Employee Retention: How Your Company Can Excel
As the economy improves, employees — who may have felt lucky in the past just to have a job — might start looking around to see if better opportunities present themselves. Losing a key staffer can be expensive for a middle market company; studies show it can cost anywhere from tens of thousands of dollars (at the low end) to 1.5–2 times the employee's annual salary.
Some businesses try to keep their best employees motivated and engaged by giving them raises and promotions. That's not a sustainable solution for employee retention, as you can't continually shower workers with new benefits and expect to turn a profit. Instead, the savviest companies recognize that you have to find different strategies to engage and inspire your staff.
Retention Is About More Than Salary
As author Daniel H. Pink highlighted in his book "Drive: The Surprising Truth About What Motivates Us," more money is nice but not always the best solution. Salary is what's known as a hygiene factor - if pay is insufficient, employees will leave because they need to support themselves and their families, but after a certain level, more money has diminishing returns when it comes to satisfaction and engagement. Instead, what matters is employees' opportunity to learn new things, have autonomy and control in their professional lives, and do work that feels meaningful.
As a manager, you can help drive employee retention by working with your direct reports to identify the goals they have for their own personal development and the skills they'd like to cultivate. Try to match those goals with the company's needs. For example, if your employee has a passion for social media and would like to learn more about online video, perhaps you could assign her a low-risk project to create a "day in the life" clip about your department. The worst-case scenario would be that you don't use the video, but at least she's learned more about what works and what doesn't. The most positive outcome would be that it turns into an ongoing series or promotional tool that the marketing department can use to differentiate your company.
Align Employee Interests With Company Goals
You don't always need to promote an employee in order for them to work on new projects. You can encourage them to volunteer for cross-departmental committees or to spearhead passion projects (e.g. your company's Earth Day plans or starting a running club to help fellow employees get fit). The key is to help employees identify what they're interested in, see how that overlaps with corporate objectives, and then encourage them to dive in and develop their skills.
Researchers have discovered that the feeling of autonomy and purpose that comes with setting one's own agenda is profound. The most critical aspect for employee engagement is their sense of progress or forward momentum. Harvard Business School professor Teresa Amabile's book "The Progress Principle: Using Small Wins to Ignite Joy, Engagement and Creativity at Work" (co-authored with Steven Kramer) tracked 238 employees at seven companies and asked them to complete daily diary entries about their workday. Her conclusion, after charting a whopping 12,000-plus entries, was that a sense of making progress each day on meaningful work was essential to employees' happiness and well-being.
It's easy, though expensive, to throw around bonuses to keep employees motivated. Smart leaders, on the other hand, dig deeper and work to understand what really matters to employees. If you can help your staff learn and grow each day, they'll be far less likely to leave.
Can employee reviews act as a link to get employees to think about pursuing different, company-aligned interests outside of their normal duties? Let us know what you think by commenting below.
Dorie Clark is an NCMM contributor, marketing strategist and professional speaker who teaches at Duke University's Fuqua School of Business. She is the author of "Reinventing You" and the forthcoming "Stand Out." You can subscribe to her e-newsletter and follow her on Twitter.