By Rajan Sethuraman, CEO, LatentView Analytics
In every industry, employers are bracing for a period of instability. A majority of companies expect to see higher employee turnover. According to Korn Ferry, 55% of respondents expect their turnover to increase year-over-year in 2022. This uncertainty has employers discovering new ways to attract and retain employees.
While organizations seek to develop new employee retention strategies, they may see a more substantial benefit in repurposing some existing external marketing strategies. Consumer brands have long recognized the importance of segmenting and microtargeting audiences to improve customer engagement and lifetime value (CLV).
By applying this same strategy to human resources and employee management, organizations can drive loyalty among their younger staff to boost a new internal metric — employee lifetime value (ELV).
Workplace shifts, most notably work-from-home policies and flexible working hours, have dramatically changed what new hires expect from their employers. According to a recent article from CNBC, the Great Resignation accelerated our transition to the “Future of Work,” with companies prioritizing employee well-being and job flexibility. While there is more recent talk of a Great Reset with tech companies enacting hiring freezes and layoffs, the importance of employee engagement and retention will never be obsolete.
We see a change in how young, talented employees view their careers. While having a good job is still essential, people realize that they value many other things in life. Recognizing that a smart, talented employee will always be able to find a job in their chosen industry, new hires are far more willing now to experiment and try different opportunities. Previously, an employee would seek to prioritize comfort and flexibility after working for 25 years in a given industry. Today, this is top of mind for people who just finished their bachelor’s degrees.
Employee Segment of One
In customer targeting, the ultimate goal is to create tighter and tighter data segments for personalized marketing and loyalty programs. Companies would have “customer segments of one” in an ideal world — delivering information on an individual, hyper-targeted level. In the context of increased employee turnover, organizations should now aim for an “employee segment of one” in their retention efforts.
The cost of recruiting, hiring, and training a new employee is more critical to an organization than the cost of simply retaining and occasionally reskilling existing employees. Just as today’s brands and retailers obsess over CLV, employers can apply the same approach to ELV. Maximizing the value an employee provides to their company depends on how long they work for the same organization, how high they are able to climb within the company, and what individual value they offer to the organization.
A hyper-personalized approach to employee development should lead directly to increased ELV, encouraging employees to focus on their passions and talents, while nudging others in the direction of reskilling and upskilling when necessary.
Driving retention through personalization
What does an employee segment of one look like in practice? These strategies make it possible for younger employees to choose their own path forward and even benefit packages while providing the necessary guardrails to ensure that employees are delivering value to the company.
● Job rotations and career progression frameworks: Of course, there are limits to how many opportunities a company can offer their employees. If a new hire at a fintech startup dreams of becoming a professional basketball coach, no number of reskilling programs will make that happen. However, organizations should create opportunities for employees to experiment with every aspect of the company’s operations. Job rotation schemes and flexible career progression frameworks make it possible for employees to choose which roles are the right fit for their skillset, while simultaneously offering an escape hatch from a bad fit without requiring them to leave the company. Job rotation programs offer an additional benefit: employees that have a wider understanding of how the company works will be able to offer more insightful suggestions for growth and improvement.
● Upskilling and paths to leadership: When a young employee looks for a new opportunity, they’re most often doing so because they don’t feel sufficiently challenged or compensated in their current role. But why should an employee only find their next leadership opportunity at a different company? By developing multiple paths to leadership for young employees, companies can make it easier to find a new challenge in-house than at a different company. In some cases, this may require the employee to develop new skills or enter a new area of the business, which is why robust upskilling programs should also be made available for those looking to make a change.
● Workplace flexibility: Above all, the COVID-19 pandemic demonstrated that employees crave flexibility. Whether it’s the ability to work from a low cost-of-living area or the flexibility in work hours to dedicate time to volunteer work, personalized policies and benefits make it much easier for employees to find the solution that best works for them. Developing policies and benefits packages around individual needs directly to improve employee loyalty and retention. For a younger employee that doesn’t need to consider parental leave, employers can potentially offer similar benefits for other worthwhile causes.
Today’s young employees want to know that they will be respected and valued by their new organization. Will they be given the tools and opportunities to grow and succeed? Applying a customer lens to employee retention will enable companies to exceed the expectations of their new hires, driving loyalty, retention, and ELV.