Employee Retaintion -12 How to Improve Employee Retention

In a down economy, employees have fewer opportunities to take a job at another company, but entrepreneurs would be remiss to take their fingers off the pulse of company morale simply because employees have fewer options. "Companies that don't think about [employee retention], that basically rest on their laurels and think 'the economy will take care of us, where are they going to go?' Those are the companies that, as soon as the labor market picks back up, their turnover rates are going to go from 5 percent to 50 percent and it will happen overnight," says Mark Murphy, author of The Deadly Sins of Employee Retention and CEO of Leadership IQ, a Washington D.C.-based executive education firm.

So what's one of the biggest reasons people quit their jobs? "One of the major reasons is being dissatisfied with their supervisor," says Linda Argote, a professor of organizational behavior at Carnegie Mellon and editor-in-chief of Organization Science. And in the cramped confines of a small business, that relationship can create even more of a strain. "In bigger companies there are more opportunities to move to other jobs if you're dissatisfied .

with a particular supervisor but like the firm, whereas smaller companies may have less options so they run the risk of losing the employee," Argote adds.

 

How to Improve Employee Retention: Motivation is Not Enough

Bonuses, vacation days, office parties, and many of the tools in a business owner's arsenal revolve around rewarding employees for a job well done and motivating them to produce similarly stunning results in the future. But Murphy says that leaders who dole out these types of perks are only focusing on half of the picture.

There are "two issues generally going on with employees at any given time: there are 'shoves,' things that demotivate people, and then there are 'tugs,' the things that motivate you, that tug at you to stay at the organization," he says. While these factors will differ for every employee, leaders often make the mistake of focusing on the motivators without adequately considering what rubs people the wrong way.

How to Improve Employee Retention: Attracting the Right Candidates

Over the years, Engage has implemented a number of policies that serve the dual purpose of attracting potential employees and keeping current ones passionate and committed. Here are a handful of examples:

• Engage gives hiring priority to people who live near the office because they believe that long commutes are detrimental to work-life balance.

• Instead of a traditional vacation policy, the company lets employees take time off from a leave bank, in which they can accumulate as many as 60 days off to use as they see fit. This policy has helped with employee retention, particularly by making it easier for female employees starting families to take time off and ultimately return to work.

• During the hiring process, Engage administers the DISC Personality test, which charts the four characteristics, drive, influence, steadiness, and compliance, to build personality profiles for new hires. All employees' test results are public knowledge, which Hoffman feels helps people understand one another and get along.

• By setting quarterly goals with rewards attached, such as iPods for the whole team or a trip to a nice restaurant, Engage can encourage employees beyond the competitive, and potentially divisive realm of salary bonuses. The group nature of these rewards is important, says Hoffman, because "somebody who is not motivated by getting an iPod knows that other people in his or her group are and doesn't want to let them down."

In addition to spurring employees to productivity, this team structure can make them happier in the workplace. Argote says, "there's evidence that being in cohesive work groups where members like each other reduces turnover."

 

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