The modern workforce, including millennials and Gen Zers, tends to switch jobs more frequently in search of higher pay and diverse experiences. This phenomenon, known as job hopping, presents challenges for employers who want to retain their high-performing employees. Understanding the reasons behind job hopping can provide insights into how to better retain employees in today’s dynamic job market.
Why employees job hop
In contrast to past generations, job hopping has become socially acceptable and is viewed as an opportunity to explore various careers and industries. This trend is fuelled by a shift in management culture towards a more employee-centric approach where work-life balance is prioritised. Consequently, employees feel less obligated to stay with a single employer and seek out better opportunities. As a result, employers are exploring new ways to retain talent by finding creative ways to keep their employees engaged and satisfied.
Job hopping can be viewed negatively by some recruiters, who may interpret it as a lack of commitment or an unknown character trait. However, there are often valid reasons behind job hopping, such as seeking greater flexibility, higher pay, or more challenging and fulfilling work.
Deferred compensation as a solution
Deferred compensation is a type of compensation that is set aside and paid out at a later date. This can include retirement plans, pension plans, and stock-option plans. It can be an effective tool for retaining top talent amid a job-hopping culture because it offers a financial incentive for employees to stay with the company over the long term.
By offering deferred compensation arrangements, employers can reap several benefits, such as aligning corporate and employee interests and increasing employee engagement. For instance, share award schemes (which grant a certain number of shares to the employee with restrictions) and share option schemes (which grant the executive a right to purchase shares in the company) can promote a greater sense of ownership and commitment among employees.
With proper planning and foresight, deferred compensation can be a valuable tool for retaining high-performing employees, ultimately creating a mutually beneficial situation for both parties involved.
If you’re a business owner with ambitious plans for the future of your company, consider designing a deferred compensation plan to retain high-performing employees and secure your retirement. Speak with us today to explore how we can help you design a custom deferred compensation plan tailored to your company’s unique needs and goals.
Disclaimer:
This article should not serve as a substitute for independent professional advice. For thorough and comprehensive advice custom-tailored to you, don’t hesitate to contact the team at Summit Planners.
Sources:
- https://www.businessnewsdaily.com/7012-millennial-job-hopping.html
- https://finance.yahoo.com/news/96-workers-job-hunting-2023-164951222.html
- https://www.investopedia.com/terms/d/deferred-compensation.asp
- https://www.investopedia.com/articles/personal-finance/102215/benefits-deferred-compensation-plans.asp
- https://www.hcamag.com/asia/news/general/worth-the-wait-deferred-compensation-schemes-unravelled/143990
