Employee Retention: How Do We Navigate the Workforce Challenges in 2023?

The report Workforce Hopes and Fears Romania Survey 2023 carried out by PwC highlights the growing number of Romanian employees who plan to change jobs in the next 12 months. So to ensure employee retention, leaders must adapt to the challenges their people face. Among the main causes are financial difficulties, concern about the future viability of the company, lack of a sense of fulfillment at work or lack of opportunities for the development of new skills. One interesting aspect is that related to optimism about artificial intelligence. Some respondents claim that AI will increase productivity in the workplace.

PwC mentions 4 actions that leaders can implement to maintain or even increase employee retention. They refer to the feeling of fulfillment brought by the work done, to the opportunities for the development of new skills (Upskilling/Reskilling) and openness to artificial intelligence, organizational culture, and open approach to topics related to potential financial problems that employees may face. All of them have one thing in common: leaders must listen to their employees and respond to their needs.

Employee Retention: How Do We Navigate the Challenges of the Workforce in 2023?

“18% of Romanian respondents say they plan to leave their job in the next 12 months, up from 16% in the previous year, but less than 26% globally,” says Daniel Anghel, Partner, Tax, Legal and People Services Leader @PwC Romania.

Satisfaction at work has decreased due to a variety of global factors. From unforeseen economic situations, to uncertainties generated by the pandemic and various conflicts, employees do not feel safe. As employee anxiety and burnout increase, companies face the critical task of retaining talent and cultivating unconditional commitment. The solution? For extra employee retention, make sure you prioritize employee well-being. This can be achieved through a data-driven approach that will help you adapt in the midst of change.

Although at first glance it may seem like an easy task, the path to transformation is not lacking obstacles. While employees crave opportunities to learn, adapt to changes brought about by AI, and face new challenges, organizational cultures struggle to keep up. And naturally, this translates into slowing growth and triggering a potential turnover. What is the repercussion? An increasing number of employees are considering changing jobs. Naturally, this urges leaders and executives to take decisive action to ensure employee retention.

Main Findings

Among the main findings of the PwC Romania Labour Expectations and Fears Survey, it is important to consider the following:

• Intentions to change jobs: Despite the economic uncertainties, 18% of Romanian respondents plan to change jobs in the next 12 months. This shows an increase in anxiety among employees. In the case of Generation Z (18-26 years old), this percentage is even higher, at 28%. At the same time, 51% of Gen-Z employees are also in a position to ask for a salary increase.
• Financial difficulties: 13% of Romanian employees struggle to pay their bills every month. At the same time, 57% manage to cover expenses with little or nothing extra. However, only 10% have an additional job, as opposed to the global average of 16%.
• Inequality of skills: 61% of Romanian employees say that their jobs require specialized training. Workers who do not have such training are more likely to face financial difficulties and uncertainty about their future skills.
• Concerns about the viability of the company: 28% of Romanian workers believe that the organizations they work for will not be economically viable in the next ten years if they continue on the current trajectory. In the case of Gen-Z workers, this pessimism rises to 49%.
• Optimism about artificial intelligence: Despite fears about job losses due to artificial intelligence, Romanian employees are optimistic about the positive impact of artificial intelligence. 28% say it will not affect their jobs and 24% believe it will increase their productivity and efficiency at work.

Actions

Taking into account the main findings, let's see concretely what to do. In the report, PwC outlines 4 crucial actions that enable organizations to become more agile, adaptable, and ready to embrace the future. And, by default, help with employee retention:

1. Involve and inspire people — especially those who are left behind
2. Make your culture a catalyst for change
3. Understand how the cost-of-living crisis is exhausting your people
4. Cultivate employees' interest in AI

1. Involve and Inspire Your People—Especially Those Who Are Left Behind

While business leaders recognize the dynamic nature of work and the disruption of skills, employees have a different perception. The survey shows that only 37% of Romanian employees believe that the skills needed to succeed in their job will change significantly in the next 5 years. At the same time, only 42% have a clear understanding of how their job requirements will evolve during that time. This lack of anticipation and understanding can prevent employees from acquiring the skills they need to remain effective in their roles.

Sorting between employees with specialized skills and those without is a growing problem that contributes to economic inequality. Those who do not prioritize the development of new skills will have difficulties adapting to potential changes. This will lead to greater skills gaps that hinder productivity and innovation for companies. Thus, leaders need to engage and inspire their employees to close this gap. Interestingly, perceptions differ depending on the company hierarchy: a higher percentage of managers (42%) believe in significant changes in skills, compared to non-managerial staff (34%). Therefore, managers seem more aware of future changes in their competencies.

What Is To Be Done?

“C-suite leaders have a responsibility to help create a fairer future by providing equal refresher and retraining opportunities for everyone in the organization — and providing a clear path to get there,” says Oana Munteanu, People & Organization Director @ PwC. Therefore, leadership teams must have a clear understanding of the competencies required for transformation. And, they need to communicate this effectively to employees. To ensure that it facilitates an inclusive vision, it is recommended that leaders:

• encourage improvement;
• provide transparency on company changes;
• align the mission and purpose of the organization with the involvement and participation of employees.

