of your strategic portfolio, culture becomes a competitive advantage. It sets you apart in the market as a serious, high-quality employer, boosting your employment brand above your competitors. You will attract, retain, and create top talent at accelerated rates. Let me help you unlock that potential.
Schedule a call!