How investing in employee retention could save your business
The heart of any organisation is its people. Yet everywhere we look, big tech companies are laying employees off in swathes; Amazon confirmed that 18,000 people would be getting the boot, while Salesforce, Microsoft and Google collectively let go of tens of thousands of workers.
On paper, restructuring might work for a business in trouble, but what most employers overlook are the aftershocks of redundancies and the effect it can have on employee morale. And with the economy as turbulent as it is right now, maintaining a loyal workforce could be a lifeline.
Employee morale plays a huge part in retention. It makes sense that happy employees are more likely to stick around, so leaders would be wise to invest in this as a starting point.
Why is retention so important?
Have you ever been in the office and realised that you were doing the work of two people? That’s probably because you were. When unfilled jobs remain vacant, the burden usually falls on some other unfortunate soul to pick up the slack. Employees who do the jobs of two people naturally get burnt out much quicker, or get fed up that their salary doesn’t match the reality of working two concurrent jobs, so they end up looking elsewhere.
Now consider the time, stress and cost of hiring new staff. Not only does recruitment eat away at productivity time, but the added expense of advertising, interviewing, onboarding and training can drain your accounts without you even realising.
On top of that, adjusting to a new role usually takes between three and six months, and research has shown that a new hire will, on average, take around two years to reach the productivity level of an existing employee. When a person is laid off, they walk out the door with years of experience, knowledge and creativity that could be an asset to your competitor.
Happy teams perform better
Enter the theory of psychological safety – the feeling that you can be yourself at work without any negative repercussions; one of the most important motivations for workplace happiness.
People need to feel that they can share ideas, collaborate with their team on an equal level and feel supported in their decisions. Have you ever tried to speak up in a group setting and either been ignored or shut down? Employees who feel this way can not only be less motivated in themselves, but have no desire to speak up or share their opinions. This can affect both their overall mental health and their satisfaction at work.
The problem is, there’s no easy solution to measure happiness. One person can find happiness in a simple ‘well done,’ while another might need a promotion. If your employees are happy, conflicts are rare and the dreaded ‘office politics’ can be minimised, so it’s important to foster the kind of work environment that can be a conduit to workplace happiness.
If you’re unsure what this looks like, go straight to the source and ask your employees. Send out recurring surveys using tools like Culture Amp or Survey Monkey, and make changes based on the feedback (both positive or negative). Step it up further by regularly training managers or offering coaching courses that help them be better leaders. Invest in your leadership as well as your employees, because they’re the ones training your staff and keeping them engaged.
Why now is more important than ever
In 2020, the worker availability ratio (which measures how many workers are available for each position) was five. In 2021, this dropped to 1.2. A possible explanation could be that while pay rises for people who stayed in their company were around 3%, gains for people who moved to another business were 4.3%, meaning it’s easier to get a salary increase by moving to another company than it is to get a raise in your current role.
Add to that the rising threat of a world war, the residual fear after a global pandemic, higher-than-ever rent costs, inflation, the impending doom of a looming recession (need we go on?), and it’s easy to see why it’s never been more crucial to hang on to talent.
How to motivate employees when pay rises are off the cards
Offering people freedom is one way to do this. Not necessarily financial freedom, but autonomy.
Our report found that 32% of businesses have had employees unable to justify the cost of travelling to work. Flexible working hours, for instance, allow employees to work during the times (and in the places) that suit them best. Some people are night owls, some are early risers, some have kids that alter their schedules, so give people the choice. Introducing flexi-time can be a massive step in trusting your staff, which in turn means they’re likely to place greater value and respect on their role. It’s also been shown to reduce absence rates, which is good news for you as an employer.
Employee motivation and happiness also stems from a culture of collaboration and inspiration. Most of the ideas that come to us are in bits and pieces, and the really good ones build over time with teamwork and patience. Allow your people to voice half-finished thoughts that might seem a bit random, or to brainstorm and think out loud so that another person might finish that thought and create something amazing.
Make mistakes, and learn from them
On top of that, it’s important to allow people to make mistakes and take responsibility for them. Inspire the kind of environment that encourages mess-ups. Don’t make a big deal out of mistakes and errors – learn from them, build on them and create something new out of them. For example, if you have weekly team catch-ups, why not encourage people to share a mistake they made recently and what they learned from it? This is a great way to remove the stigma that surrounds oversights.
And if you mess up as a leader, own up to it! People have much greater respect for those who can admit they were wrong.
Invest in wellbeing
Given your people are your biggest assets, it’s important to look after their wellbeing. We spend a large chunk of our time at work, and by the time we clock out we’re often too exhausted or mentally drained to do anything else. Initiatives like wellbeing programmes, employee assistance programmes and monthly mental health days can make an enormous difference to workplace happiness.
Reward high performers
Almost everyone appreciates a pat on the back for a job well done, but a gift or reward for great performance is an extra step you can take to give someone that important confidence boost. Many employers feel that incentives are too costly (our report found that 23% put a stop to employee gifts in 2022) but what about rewarding high performers with an extra day's holiday, a 20 minute in-person chat with the CEO or an early finish one Friday? Get creative and find fun ways to show your people that you appreciate their hard work.
Hanging on to – and developing – your employees isn’t rocket science. Showing your employees that you care about them as more than just a business asset will incentivise them to stick around, which will benefit you in the long run.
For more tips on keeping your business not just surviving but thriving in 2023, download our State of Spending report.
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