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Employee Retention: 3 Non-Wage Factors to Keep Your Talent

Published in July 2016

By: Kristopher Kapphahn

Successful HR leaders recognize that, while a competitive wage is a necessary component of a satisfied employee's compensation package, wages alone are generally not sufficient to prevent attrition. As wages continue to grow and turnover ticks up to 25 percent (from 24.4 percent in Q4 2015) according to the ADP Research Institute® Workforce Vitality Report, many CHROs are looking for wage-independent retention strategies.

According to the Marshall University School of Management, factors of employee retention are often a function of an employee continuance commitment, or an employee's commitment to their current employer. That simple concept can be explored and cultivated within your organization to keep your employees in a number of ways.

1. Cultivate Your CultureOne component of continuance commitment is culture.

All other factors of employee retention being equal, organizations with more nurturing and supportive cultures have better retention. Some more traditional organizations have capricious, authoritarian cultures where even small mistakes are punished and employees are motivated to compete with each other rather than to collaborate. The day-to-day operation of those organizations can more closely resemble a business casual episode of Game of Thrones than a functional work environment.

Employees are often forced to take time away from doing their work in order to navigate cutthroat office politics (and peruse the want ads for a better place to work). This is especially true for salaried millennials, who may have a lower tolerance for unnecessarily severe office politics and who, according to the ADP Workforce Vitality Report, stand to benefit financially much more than their older colleagues from switching employers. Provide your employees with the type of workplace milieu they won't want to leave, and, well, they won't want to leave it.

2. Manage Your Managers

Even if your company's culture is ideal, your employee continuance commitment and your retention efforts can still be stymied by managers with poor leadership skills, or who don't respect their direct reports. For employees, management serves as a direct representative of the organization; employees who feel slighted by their manager feel slighted by their organization and will be more likely to seek employment elsewhere.

Minimizing turnover requires leaders who recognize that there is more to finding an effective manager than simply promoting someone with domain knowledge. Effective management isn't just about managing employee output, it's also about managing employee attitudes, expectations and outlook. Employees are people, and while most people enjoy the satisfied feeling that comes from a job well done, they also require respect, recognition and validation from their managers.

Organizations that are successful in employee retention recognize that successful managers have the capacity and desire to treat their direct reports with respect, acknowledgment and compassion. That point is especially relevant in the leisure and hospitality industry, where, according to the ADP Workforce Vitality Report, the wage growth for employees willing to jump ship has topped all other industries.

3. Be Benevolent With Benefits

According to the ADP Workforce Vitality Report, employees who jump ship tend to end up with better pay. Continuance commitment isn't just about how you manage your culture or your managers, it's also about what you can offer that other organizations can't.

Because employees know they can make more elsewhere, competitive organizations should focus on benefits for keeping their employees around. While some organizations in Silicon Valley may be dialing down their lavish employee benefits, according to Business Insider, the principle underlying the provisioning of perks like on-site laundry services or free meals is sound. The availability of services like those tells employees that their comfort and convenience is a priority, and more importantly for retention purposes, can create a sense of loss associated with leaving the organization that undermines the allure of drawing a larger salary elsewhere.

While you don't need to provide an on-site rock climbing wall or bottomless piles of bacon, simply providing an endless pot of middling-quality coffee is no longer sufficient. Flexible scheduling, on-site fitness facilities, negotiated travel deals, tuition reimbursement or unlimited vacation are all benefits that could help tip the scales toward your organization for an employee on the edge. These perks can provide a widely talked-about way for your organization to differentiate itself from your competitors, so get creative with them.

In a tightening talent market, figuring out how to retain and recruit great employees can seem a bit overwhelming. Starting with your culture, your management structure and your benefits are good first steps.

Keywords: Retention, Talent Management, Vital Signs




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The ADP Workforce Vitality Index is a comprehensive, quarterly measure of U.S. workforce dynamics that looks at key labor market indicators, such as employment growth, job turnover, wage growth and hours worked. This report yields deeper insights into workforce dynamics and trends than previously available.

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