It is well-established that employee turnover is both costly and wasteful. High employee turnover is, in fact, one of the biggest impediments to positive business growth, no matter the industry. In the majority of instances, the cost to recruit, hire and train new employees and the additional workload that the process puts on management and existing employees adds no value to the business. When good employees leave a company by choice, it is just a loss. So employee turnover has a huge effect on profitability. For that reason alone, companies with high churn should work hard to reduce the employee turnover rate.
However, if the sheer cost of employee turnover is not reason enough, managers should consider that cohesive teams are much more productive and creative than workplaces where the people are learning to work together and don’t really know or trust one another. A department in which employees come and go – like a revolving door — will have more confusion, communication breakdowns and mistakes than one in which all of the people have been working well together for a long time. It is human nature that people get to know and understand how others on the team work and are able to work more harmoniously and intuitively. Turnover also causes loss of memory of vital information. Learning from both mistakes and successes helps employees find better solutions to challenges. Reports or other people’s recollections only offer a snapshot of that information. Workers have to actively experience and remember losses and gains in order to be influenced by them. And, business contacts and deeper networks of connection are lost if new department heads or salespeople are lost, NOT because of promotions from within, but because the company is hemorrhaging workers.
Another good reason for companies to focus on reducing employee turnover is reputation. Companies with high employee turnover get a reputation for churn. In every industry, there are companies that everyone knows have a “high churn and burn rate.” These are firms where management is quick to both hire and fire. Those firms are unlikely to attract top talent, unless that talent is specifically being brought in to fix the “churn and burn” problem. Companies that cannot attract top talent are unlikely to disrupt a market, revolutionize a field or become industry leaders. All of these reasons should motivate companies with high employee turnover to tackle the issue. Thankfully, there are ways to improve employee loyalty and reduce turnover and many of them don’t cost a cent. Last week, we looked at five reasons employees stay with their employer: compensation, mentoring, challenges, promotions and involvement. Here five more reasons.
Reasons Employees Stay with their Employer
Appreciated / Valued
For many people, a primary reason they stay at their existing job is because they feel needed and appreciated for what they do. All other factors being equal, often working at one place versus another comes down to something as simple as gratitude. If an employee feels that what they do is genuinely valued by a company, they stay. If they work for a great company with excellent pay, benefits, upward mobility and involvement – but they don’t feel valued – they typically will move on the first chance they get. Stories abound of people leaving a top position at a big company to go to another.
It is hard to put a finger on why “feeling appreciated” carries so much weight in a decision as important as where a person works and spends the largest parking of his waking life. But perhaps it is just for that reason? Employees spend a huge part of their life at work. For Associate Attorneys, Computer Programmers, Tax Season Accountants, Emergency Room Doctors, and so many other professions, the hours are long and grueling. Feeling appreciated is the wellspring upon which an employee can draw in the wee hours of dawn, twilight or weekend to answer the tiny question in the back of the mind that whispers “why am I doing this?”
Sam Walton, founder of Wal-Mart once said, “Appreciate everything your associates do for the business. Nothing else can quite substitute for a few well-chosen, well-timed, sincere words of praise. They’re absolutely free and worth a fortune.” And yet, making employees feel appreciated is something which employers often don’t do well. One proverbial pat on the back every six months generally does not suffice. Some managers don’t even do that much. Ask managers how they show employees that they are appreciated and some answer “We pay them.” Many managers feel that a paycheck is appreciation enough. But for most employees, it isn’t. And for truly valuable employees – the educated, talented, hard-working, creative ones who can find a job with the competition in a snap – the paycheck is important but certainly attainable in many workplaces. So deciding on whether to work here or there often boils down to feeling valued. Developing strategies and skills for managers to make employees feel appreciated can be what lowers a 20% turnover rate to a 10% one. That could potentially save a company tens to hundreds of thousands of dollars.
On a Mission
According to Jim Collins, American business consultant, author, and lecturer on the subject of company sustainability and growth, “It is impossible to have a great life unless it is a meaningful life. And it is very difficult to have a meaningful life without meaningful work.” Indeed, people need to feel that there is a worthwhile purpose to what they spend their time doing all day, most days. The work needs to hold meaning. But for many, work is a necessity that must be endured in order to afford to do the things which they do value. For many employees, work has little meaning and is simply a means to an end. For those employees, working for one company making widgets is the same as working for some other company making widgets.
