by Cait DeBaun
The Race for Retention: Why It's About More Than Money
It’s a good time to be a full-time employee in America. Sure, we have a long way to go to break our work martyr habits, our obsession with busyness, and our overall inability to take our time off. But it appears the job market has started to transition to an employees' market, not an employers' market.
According to the latest ADP Workforce Vitality Report—an in-depth quarterly analysis of the vitality of the U.S. workforce—full-time American workers are taking advantage of a tightening labor market to secure better wages. ADP’s analysis discovered that full-time employees experienced higher wage growth when they switched employers in the first quarter of 2017, compared to those who stayed in their jobs (5.2 percent vs. 4.3 percent). For employers, this reinforces an already pressing topic: employee retention is crucial—or, as Forbes dubbed it, “the biggest talent challenge of 2017.”
But the solution to that challenge isn’t only about wages. According to recent research conducted by Glassdoor, offering better pay alone was not likely to improve retention. Instead, the key is to pair better wage offers with real investments in positive workplace culture.
“One of the most striking results we’ve found is that, across all income levels, the top predictor of workplace satisfaction is not pay,” explained researcher Andrew Chamberlain. “It is the culture and values of the organization, followed closely by the quality of senior leadership and the career opportunities at the company.”
A similar study by Timothy M. Gardner and Peter W. Hom reinforced this conclusion. Gardner and Hom identified 13 “pre-quitting behaviors," a set of behavioral changes that are strong predictors for an employee leaving a company. Surprisingly, the behaviors most indicative of quitting actually weren’t about finances. Workers considering a move were far more likely to exhibit decreased work productivity, less motivation, and lower enthusiasm for their current organization’s mission.
These are often the same behavioral patterns found in Project: Time Off research that occur when workplace culture does not encourage workers to take their earned time off. Vacation is a sure-fire way to help increase productivity, creativity, and retention. What’s more, employees rank vacation as a top benefit, second only to healthcare (yes, ahead of raises/bonuses/promotions).
Not taking time off hurts employee engagement and productivity, affects talent retention, and expedites burnout—all of which hurt a company’s bottom line. And knowing that the boss is the number one influencer over an employee’s time means communication around the importance of vacation for the success of the individual and the company needs to infiltrate all levels of the corporate ladder.
The bottom line: talent retention often can be the reason that a business succeeds or fails, and an engaging culture is imperative to make it happen. If you want to hang on to the good people you’ve got, don’t just offer them a raise—make sure you talk to them about how they can recharge and refresh.
If you don’t, they might get that message (and corresponding work culture) at another company.
May 16, 2017