According to the U.S. Bureau of Labor Statistics, the price of day-to-day essentials has increased a whopping 11.4% since 2020, leaving many Americans feeling the strain on their bank accounts as they swipe their cards at the grocery store. With this steady increase in the cost of living, it may come as a surprise that compensation is not the primary reason employees are leaving their jobs. So, if money isn’t keeping employees at their jobs, what is? In this blog, we explore what employees really want from their employers and how you as a business owner can adjust your rewards strategy to retain your workforce long-term.
A Changing Employee Mindset
Oftentimes, employers will try to solve employee dissatisfaction by providing monetary incentives, commonly salary increases and bonuses. While it is important for employees to feel like their compensation is adequate and keeping pace with their professional growth, salary is only a baseline motivator and quickly loses its impact the longer an employee stays at your organization. This is because compensation is not unique to any single business and employees know that no matter which company employs them, they will receive compensation in exchange for their work.
This idea was exacerbated by the shift to remote work and mass layoffs caused by the pandemic. Prior to 2020, employees were used to regularly commuting to work and many would stay at the same organization for years before looking for new employment opportunities. Due to global lockdowns, many employees transitioned to remote work, which provided them with an increased level of work-life balance they hadn’t experienced before. Another large percentage of the workforce was forced back into the job market due to layoffs and, for the first time in years, saw what incentives different organizations had to offer. Although lockdowns are over and many companies have reverted to requiring in-office work, the pandemic reshaped priorities and employees are continuing to look for factors outside of compensation to fulfill their high-level needs.
Compensation is No Longer the Sole Factor Contributing to Retention
In keeping pace with this change in employee mindset, the once singular focus on competitive compensation packages as a motivator has given way to a more holistic approach centered around an employee’s overall work experience. Today, not even the most appealing paycheck can compensate for not meeting an employee’s higher-level needs.
According to a report published by the Society for Human Resources Management (SHRM), employees expressed that work-life balance, paid time off, flexible working options, paid family leave, and professional development opportunities were more important to them than a generous compensation package. In addition, employees indicated they would accept a lower paying position if it provided them with any of the above, which is a trend we’ve consistently seen as a consulting firm specializing in recruitment process outsourcing and compensation strategy design. Remote positions easily garner hundreds of applicants while similar in-person roles struggle to attract talent. Candidates are also quick to remove themselves from the interview process if a company doesn’t have lucrative benefits such as a parental leave policy or a competitive PTO policy. This has resulted in organizations moving towards offering more comprehensive benefits packages to retain their valued employees.
Five Factors Driving Employee Retention Besides Compensation
Your business is more at risk for employee turnover if you are unaware of how your benefits offerings compare to the current market. Below are five specific factors you can provide in addition to compensation and medical benefits to drive employee retention.
1. Work-Life Balance
One of the biggest driving factors of employee turnover is lack of work-life balance and individuals are now intentionally seeking out opportunities that will allow them to excel professionally without sacrificing their personal lives. While the shift to remote work is what highlighted the desire for work-life balance, the lack thereof has always resulted in employee turnover. If your organization monitors employees’ “active” online status, expects them to regularly work over 40 hours per week, or requires on-call availability during nights and weekends, you are at greater risk for burnout-related turnover. Organizations that prioritize work-life balance by offering flexible work schedules, remote working options, and generous paid time-off policies see a higher level of employee satisfaction, engagement, and retention.
2. Workplace Culture
“The Great Resignation” was the result of employees who were burned out due to toxicity in the workplace. Now more than ever, employees are looking for a workplace that fosters collaboration, inclusivity, and innovation, which means the culture of your organization plays a huge part in retaining employees and attracting future hires. Developing core values and using them to guide decision-making throughout the organization is the most effective way to build a strong workplace culture. Employees feel more fulfilled at work when they’re aligned with their company’s core values and see those values reflected in the day-to-day actions and business decisions of coworkers and leadership. Organizations who have a values-driven workplace culture experience less turnover because they focus on the employee experience.
3. Effective Leadership
Leadership plays an important role when it comes to employee retention, and it is important for the leaders in your organization to always lead by example. Employees will quickly feel disconnected from your organization if leadership is following a different set of rules than the rest of the workforce, which makes it imperative for leadership to adhere to the same expectations they set for employees. If employees are required to follow a hybrid work schedule, your leaders should align their schedules to match. For remote companies, leaders should participate in non-work-related communication channels and ensure they are meeting regularly with their direct reports. It is the job of leadership to connect with employees on both a personal and professional level to show employees they are valued members of your organization. Effective leaders not only drive the business forward but inspire commitment from their workforce by creating a work environment where employees feel appreciated and motivated to stay.
4. Flexibility and Support
While the ability to adapt to the evolving needs of employees is a key factor in retention, flexibility isn’t one size fits all. Consider what support and flexibility is realistic for your organization to offer and if it will be sustainable to maintain as your business scales. It’s okay if you don’t want to commit to going fully remote, or if remote work isn’t possible for the type of work you do. Hybrid work is becoming a popular compromise among many organizations because it provides a work-from-home option for employees while also promoting in-office collaboration. Flexible scheduling is another way to support the unique needs of your workforce as it allows employees autonomy in when they complete their work. Instead of employees using PTO for a doctor’s appointment or missing out on school pickup due to regular office hours, flexible scheduling lets employees step away from work without penalty. Placing trust in your employees by providing the flexibility to manage their own schedules promotes retention by reinforcing your organization’s commitment to their well-being both in and outside of work.
5. Development Opportunities
Employees want to be recognized and rewarded for their work and will quickly become unsatisfied in the workplace if there are no clear paths for growth and development. Even with regular compensation increases, an employee is more likely to look for new career opportunities if they feel stagnant in their current role. Provide development opportunities for employees if you want to positively impact retention. First, clearly define career ladders for each functional area within your organization and train managers on how to support their team’s development through goal setting and performance management. Before going to market for an open role, review the skills of your current workforce to identify if there’s an opportunity for internal promotion. Every time you promote an employee, you are indirectly communicating that growth is achievable within your organization. Additionally, it is important to offer employees a variety of learning opportunities as promotions don’t always happen regularly. In-house training courses, mentorship programs, and providing reimbursement for professional development opportunities are all great ways to promote continuous learning to keep employees engaged and satisfied within your organization.
If You Need Help With Employee Retention, Red Clover Can Help
In one of the toughest job markets to date, it is imperative your business adapts to the evolving needs of today’s workforce if you want to retain your talented employees long-term. If you’ve been struggling with retention, contact us today to explore how Red Clover can help you go beyond the paycheck, and create a comprehensive benefits package aligned with your business goals.
Photo by Karolina Grabowska
