Staff retention should be an organisational priority at all times. Recruiting new employees with the right skills set and cultural fit can be timely and costly, and with often serious competition for strong talent.
Smart organisations work hard to effectively manage, develop and retain internal talent. The 2017 Staff Retention Report investigates current market trends in relation to staff retention and considers a range of strategies that can help reduce voluntary staff turnover and ultimately retain an effective and productive pool of in-house talent. In particular, the report looks at salary and its role in retaining top staff.
The IMF expects Australian economic growth to increase only modestly to 2.2% by 2018, down from the original estimate of 3%. Economic growth in Australia has been dragged down somewhat by declining resource-sector investment, while bad weather slowed housing investments and mining exports for first half of 2017 and Cyclone Debbie, which hit Queensland in late March, temporarily disrupted coal transportation.
This has been compounded by global political upheaval, including Brexit, the 2016 American election and, closer to home, high turnover of political leaders in Australian federal politics (six prime ministers in eight years).
Slow economic growth generally engenders slow salary growth. Wage growth has been steadily decreasing in Australia, dropping consistently each year from 4.1% in 2012 to 2.8% in 2017. What’s more, salary growth has not been keeping in line with inflation.
However, slow economic growth is only a part of the picture. Australia is experiencing a delayed effect from a global trend of weak salary growth. In the past, the mining boom largely shielded Australia from this trend. The rise of the “gig economy” where workers are employed as private contractors (including Uber, and food delivery services such as Deliveroo), and the growth of part-time roles also contribute to weak wage growth. In fact, wage growth might never recover to pre-Global Financial Crisis levels as the structure of the labour market has since significantly changed.
Additionally, there’s evidence to suggest Australians are becoming more risk averse and are choosing not to bargain for higher wages for fear of unemployment. Underemployment has increased and as a result more part-time workers are willing to take on greater numbers of hours rather than asking for a pay increase.
Remuneration plays a very important part in employees’ decisions to stay or leave workplaces and it may be the only factor for some. Market data from the National Salary Survey suggests that there are several HR strategies and approaches that can be considered to help organisations to achieve below market average resignation rates. Organisations could positively impact their turnover rates with policies such as increasing the entire salary package, providing a fully flexible salary package, adding more superannuation and rewarding overtime work with options that fit their needs. Also having a supportive development culture will help to keep staff engaged and challenged enough to keep them from looking elsewhere.