August 12, 2021 | Karen Kislin
The topic of labor shortages continues to headline my newsfeed. Even though the U.S. added significantly more jobs in June, more of the workforce is quitting, adding to the shortages. While these shortages appear to be impacting the hospitality and food and beverage industries the most, they are not uncommon to financial services.
As more companies navigate the return-to-office movement, management teams are faced with an increased urgency of retaining quality talent. Measuring and managing employee engagement is critical to reducing attrition, as well as acquiring new talent. I reviewed Raddon trends of the Employee Viewpoint Survey results over the past couple of years to gain insights on how financial institutions can better engage and retain their workforce today.
The first thing I noticed was that employees have expressed an increase in overall satisfaction in working for their financial institution since 2019. It is important to note that the results of 2019 and 2020 represent the combined results for the entire year; the 2021 results reflect employee sentiments from only the first quarter of this year.
While this is a promising trend, I offer a word of caution: Employee satisfaction does not guarantee engagement. Just as my Engaging an Exhausted Workforce article outlined, employees seem to be satisfied in their workplace; however, the external environment of the pandemic has taken its toll. More and more of the U.S. workforce is experiencing signs of burnout resulting in exhaustion and other mental health concerns.
It is plausible that this type of burnout is contributing to the labor shortages we are experiencing today. Many workers moved during the pandemic, and many others have changed their preferences, pursuing remote work. In order for financial institutions to retain their quality talent, they must dive deeper into understanding what motivates their employees to come to work, regardless of how satisfied they might be. This is why measuring employee engagement is so vitally important.
The percentage of your engaged workforce is reflected in combining your “cheerleaders” and “content employees.” In 2019, financial institutions who participated in the Employee Viewpoint Survey saw an average of 43 percent engaged employees. Throughout 2020, we saw these engagement levels increase to an average of 51 percent. This seems promising, but in the first quarter of 2021 the average engagement dropped dramatically to only 37 percent. Most alarming is the fact that the percentage of detached employees nearly doubled from 2020 to 2021.
According to Daniel Zhao, senior economist at Glassdoor, this is a job-seekers’ market with worker demand at record highs. Furthermore, Ian Shepherdson, chief economist at Pantheon Macroeconomics, predicts that this fall will generate even more urgency among people in jobs to switch due to enhanced benefits expiring and full reopening of schools and childcare.
Having an exceeding number of disengaged workers now will only increase your risk of attrition over the next few months. In order to bridge that gap, financial institutions must dissect the specific elements that influence their employees’ engagement.
There are four main categories that drive employee engagement:
Even though the trend of overall engagement has ultimately declined since 2019, there is one category that consistently has the highest impact driving engagement, the company.
When employees are engaged due to the company, what they are saying is they understand the organization’s vision and are proud to tell others they work for the company. Employees feel their manager reinforces the company’s vision and their performance directly impacts the company’s bottom line.
The quickest way to increase employee engagement is to unite and inspire your workforce through your company vision. This aligns with the insights shared by Michael Stallard in his book, Connection Culture: The Competitive Advantage of Shared Identity, Empathy and Understanding at Work. Stallard recently shared the need for companies to boost their emotional compensation to cope with labor shortages. He refers to seven universal human needs to thrive at work: respect, recognition, belonging, autonomy, personal growth, meaning and progress. When a company culture is connected by its vision, more of its workforce naturally becomes happier and engaged.
In fact, the financial institutions that saw the highest level of employee engagement over the past two years shared with me that they proactively manage engagement by making it part of their management performance goals. Leaders make it a priority to emotionally connect with employees, practicing empathy and reinforcing the financial institution’s vision.
In order to attract and retain quality talent in this job-seekers’ market, financial institutions should actively demonstrate their commitment to their vision and mission. Management teams should deliberately lead their employees by the example of delivering on that vision, and leaders should elevate their emotional intelligence to foster an environment of respect and belonging.
Only in your actions will you increase the emotional compensation your employees receive, which will elevate your overall employee engagement. Not only will nurturing a culture centered on human connection help your financial institution weather this immediate labor shortage environment, it will sustain the organization with a competitive advantage now and into the future.