Looking to Optimize Workforce Costs? Become an Employer of Choice

It’s no secret that the traditional workforce is changing, not just among employees in corner offices and corporate headquarters but also among those on the front lines. Flexible and competitive work arrangements are now a universal expectation. Add rising costs, turnover, and scarcity into the mix and those leading teams face a perfect storm of always-changing variables that make it tougher than ever to manage their people. And in many cases leaders believe these efforts stand in the way of those to optimize the shift-based workforce and keep costs low.

But it doesn’t have to be either-or.

Companies can find sustainable solutions to shift-based workforce cost optimization by addressing the underlying drivers of employee engagement and enablement. This involves becoming an Employer of Choice. This blog explores what it means to be an Employer of Choice, and your next steps toward becoming one. Before we share a few tips to get you started, we must first understand the unique trends prompting business leaders to make changes.

Catalysts for workforce change

Lately, many shift-based organizations have battled a rise in voluntary turnover as low unemployment, a lack of skilled labor, and a rise in the number of vacant roles have given people more employment choices. We observe these challenges in a wide range of roles, from distribution center and fulfillment workers to those in call centers and restaurants, as well as hospital nurses.

What’s behind these trends? It comes down to four major catalysts: (1) marketplace competition, (2) untargeted benefits, (3) rigid employee experience, and (4) inconsistent leadership.

Marketplace competition: Applicant skill sets are more transferrable than ever. It’s now easier to transfer skill sets to more convenient jobs, particularly last-mile delivery jobs and work-from-home options that offer similar pay with a more flexible work schedule.

Untargeted benefits: Benefits are far from one-size-fits-all. Those that don’t apply to a particular segment of the workforce dilute the employee value proposition (EVP), prompting leaders to explore more localized benefit options. For example, one warehouse location may have a higher population with multigenerational households or areas where the average age of the head of household is older. Offering child care credits for a population where the average age of the worker is significantly higher than those in other warehouse locations is not as beneficial.

Rigid employee experiences: Fixed-shift schedules often fail to address the varied needs of different employee segments and lifestyles. As a result, organizations are starting to rely on apps that create visibility into real-time capacity and make it easier for employees to trade shifts.

Inconsistent leadership: Poor leadership exacerbates the labor shortage issue if leaders are not trained beyond the skill set of the job or are ill-equipped to lead. For employees to stay engaged and productive, they need to feel that their manager is invested in supporting their growth and development journey.

The value case for Employers of Choice

Organizations that fail to address these trends face increased turnover, increased absenteeism, inconsistent performance, a weakened leadership pipeline, and higher operational costs.

Overcoming these challenges starts by addressing the foundational drivers of employee engagement. This involves becoming what North Highland refers to as the Employer of Choice. These employers prioritize the intersection of life and great work that values individuals. It allows them to position themselves as the top option in a competitive employer market. The proof is in the numbers: an organization can cut its compensation premium by 50 percent and expand into the labor market by 50 percent when its EVP resonates with candidates. In one situation, warehouse leadership saw a 31 percent improvement in labor efficiency after implementing a multivariable data-driven compensation program and offering workers the opportunity to have ownership over their own hourly wage. Even without research showing that happy employees are 13 percent more productive, most operations leaders know anecdotally that employees who have positive feelings toward their place of employment produce better results, and that customers take notice.

How to become an Employer of Choice

There isn’t one set formula for becoming an Employer of Choice, but it generally involves infusing four principles into employees’ daily work: autonomy, connection, convenience, and mastery.

  • Autonomy, or ownership and control of one’s work, opens the door to creativity and passion.

  • Connection of individual performance to organizational success highlights employee value.

  • Convenient work environments and employee benefits enables focus and productivity at work.

  • Mastering one’s skills and becoming an expert increases an employee’s reliability and confidence to perform at a high level.

To drive this forward, measure the effectiveness of each proposed solution and inform success metrics to track each one. We typically recommend that leaders measure productivity and turnover, both of which show up in variable cost figures.

Shift-based organizations need to establish performance measures and help employees set clear goals that reinforce these principles in daily work. These can still include usual business metrics such as throughput, productivity, and attrition compared with industry or local benchmarks; however, organizations should also collect and analyze a more comprehensive set of data, inclusive of both qualitative and quantitative sources. For instance, consider data from focus groups and pulse surveys among a more diverse set of voices not always heard at work. An equally crucial barometer in leaders’ efforts to become an Employer of Choice, quantitative data can help organizations understand and correlate the degree of perceived ownership, connection, convenience, and expertise with cost-saving and bottom-line performance objectives.

By addressing the underlying drivers of employee engagement and satisfaction, shift-based workforce leaders can finally balance all the variables in the workforce optimization equation—including attraction, retention, cost, and productivity. It all starts by building autonomy, connection, convenience, and mastery into employees’ daily work.