For most employees, having a mission or purpose — a feeling that one’s work is important and makes a difference is the world – is what makes a job worthwhile. But this is good not only for employees. It is good for the employer, too. In their book “Beyond Performance: How Great Organizations Build Ultimate Competitive Advantage,” Scott Keller and Colin Prince showed that when organizations give people a sense of meaning in their work, it’s not only helps employees, but it also helps build a well-functioning and competitive organization.
The reason that having a mission or having meaningful work is so important is that mission fuels ownership. When an employee feels that what he is doing has a purpose and is adding value, he is more likely to take ownership of the work and ensure that is done right and on time. It increases his engagement and a sense of pride in the work.
To help amplify the meaning of work, companies must consider and communicate how the company’s mission helps the individual employee (providing for their family, making progress in challenging work), the broader group of people at and around the company (working as part of an effective, respected team or organization, positively impacting customers’ lives), and society as a whole (helping people around the world live better lives). If the employee sees that his work has purpose, that employee is more likely to keep working for that employer.
Employees like working at places where they are empowered. Having the power to act is a naturally-occurring desire in people. So the question is whether an organization can be designed and managed so that people can exercise the natural power that comes from being a human. Companies that “empower people” are really just allowing people to do what comes naturally. Solve problems. Apply solutions. Use logic to make sound decisions.
Employees prefer to work at companies that give them more authority and decision-making ability. The best managers are those who push decision-making down the organization as far as possible so that the decision is made by those people who are closest to the information. Top-level managers who micromanage every step will generally have a higher turnover rate and lower success rate than those who allow employees to act and hold them accountable.
According to HRSpecialist.com, 86% of employees want to trust—and be trusted by—their manager. A Dale Carnegie survey found that 70% of respondents chose “Being trusted to do my job and more,” as one of the emotional attributes that made them feel engaged at work.
The ability to trust and be trusted is not only desirable, but essential, for an employee to do their best work. If an employee feels that they are not trusted, they will hesitate to act, second-guess their own reasoning, and wait for things to unfold rather than be proactive. Employees who don’t feel trusted won’t take calculated risks for fear of making a mistake and being criticized — in hindsight — by an untrusting supervisor. In time, employees who feel they are not trusted will seek employment someplace where they are trusted.
Shockingly, a study of nearly 20,000 employees by Harvard Business Review and Tony Schwartz, found that 50% of employees don’t feel respected by their bosses. Half! In fact, from all the outcomes measured by the study, no other leader behavior had a bigger effect on employees. Being treated with respect was more important to employees than recognition and appreciation, communicating an inspiring vision, providing useful feedback — and even opportunities for learning, growth, and development.
According to HBR, “Employees who felt respected by their leaders reported 56% better health and well-being, 1.72 times more trust and safety, 89% greater enjoyment and satisfaction with their jobs, 92% greater focus and prioritization, and 1.26 times more meaning and significance. Those that felt respected by their leaders were also 1.1 times more likely to stay with their organizations than those that didn’t.” Respect also had a clear impact on engagement. The more leaders gave respect, the higher the level of employee engagement, People who said leaders treated them with respect were 55% more engaged. Feeling respected, perhaps more than any other factor, makes employees stay with their employers.
For companies that are interested in keeping their valuable employees, consider that employees stay with their employers when they receive fair compensation, mentoring, challenges, promotions, involvement, appreciation, a sense of purpose, empowerment, trust and respect. The good news is that this is doable. Indeed, the best companies are already providing many, if not all, of these. Is yours?
Quote of the Week
“Employees who believe that management is concerned about them as a whole person – not just an employee – are more productive, more satisfied, more fulfilled. Satisfied employees mean satisfied customers, which leads to profitability.” Anne M. Mulcahy
© 2016, Written by Keren Peters-Atkinson, CMO, Madison Commercial Real Estate Services. All rights reserved.