How CEOs can solve the ‘workforce velocity’ problem
As we move through the aftermath economy and the likelihood of a recession looms, CEOs are bracing for economic softness. But instead of screeching to a halt, it’s important for leaders to use this time to ramp up for the next growth cycle.
By far, the best way CEOs can prepare for the next wave of acceleration is by focusing on their workforce velocity.
What is workforce velocity?
Simply put, workforce velocity is the movement of workers. It encompasses everything from new hires to quits to retirements. A company with high workforce velocity may be adding headcount and growing exponentially, but it’s also likely experiencing excessive attrition and turnover.
This phenomenon is not insular — per the U.S. Bureau of Labor Statistics Job Openings and Labor Turnover Survey in February 2023, quit rates are historically high. This means that despite an overarching economic slowdown, employees are still confident in their ability to secure a better position.
Subsequently, leaders are constantly having to backfill vacancies. These retention issues are not only taking a toll on culture, but they are also incurring harder costs in the form of recruiting, salary negotiations, and training.
What is causing a workforce velocity issue?
Skyrocketing workforce velocity speaks to workers’ unprecedented transparency into new opportunities, as well as their ability to advertise their capabilities like never before.
In today’s world, employees can instantly post their résumés online and showcase examples of their best work to employers across the world.
They can automatically find multiple openings with requirements that match their skill set and years of experience. They can filter through job openings to find a position that offers the benefits they desire such as increased flexibility, and/or an organization that aligns with their values.
And now, with many states introducing salary transparency, they may even be able to see how much that employer would be willing to pay them, before ever having to say “hello.”
With this unprecedented level of connectivity and insight into other opportunities, employers are tasked to make their workplace somewhere that talented employees don’t want to leave.
How can leaders solve the workforce velocity problem?
Improving the company culture and upgrading the physical workplace are two tried and tested ways to increase retention. For example, according to Vistage research, 84% of CEOs are increasing wages, 68% are offering flexible hours, 60% are providing remote work options, and 52% are increasing benefits — all in an effort to combat workforce velocity.
CEOs who are not willing to accept the fact that we have permanently moved from the analog 9-5 workplace to the digital 180 workplace, which is hybrid and powered by technology, will continue to lose out. Today’s talent wars are won by those companies who are great at collaboration and innovation.
Employee development is another important offering for retention. Employees want to know their employer is invested in their long-term career trajectory.
It’s particularly critical for leaders to focus on training their frontline bosses. This ensures the people who have the greatest influence over (and the most direct day-to-day interaction with) employees are equipped and capable to support them. People don’t quit bad jobs, they quit bad bosses.
While we may be experiencing a slight cooling in the demand for talent compared to the white-hot labor market of 2021, it’s worth remembering current levels are still well above what they were pre-pandemic, and economists project this lull will be short-lived.
As we enter the next growth cycle, we can expect the demand for talent to increase, and the quit rate to hold strong. Workforce velocity will only gain speed — to slow it down and stay ahead, leaders must create an environment workers want to be part of.
This story was first published in Inc.