Note: This is one in a five-article series spotlighting the five top risks to employee engagement and retention cited in Swift Bunny’s 2023 Employee Engagement Risk Report. Employee turnover is a persistent top challenge for rental housing operators, and the labor shortage has made staffing even more difficult than usual. A focus on driving down employee turnover and driving up employee engagement, tenure, and loyalty will help apartment leaders keep their communities and companies fully staffed and high performing.
It likely comes as no surprise that one of the top risks to employee engagement and retention among rental housing employees is compensation. Here are some of the common themes expressed by employees in confidential surveys completed in 2022:
- An inability to afford to live in the apartment communities in which they work
- Prohibitively costly health benefits, especially for dependent family members
- A desire to be recognized and rewarded for taking on additional responsibilities due to being short staffed
- A sense of injustice between the significant rent increases passed on to residents and the modest wage increases offered to employees
“People want to be paid more? This is not news,” some leaders may think. But if you are tempted to dismiss concerns around compensation as invalid, I caution you not to do so. Today, many employees have good reason to be dissatisfied—and leaders who want to hang on to their team members must take their concerns seriously. Consider the following circumstances:
Why employees are dissatisfied with compensation?
- High inflation has shrunk workers’ buying power as their expenses for everything from gas to groceries have climbed in the past year. The Consumer Price Index (CPI) for all items rose 6.5% for the 12 months ending in December 2022, according to the S. Bureau of Labor Statistics (BLS). Despite the cooling seen recently, the inflation rate remains significantly above its multiyear average.
- Wages have also risen, but not enough to keep up with inflation. ADP Research Institute reports wages for existing job holders rose a record 5.9% in December, 2022 compared to the year before. That sounds like good news for workers, but here’s the rub. Real average hourly earnings—which factor in the increase in CPI—fell 1.9%, seasonally adjusted, from November 2021 to November 2022, according to the BLS.
- Furthermore, recent wage growth has favored new recruits. Those who switched jobs in 2022 increased wages by an average of 8%, a record high, according to ADP Research Institute as reported in TIME. Loyal employees are effectively penalized—which makes it understandable why so many rental housing employees are exiting for other opportunities.
- Everywhere employees turn competitive job offers tempt team members away posing additional risks to employee engagement. “Now hiring!” signs are posted at businesses small and large, often with generous pay, benefits, and flexible work arrangements detailed. Social media feeds are filled with opportunity. Your associates are being recruited every day, both actively and passively, and their dissatisfaction with their compensation package may lead them to consider other offers.
What can employers do?
The obvious solution is to pay employees fairly, of course. Especially in today’s highly competitive labor market, it’s crucial to be well informed on benchmark data on salaries and benefits. Now may be the time to conduct or acquire an updated compensation survey to help you understand your strengths and potential exposures.
There are also number of smaller, less costly steps that rental housing companies may consider in order to address compensation-related objections from their team, strengthen their offerings, and earn increased satisfaction from their employees. For example:
- Use a Total Compensation Worksheet, personalized for each employee, to provide detail on the value of your benefits package. Many employees are unaware of the value represented by Paid Time Off (PTO), for example, or how much the company is paying towards their health benefits. Spelling it all out, clearly and completely, can be a very eye-opening tool. Consider using this in a one-on-one meeting with each associate and also as a part of your job offer package for future recruits.
- Employees appreciate flexibility. Where can you add some to their work experience? For example, add more PTO, preferably the kind that associates can choose when they wish to use it. Adjust work hours to meet employees’ needs. Allow for work-from-home or hybrid work arrangements where it makes sense to do so. Ease up on requirements to request time off 30-days in advance or similar. Make it possible for associates to use their PTO by ensuring their responsibilities are covered while they are out. Encourage employees to actually unplug from work when they are off.
- Analyze participation in your various benefits programs, in particular your health coverage. If there is very little participation, that may be a sign the costs are prohibitively high for your associates. Explore options that may lower the contribution or out-of-pocket costs for individuals and their dependents, such as shopping other providers or adding different levels of plans. Refer to the compensation study, mentioned earlier, to ensure your offerings are competitive with other employers.
- Consider other programs that are impacting employees’ finances. For example, a Swift Bunny client responded to specific feedback from their team members regarding their career apparel program. Employees were unhappy that they were required to pay for a portion of their uniform cost via an automatic debit from their paycheck. Leadership revisited the program, ceased requiring employees to make a financial contribution, and retroactively reimbursed employees for past charges. This small change was a meaningful one for team members, who not only had more money in their pocket but also felt their concerns had been heard.
In today’s highly competitive labor market, please don’t dismiss employees’ concerns about compensation as unfounded or unsolvable. To do so would be to risk increased employee turnover. Instead, dig in to what specifically employees’ feel is keeping them from being wholly satisfied, and think creatively about how to strengthen your compensation package and boost engagement and loyalty.
Learn more about the other risks to employee engagement that we have identified as driving dissatisfaction and turnover, including communication, professional development, workload, and onboarding, and get your copy of the 2023 Employee Engagement Risk Report for our complete findings.