Employers vs. Employees: Who’s Got Leverage in Today’s Job Market?

Companies are fighting to hire quality workers. But that doesn’t mean they don’t have—or can’t create—leverage.

The Great Resignation continues, with the Department of Labor’s (DOL) latest January report showing a record 4.5 million workers quit in November. And a December survey shows that “89% of employers believe recruiting and hiring will be either ‘somewhat’ or ‘very’ challenging” this year.

All of this sets up the classic, cyclical swing in the job market, right? Employees and job candidates have all the leverage, and employers must struggle to find good (or adequate) workers by any means necessary.

Well, yes and no.

Employers will always have significant leverage, and they can maximize it by taking steps to create attractive workplaces that stand out from the pack. The Great Resignation and rebounding economy may simply change the paradigm, creating a situation where worker and company demands adapt to each other and achieve greater alignment. Let’s look at how each side of the table can maximize their leverage and find the roles or candidates that are right for them.

The employee perspective: honestly evaluating needs and wants—and going after them!

Workers may not have all the cards, but they certainly hold a lot of them right now, especially if they are highly skilled and in demand.

The DOL reported the highest resignation rates in lower-skilled and -paid industries, including “retail trade” and “leisure and hospitality.” But there was also a quitting spike in “professional and business services,” which had a November resignation rate of 5.5%. Separately, MIT researchers reviewing Glassdoor data found that while “apparel retail” had the highest turnover between April and September 2021 at 19%, “management consulting (16%), internet (14%), [and] enterprise software (13%)” eclipsed several food and hospitality sectors.

Thus, many industries with a smaller pool of qualified candidates are also feeling the pinch, and job seekers with the right credentials are in a great position. So, how can they maximize this leverage to find the right job?

It all starts with evaluating and defining what they want and need. From there, candidates should broadly assess opportunities and stick to their guns about their lists of non-negotiables. Finally, job seekers should recognize when they’ve found something truly good and lock it down. All this advice boils down to “know when to say ‘no’ and when to say ‘yes!'”

For example, a  professional services manager whom we know recently started looking after becoming burned out working for a small company. Among her search non-negotiables were equal or higher pay and benefits, a somewhat lower workload with better-defined responsibilities, and a remote position that would give her the flexibility to care for her kids. Some positions she evaluated had some of these characteristics and were attractive overall—but she held out for and took the one that checked all the boxes. And she’s very happy with the new job.

Given the number of openings and the unmet demand for high-quality workers, a job seeker should be a bit more comfortable saying “no” to opportunities that meet most, but not all of the non-negotiables.  Waiting for an opportunity that has it all may indeed be within reach. They are more likely to find that job right now than a few years ago.

The employer perspective: maintain or build leverage

With talented candidates being pickier and in shorter supply, determining what offer will be accepted becomes a puzzle. Employers still decide what to pay, which benefits to offer, and how a job works. But that mix may not be enough to gain acceptance of an offer. Companies must embrace the notion that they maintain the power to improve themselves and their work environments. And the ability to communicate the value proposition of working at the organization might seal the deal … as long as there is value to joining.

The first step in exercising this power is creating a system and an organization that can thrive in the ‘new normal’ and attract the best candidates. And the lessons that inform this change are found in why employees are quitting jobs in the first place.

The MIT research mentioned above found that pay concerns only ranked 16^th among the “top predictors of employee turnover.” Here are the biggest reasons in order of priority:

• A toxic corporate culture was 10.4 times more important as a reason for quitting than compensation.
• Job insecurity and reorganization (3.5 times more impactful than compensation)
• Companies with high levels of innovation (3.2 times more relevant than compensation) were associated with longer hours, a faster pace, and more stress, all of which drove turnover.
• Failure to recognize employee performance (2.9 times more significant than compensation)
• A poor response to COVID-19 (1.8 times more powerful than compensation)

A toxic culture may be the strongest predictor of turnover, but culture and how the organization and its jobs are structured influence all the above factors. To achieve the leverage necessary to attract good candidates, companies must closely evaluate their culture, organization, processes, roles, and benefits and revise them as necessary, thus creating the value proposition to work there.

Each business is different, but some common elements that may attract more candidates include:

• Offering flexibility, usually through flexible hours, hybrid or fully-remote working arrangements, and adequate leave policies.
• Honestly assessing what is needed from a position, then structuring it with a practical, reasonable workload.
• Diligently promoting a culture of respect and support for employees.
• Maintaining competitive (not outsized) pay and benefits.

In short, become an organization that people want to work for, and you’ll stand out from the companies where people are quitting. Many of these changes, such as remote or hybrid work options, are pretty straightforward to implement without impacting productivity. Others, such as removing toxic leaders, may be more difficult. Nevertheless, the businesses that want to find quality candidates must do what’s necessary.

Finally, any reorganization should include a redundancy plan to accumulate talent. Companies should consciously design a ‘deeper bench’ through hiring, cross-training, and skills development. At a minimum, develop ‘utility players’ who can fill in if someone essential departs. This provides the crucial breathing room to find a replacement who will succeed long-term instead of simply getting a body in the door just to survive. Attracting enough ‘athletes’ provides backups, successors, and takes the time pressure off of hiring.

Maybe ‘The Great Resignation’ should be called ‘The Great Realignment’

The days of simply putting up a job ad, getting a ton of applications, and picking a good candidate are over—for now. And that may be a good thing, even from the employer’s perspective.

The pandemic, a rebounding economy, and workers re-evaluating what’s important in their lives are spurring a re-evaluation of the nature of work. And it all may result in a realignment for employers and employees into a new and better relationship.

If you are a jobseeker, decide what you want from work and life and take this opportunity to find it!

If you are an employer, understand that the workplace ground has shifted beneath your feet and make the adaptations necessary to succeed.

In the end, both parties need each other and have leverage. Companies and workers alike should maximize their strengths to find the right fit.

Karp HR Solutions helps businesses attract, retain, and motivate people through creative solutions and strategies that master the mix of finance and human resources. Contact us today for a free consultation.