Over the course of the past few years, companies have had to cut back in numerous areas to survive the downturn. In 2012, companies are beginning to bring back initiatives, programs and, most importantly, talent as ways to once again improve the workplace.
While the economy is no longer placing immense pressure on companies, there are still plenty of challenges facing businesses in Northeast Ohio such as hiring and retaining strong talent, supporting health care and benefits costs and re-implementing training and development programs according to this year’s ERC/Smart Business Workplace Practices Survey.
As companies are once again focusing on growth efforts, hiring and retaining employees was overwhelmingly the biggest challenge Northeast Ohio businesses reported in 2012.
“Companies are still somewhat cautious in the market being an election year as well as health care reform, but they are definitely hiring,” says SueAnn Naso, president of The Cleveland Society for Human Resource Management, and president of Staffing Solutions Enterprises.
While companies are looking to hire, the process for finding the right employees has slowed down over years past.
“One of the things that we’ve been seeing recently as we are emerging from this recovery situation is that the hiring process remains lengthy,” says Cyndi McCabe, advisory chair for the Northeast Ohio Human Resources Planning Society, and a job placement coordinator at Lorain County Community College. “Employers are definitely taking their time in making their decisions.”
With more companies joining the employee search pool, a slower hiring process could actually hurt rather than help a business.
“It can hurt employers because what happens is if you’re looking for a certain type of talent and the person is in demand you might lose,” McCabe says. “If it takes too long they’re going to get snapped up by somebody else and the candidate can lose their enthusiasm for that particular organization. Sometimes this is because the organizations themselves are a little bit leaner so it could depend on who’s available to help with the hiring process. They may also be thinking, ‘Let’s have one more interview here. Let’s have them talk to this person and have them talk to that person. Let’s be a little cautious here.’”
While the survey doesn’t mention the speed at which hiring decisions are made, it does report that 7.7 percent of organizations, up from 2011 numbers, are using part-time and temporary workers until they fill positions permanently.
“Some positions are staying open longer so they’re getting creative for how they are filling those needs sometimes using contractors or temporary employees while they take their time doing their permanent search,” Naso says. “We also see them getting more creative around how they are screening passive candidates and utilizing social media is becoming much more of an important tool. Things like LinkedIn and Facebook.”
Social media use for hiring candidates made a big leap this year up to 51.5 percent compared to only 38.1percent in 2011. The use of online tools overall is moving in an upward direction.
“You’re hearing more about social media and there is more reference to checking someone out on LinkedIn and other tools,” McCabe says. “To a limited extent I’m hearing about the use of online job fairs as a way to attract some talent.”
Companies more than ever are looking for ways to streamline hiring efforts and ways to better communicate with potential candidates.
“They’re spending quite a bit of resources updating their websites so that they are compatible with mobile technology,” Naso says. “They are also trying to automate their whole recruiting process and utilizing technology for that — applicant tracking systems, onboarding systems and anyway to communicate with candidates faster and better.”
Businesses are also looking to improve and bring back benefits that were cut in order to do a better job of retaining the top talent they are attracting.
“On the retention side, during the downturn many companies executed salary freezes and now they have lifted those salary freezes,” Naso says. “The majority of companies did provide pay increases this year.”
In fact, the hourly rate paid to employees rebounded from 2011 and is $11.02, the highest amount reported for which there is data. Also, among organizations anticipating pay increases, the average base pay for hourly and salaried workers rose from last year to 3 percent and 3.1 percent, respectively.
“Companies are having to go back and re-evaluate and often increase their hourly rates and base salaries to stay competitive because the available talent is shrinking because people are getting back to work, especially in skilled areas like CNC welding, engineering or scientific positions, we are seeing those base salaries and hourly rates increase this year to stay competitive,” Naso says. “Those companies that are lagging behind or aren’t making those changes as swiftly as others are seeing higher turnover, they’re losing talent to other opportunities and are finding they’re having to replace talent more often.”
Another crucial area workplaces are trying to improve is health care and benefits. For the first time since 2008, these costs ranked in the top three challenges among Northeast Ohio companies.
“You’re hearing a lot about wellness incentives and more wellness programs,” McCabe says. “There is a lot of conversation and implementation around that.”
These wellness programs, as with hiring practices, are creative ways for companies to keep costs down. The survey reports that the average increase in health insurance premiums is 10.1 percent.
“What we have seen is an increased number of companies that are trying to come up with creative solutions to contain their costs but still provide this benefit,” Naso says. “They know they need to provide this benefit so there’s an increasing number of companies who have gone to a smoke-free environment where they won’t even hire smokers and they do tobacco testing because the insurance companies will give them a discount on their premium. We also see companies creating a tier system with their benefit costs that they will pick up a higher percentage of the benefit costs for their employees who participate in their wellness programs and do a specific kind of screening instead of automatically paying the same amount for every employee.”
Another way employers are keeping these costs down is by offering flexible work arrangements, which rose to 53 percent, the highest level in 12 years.
“One of the things we see is the trend of people taking part-time work,” McCabe says. “Organizations are rethinking whether they make a position full-time and maybe divide up a function, so instead of one full-time person you have two part-time people as a work around for benefits.”
When the recession hit home in Northeast Ohio, a majority of companies had to do away with employee training and development programs. These initiatives have started to make a rebound in 2012.
“We’re starting to see companies invest more in employee training and development again and they’re reinstating or starting new employee recognition programs to reward and recognize top talent,” Naso says. “During the downturn that was one of the first things they slashed. They laid-off all of their training staff and probably within the last 12 months we have seen companies start to reinvest in training. The training they’re focusing on is a lot of soft-skill training, supervisory training, leadership training and succession planning.”
While training is coming back more so than previous years, the type of training and how it’s administered is much different. Over the course of nine years, the use of Web-based training is at its second-highest level at 66.7 percent.
“You’re hearing the trend more and more that the traditional classroom training is not the only way to learn anymore,” McCabe says. “You’re hearing more about all of the e-learning, online learning or even blended learning where you’re doing things online and then coming together for a specific opportunity to practice what you’ve learned.”
The economic downturn is now in Northeast Ohio’s rearview mirror, but the effects of those few years have left businesses to approach workplace practices much differently than before and it will be interesting to see what next year’s survey reveals about the direction companies continue moving in.