Considering the information, as a leader, we encourage you to meditate on the question: “Do you have employees who do not use their potential to their maximum capacity?”. As the survey notes, “Companies focus more on formal qualifications and job history than skills. The result? You may not be taking full advantage of the competencies that your company already has.”

2. Make Your Culture a Catalyst for Change

It is not new that smart leaders recognize the value of their employees as a source of energy and innovation. But while this is universally known, many companies tend to discourage experimentation, debating ideas, and challenging the status quo. These actions that are critical to promoting innovation, reinventing the corporation, and ensuring that employee retention remains positive. Moreover, only a part of the Romanian employees feel properly rewarded and fulfilled through their work. And a significant number report unmanageable workloads, often citing lack of resources as the main factor. At the same time, a significant percentage of respondents believe that their managers do not tolerate small-scale failures and do not encourage disagreement and debate. This fact leads to a disconnection between employee perceptions and what executives reported in a survey of CEOs for Romania by PwC.

Regarding employee attitudes, approximately 61% of Romanian respondents believe that they bring new and innovative ideas to their team, actively seek and provide feedback, and willingly take on additional responsibilities. However, concerns about burnout persist. More than a fifth of workers say they frequently experience unmanageable workloads. At the same time, 41% attribute this to a lack of staff and unrealistic deadlines. These issues highlight the importance of cultivating an environment that supports employee creativity, openness to feedback, and resilience, while ensuring a healthy work-life balance.

Thus, the question we recommend you meditate on, as a leader, could be: “Am I part of the problem?” To become innovators, employees must feel safe to test, learn, and fail without fear. Do I feel that?

3. Understand How The Cost Of Living Crisis Is Exhausting Your People

How can people perform if they are going through a cost-of-living crisis? Unfortunately, a large number of Romanians are facing such a crisis at the moment. By default, at least some of your employees could be affected. A decreasing proportion of employees (26%) have money left at the end of the month compared to the previous year (29%). At the same time, 13% try to pay their bills most of the time, a slight increase from 12% in 2022. This financial pressure contributes to an increase in the percentage of employees who plan to change jobs in the next 12 months (18%, compared to 16% in 2022).

As a leader, you need to recognize the importance of your employees' financial stress. Because it seriously affects their well-being, it will inevitably affect their productivity and involvement in the organization. By default, it also makes it difficult for you, as a leader, to responsibilities related to employee retention. In addition, an increasing number of employees taking a second job (10% of respondents) further emphasize the severity of the financial pressure. It is also interesting to note that 13% of women have more jobs. A higher percentage than the percentage of men, which is 7%. Addressing financial stressors is crucial to keeping employees healthy and prosperous.

Therefore, some questions that are worth considering as a leader would be:

• “Do our strategies for remuneration and retention of talent support each other?”
• “Do we openly discuss financial well-being at work?

4. Cultivate Employee Interest in AI

It is gratifying to see that the survey found an overall optimistic perception about artificial intelligence. More than half of Romanian employees recognize its positive impact. These include increased productivity, opportunities to learn new skills and job creation. At the same time, it is important to note that the development of human skills among the workforce, especially for jobs that do not require specialized skills, is also a priority for companies, since these skills cannot be replaced by artificial intelligence.

Thus, some of the questions that it is recommended to consider as a leader are:

• “Do we have a narrative about the future of work? “
• “Are we supporting our people to influence our AI plans?”

Conclusions

The report Workforce Hopes and Fears Romania Survey 2023 of PWC provides valuable insights into the current economic landscape and workforce dynamics. The world of work is undergoing significant change, fueled by technological advances, economic uncertainties and evolving employee expectations. And, it's time for leaders and companies to adapt to these changes. Adaptation is beneficial both for strengthening market position and for employee retention. With employees facing challenges such as low job satisfaction, financial pressures and skills gaps, leaders need to prioritize employee well-being, foster an environment that encourages innovation, and provides equal opportunities for improvement and retraining. Addressing these concerns is not only essential for the well-being of employees. But also for the long-term success and sustainability of organizations.

However, while there is optimism about the positive impact of AI on productivity and skills development, it is essential to recognize that human skills cannot be replaced by algorithms. Promoting a culture of continuous learning and development supports employees in the process of adaptation, preparing them for any future change. But as leaders navigate through all these challenges, they need to remain agile and responsive to their employees' feedback. Engaging employees in a transparent and inspiring vision, valuing perspectives, and addressing their financial and emotional well-being will help create a resilient, innovative and inclusive organizational culture (and, by implication, employee retention). By prioritizing human potential, embracing technological advances, and fostering a sense of accomplishment, organizations have the opportunity to position themselves for success and create a positive impact on both their employees and the community as a whole.

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