Employers hustle to retain job-hopping workers

Companies are scrambling to hold on to workers amid a tightening labor market and higher turnover, doling out bigger raises, expanding benefits and providing more training and other perks.

"They're awakening to the fact that they're going to lose their people," says Paul McDonald, an executive at staffing firm Robert Half. "We're seeing an increased investment in the employee."

The U.S. unemployment rate last month fell from 5.5% to a near normal 5.4%, helping shift the labor market's balance of power to employees. In March, 2.8 million workers quit their jobs, largely to take other positions, the most since April 2008.

Companies are responding. Wages, salaries and benefits jumped 2.6% in the first quarter, the most since 2008, according to Labor's Employment Cost Index.

About a third of chief financial officers are reinstating or increasing bonuses and half are boosting investment in training and development, according to a survey of 2,200 CFOs released this month by staffing firm Accountemps

McDonald says 30% of his clients are making counteroffers to employees who say they plan to leave, up from 20% a year ago.

Chains such as Walmart, Target and McDonald's have trumpeted pay increases in recent months, while Starbucks expanded its online college tuition program. Others across the USA are moving to retain employees by:

• Raising pay. Papouli's, a four unit restaurant chain in San Antonio, Texas, recently boosted its starting pay to $9 an hour from $8, says owner Nick Anthony. Many employees quit recently to work at the booming area's new crop of restaurants, leaving him with a 30% staffing shortfall.

"When I saw McDonald's" increase wages, "I thought we might want to piggyback on that," Anthony says.

• Expanding benefits. After employee turnover increased in 2014, law firm Drinker Biddle & Reath, with 1,200 U.S. employees, decided to provide lawyers and senior staffers unlimited vacation and bump paid parental leave to five months from three. The more liberal vacation policy shows staffers "we trust them and respect their judgment" while the longer parental leave demonstrates "that we care about them," says Chief Human Resources Officer Mark Ansorge. "Both of those messages build loyalty."

• Increasing stock options. Silicon Valley marketing firm GlimpzIt recently decided to award stock options every quarter, up from twice a year. It lost a developer to Google about six months ago. Since the options fully vest in four years, "It gives (employees) an incentive to stay," says CEO Parry Bedi.

• Listening to employees' gripes. To stem turnover, Smokey Bones Bar & Fire Grill, with 65 restaurants in the Eastern U.S., last fall began conducting "stay interviews" with managers to determine how to improve their work lives.

"The single biggest reason people quit their jobs is they don't trust their boss," says Dick Finnegan, a consultant for the chain.