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Retention and Recruitment

Midtier Companies Worry About Employee Retention in 2015

A recent article on revealed that, midtier companies are most concerned about employee retention and recruitment, according to a survey of more than 400 executives by TAG Employer Services. TAG is an ASO that serves midtier employers nationwide.

Executives of small to medium-size enterprises were asked:

What will be your most pressing business challenges in 2015?

Business growth and profit 77%

Employee recruitment and retention 54%

Cost control and reduction 50%

Complying with government regulation 39%

Building the next level of management 31%

Management succession 23%

Customer retention 17%

“Loss of key employees, a concern for any organization, is especially troubling for companies with fewer than 200 employees,” said Joe Johnson, chief operating officer for TAG. “When a skilled worker departs it is really felt by midmarket employers. They’ve got to scramble to find a new person with just the right mix of competencies. Meantime, they have to plug the gap, deadlines are missed, and labor costs jump.”

Compensation is seldom the main issue for skilled workers who are considering a move, observed Johnson. “Salary ranges don’t vary much from company to company in sectors such as manufacturing or construction. Top performers are seldom recruited away by a big raise, much less a hiring bonus. If they leave it’s probably because of friction with management, or maybe they were just restless. Whatever the reason, losing people like this slams efficiency and means having to recruit, a real burden for a midtier company.”

According to Johnson, midsize organizations are less equipped to recruit and risk making a bad hire. “They have a lean staff and do their own recruiting, maybe by advertising or word of mouth. Skilled labor is hard to find, and getting the right fit certainly is a challenge. A bad hire can easily cost a smaller employer as much as 40 to 50 percent of that hire’s base salary.”

An underlying issue for midtier employers, explained Johnson, is their ability to understand hard and soft labor costs. “They may not have the analytical tools necessary to track these costs, or they may have the tools but can’t get managers to use them properly. This is why they’re worried.”

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