Employees are widely recognised as an company’s greatest asset, and the costs of employee losses are very high, estimated at up to 12 months remuneration. Improving employee retention is therefore an essential aspect of effective business management.
But its not just about the money
Employee retention starts with remuneration. Money is a primary motivator for many employees. Remuneration needs to be competitive and provide meaningful immediate and long-term outcomes. However it should be recognised that remuneration alone will not lead to long term employee engagement and retention.
Numerous studies have shown that improving employee retention is not only a matter of increasing financial incentives. While an increase in remuneration may provide an immediate “sugar hit”, there are other factors which are equally effective in improving long term engagement.
Gather feedback through “engagement metrics
The first step in improving employee retention is understanding the current attitudes of employees. This is usually achieved through surveys (including online), in-person interviews and group feedback sessions. Whichever method is selected it is essential that employees are given the opportunity to provide open, candid and honest feedback without the fear of potential negative consequences.
The 3 most important non-financial incentives
Three non-financial incentives are consistently rated by employees as equal, or greater, in importance to remuneration in providing motivation and long-term engagement.
Positive immediate management
Positive feedback, encouragement and support from immediate managers is often cited as the most important factor in long term employee retention and engagement. This contributes not only to a positive day-to-day working environment, but also improves an employee’s perceived prospects for training, development and progression.
Gaining attention from leadership of the organisation is highly motivational. This manifests in a sense of ownership and engagement with employees, rather than simply working for the next pay cheque.
Attention from leadership can be provided in many forms – individual meetings, focus groups, working groups etc. Care needs to be taken however to keep this type of engagement genuine and personal. Large “town hall” style events don’t work and reinforce a feeling of separation between leadership and employees.
Providing employees with opportunities to lead projects or task teams has also been found to be highly motivational. These opportunities are an acknowledgement of an employee’s skills and provides confidence regarding future progression.
- A number of further factors have also been found to be important in employee retention;
- Fostering a shared sense of purpose – a shared “mission” or set of values which employees can “buy into”;
- Flexibility in working arrangements;
- Corporate social responsibility.
In reality these factors are not effective in isolation – it is the whole employee experience that ultimately drives engagement and employment longevity. Attempts to implement non-financial incentives without genuine intent and support are unlikely to be successful.
Improving employee engagement and retention is an essential aspect of sound business management . If you need help reach out to the seasoned team at Fullstack whom can help with outsourced CFO advisory.