New research from 15five, the holistic performance management company, reveals the modern workplace is in a state of upheaval, with one-third of workers planning to quit their jobs despite the potential economic downturn. In addition, nearly one in five organizations are planning on layoffs, and more than one-third of HR leaders have rescinded job offers.
“We are seeing economic shifts driving some companies to downsize their workforces, especially in the tech sector, while other businesses are still dealing with high attrition and difficulty hiring in a competitive labor market,” said Jennie Yang, VP of People & Culture at 15Five. “But no matter the state of the economy or talent market, it's vital to first gather data on employee sentiment and performance and then take action. Tech solutions can help HR leaders to identify top performers and then equip managers to bolster employee engagement, productivity and morale.”
The firm surveyed 1,000 U.S. adults employed full-time and 500 HR leaders about work-life balance, their preferred work environment, the likelihood of quitting and layoffs and other concerns about the economic climate.
Work-life balance a top priority
The survey reveals that work-life balance is a top concern for employees, behind only pay and health benefits. When HR leaders were asked what was most important to their employees, work-life balance jumped to the No. 1 spot (64.6%), followed by health benefits (62.8%) and growth opportunities (54.6%).
HR and employees agree they want downtime to be honored. Asked if they could change one thing about today's work environment, the No. 1 response for both groups (21.9% of employees; 20.8% of HR pros) was to have personal downtime respected.
HR is on the case, actively looking into creative options to resolve the work-life balance and disappearing downtime conundrum. One option picking up steam in larger organizations — those with more than 500 employees — is the four-day workweek. Nearly 60% of HR leaders report they will likely go to the shorter week.
Attrition rates slow down but continue
Attrition rates will likely slow but not stop due to the potential downturn. While most employees (56%) said economic factors would influence their decision to leave, nearly one-third of employees are still planning or considering quitting in the next six to 12 months. However, the risk that fewer jobs may be available did not alter the number.
Forty-four percent of HR leaders report that more employees have left in the first half of 2022 compared to the first half of 2021. Our survey confirms that the top reasons employees leave are for better pay, because they feel stressed and burnt out, and want flexible work options.
Meanwhile, nearly one in five HR leaders report planning on implementing layoffs, with solid majorities acknowledging that the economic downturn has significantly impacted revenue (59.8%) and their ability to hire (68%). Over one-third (35.8%) said unexpected hiring freezes led to rescinded offers. Most of the companies reporting they rescinded offers have 500 or more employees.
The hiring freeze has heightened HR's efforts to upskill workers. Nearly half (49.6%) plan to introduce manager training and add performance management software (46.4%) in the second half of 2022 and beyond.
The survey indicates that the top ways HR identifies top performers is through quarterly reviews (25.8%), manager feedback (22.6%) and annual reviews (20.4%). Almost all HR leaders (95%) report that employee performance ratings are key when considering layoffs.
HR leaders are feeling the pressure
HR leaders are experiencing pressure from all sides: leadership is imposing financial constraints while the organization still needs to replace people leaving. HR must juggle the conflicting realities of the Great Resignation with a possible downturn and having to implement layoffs.
When employers look to cut staff, HR has the difficult task of sharing the bad news. We found these pros are feeling the strain: As a result of directly communicating layoffs to employees during their careers, 42.2% reported they have anxiety, 30.2% burnout and 16.8% quit.
“HR is often required to take on Herculean tasks in this highly tumultuous environment,” said Yang. “The fluctuating economy means HR must be prepared for either retraction or growth while ensuring top talent doesn't quit. HR is also expected to support managers in keeping their employees engaged and productive despite any upheavals happening internally within the organization or externally within society. We have found that HR teams that leverage data and insights are finding success navigating this volatile environment.”
Read the full report here.