Why Do They Leave?

Employee Retention Motivational Factors: The Big Six

Most employers know that attracting and retaining highly skilled employees is vital to their organizational success. However, some employers struggle to find the best means of keeping their employees engaged, often relying on one-time recognition awards or ad hoc communications. A kernel of truth to this state of affairs was satirically captured by an article in The Onion, jokingly quoting a Harvard Business School researcher saying, “Our findings clearly show a hastily dashed-off email telling employees to ‘keep up the good work’ far outweighs other factors such as pay raises, promotions, and company culture in terms of keeping efficient workers in the stable.” In reality, a research article in the International Journal of Advances in Management and Economics, found that six specific motivational factors are central to retention:

1. Financial Rewards
2. Job Characteristics
3. Career Development
4. Recognition
5. Management
6. Work-Life Balance

Financial Rewards: Is It Just About the Money?

The short answer is: No, but it is an important factor. A study of 660 American workers asked what would persuade them to remain with their current employer. The study found that 43% would stay if they received a pay raise, while 50% said they would stay for other reasons including: An improved benefit program (23%), flexible work schedules (14%), stock options (8%), and better training (5%). An improved benefit program and stock options are both related to total compensation, and therefore could be included as motivating factors related to money. Financial compensation is important to nearly all employees, insofar as the compensation covers the basic needs to survive (e.g., to pay the bills) and provides a sense of stability for the employee and their family. Compensation is also a form of recognition to employees, a signal that their employer values their skills. One study found that a 10% increase in base pay raises the likelihood by 1.5% that the employee receiving the raise will remain with their employer when moving to their next role. Data from that same study suggest that symbolic job title promotions without higher pay may not be an effective way to improve retention.

Financial compensation being important does not mean that employers need to pay salaries which exceed comparable financial awards at similar employers. Instead, it is more important for employers to pay salaries which employees perceive as “good” or “fair.” Salaries described in such a way have a strong correlation with employee retention. Once financial compensation is on-par with what employees believe they should be paid, compensation ceases to be a primary factor in retention. However, the process by which pay raises are administered remains an important factor for retention. Employees need to know how their employer’s compensation system works and how to earn pay increases. Small non-cash rewards and permanent salary increases are the most effective means to decrease the probability of employee turnover.

Job Characteristics and Career Development: Current Role and Future Direction 

Employees do not just work for the money, but also to create purpose and satisfaction within their own lives. When employees view their work tasks as challenging, and offering opportunities for learning and career development, their likelihood to remain with their present employer increases. Conversely, employees are more likely to leave their employer if they believe their skills are underutilized in their current job assignment. To avoid this issue, employers should consider offering employees opportunities to be creative, to master new skills, and to pursue projects that interest them. Tasks and projects which require employees to stretch their knowledge, skills, and abilities are more frequently experienced as meaningful opportunities and increase an employee’s desire to remain with their current employer.

A Glassdoor Research Report found that job titles also play an important role in retention. For every 10 months an employee stagnates in a job title, their likelihood to leave the employer increases by 1%. This finding is linked to the belief that if an employee stagnates in a job title for too long, they are more likely to be discouraged about the career development opportunities at their employer. This finding also suggests that employees who are a poor fit for their employer will leave to find a better fit elsewhere. The bottom line is if employers do not recognize an employee’s need to grow within the organization this lack of career development becomes the primary rationale to leave.

Recognition: More than Occasional Positive Messages

Every employee has some need to be recognized and praised for the work they complete. Meaningful recognition may take on various forms, depending on the preferences of the employee, but being recognized makes employees feel better about themselves and their organization, which often inspires loyalty to the employer and improves retention. Recognition is not just about sending out “keep up the good work” emails as the earlier mentioned The Onion article facetiously declared, but also eliminating favoritism, recognizing strong contributors as well as top performers, and valuing employees for more than just their work. 

Organizations should ensure that employee recognition is fair, transparent, inclusive, frequent, timely, and varied. Employers should seek to offer employees recognition which is meaningful to them. Determining what type of recognition is meaningful to each employee is something each supervisor within an organization should prioritize. Without knowing this vital information, the employer may squander valuable time and resources recognizing an employee in a manner which is not particularly effective.

Management: Showing Respect and Providing Opportunities

An employee’s supervisor or manager plays a significant role in an employee’s commitment to the organization and their retention. When it comes to retention, there are specific management practices which play a negative role: Scheduling off-duty employees to come in to work, providing limited training opportunities, offering non-competitive financial compensation, and poor employee communication. Conversely, managers who respect and value an employee’s competency, track employee aspirations, provide challenging work, value work-life balance, and provide opportunities for learning will foster engaged employees who intend to remain with their present employer. 

Work-Life Balance: Offer Meaningful Choices to Strike a Balance

The conflict between work and employee private lives has taken on a greater role in society as technology makes it easier to work at all hours of the day and from multiple locations. While this technology enables workers to have greater flexibility, it also increases managerial expectations that employees are available to communicate and work for more hours throughout the day. When employer demands start to negatively impact employee private lives, it can become a leading factor as to why employees resign. To reduce this conflict and reduce employee stress at managing the balance between these competing priorities, employers should seek to offer employees meaningful choices as to how they can succeed in both their career and private lives.

Conclusion: Putting All Six Factors Together

It is not enough for employers to excel at just one, or some, of these six factors. A blind spot in any of these six areas will negatively impact employee retention. To drive successful long-term retention of an organization’s workforce, employers must implement solutions to each of these motivational factors. To summarize the best practices outlined above:

1. Financial Rewards: Ensure employees consider their total compensation to be “fair” or “good” and provide transparency as to how the organization’s compensation system works and how employees can earn pay increases.
2. Job Characteristics: Ensure employees view their work tasks as challenging and offering opportunities for learning and career development.
3. Career Development: Do not allow employees to stagnate in a particular job title and offer employees opportunities to be creative, to master new skills, and to pursue projects that interest them.
4. Recognition: Eliminate favoritism, recognize strong contributors, as well as top performers, and value employees for more than just their work and ensure that employee recognition is fair, transparent, inclusive, frequent, timely, and varied.
5. Management: Respect and value an employee’s competency, track employee aspirations, provide challenging work, value work-life balance, and provide opportunities for learning.
6. Work-Life Balance: Offer employees meaningful choices as to how they can success in both their career and private lives.

References:

Aguenza, B., Som, A. (2012, December). Motivational Factors of Employee Retention and Engagement in Organizations.International Journal of Advances in Management and Economics. Retrieved from http://managementjournal.info/index.php/IJAME/article/view/233/222.

The Onion (2018). Report: Greatest Factor in Employee Retention Boss Sending Out End-Of-Year Note Titled ‘Thanks Team’. Retrieved from https://www.theonion.com/report-greatest-factor-in-employee-retention-boss-send-1831108402.