Today’s fast-moving job market doesn’t bode well for companies with high employee turnover. Studies show that losing an employee can cost up to 21% of their annual pay, while other research suggests that properly investing in a salesperson can net over $1 million in revenue over their lifetime at a company.
With numbers like those, it’s obviously in the best interest of companies to reduce employee turnover as much as possible. Chief Economist Andrew Chamberlain and Data Scientist Morgan Smart at Glassdoor analyzed over 5,000 job transitions and found that, while pay remains important in employee retention, culture means just as much to today’s workers.
What matters in employee turnover
Pay is rarely the single reason that employees stay at a company, but it still plays a huge role. If employees are performing well, they want to be well-compensated. This remains one of the biggest factors that influences employee turnover. Glassdoor’s research shows:
A 10 percent increase in base pay raises the likelihood by 1.5 percent that the average employee will stay inside the company when moving to their next role. tweet
That 1.5% increase is significant because Glassdoor found that when employees change roles, they leave their current employer nearly 73% of the time. Companies looking to retain their talent should find ways to invest in them monetarily, but offer other benefits as well. Andrew and Morgan’s research shows that company culture is a strong indicator of how employees will decide their next move.
Using Glassdoor ratings as a benchmark for company culture, their report shows a statistically significant impact on employee retention relative to overall employer rating. The impact on employee retention is even higher when correlated to the culture and values ratings of each company:
These findings echo previous research showing that career opportunities and the culture and values of an organization are among the top drivers of employee satisfaction. It should come as little surprise that employers who offer attractive culture and values and provide clear upward career paths for employees are more likely to retain workers who are looking for the next job in their careers. tweet
In Glassdoor’s research, these were the two biggest factors in determining whether or not an employee would leave a company during a job change. The good news is, there’s never a better time to start changing things than right now.
Building a culture that prevents employee turnover
As important as compensation is, there are other lessons to learn from this research can help improve employee retention. Using a team learning software like Lessonly is one great way to share information with employees and preempt tough conversations.
- Announce your mission, vision, and values. Here at Lessonly, one of the first Lessons we are assigned as a new employee is one that explains our company mission and how we go about achieving that mission. Written by our CEO, it helps orient new employees to the direction the company is headed while giving them a taste of the culture. A Lesson like this early in an employee’s tenure can make a big impact.
- Be transparent about career paths. Transparency and consistency are critical to managing expectations related to growth and development opportunities. A Lesson from management on how promotion, development, and growth paths work will go a long way in giving employees concrete goals to work toward and exceed. Explain what the ideal team player at your company looks like, give suggestions on how employees flourish, and follow through by rewarding their efforts when appropriate.
- Encourage employee feedback. The best way to keep in touch with employees is to continually gather their feedback. Often, employees have ideas or suggestions for management that can change a company for the better. Sending out a weekly, monthly, or quarterly Lesson that asks team members where they see potential to improve is a great way to actively cultivate trust and company culture. Employees will appreciate that they are being heard and given an opportunity to impact the company at-large.
A more active company culture doesn’t have to include sweeping changes. Simple Lessons sent to employees to check in can be a good start toward real improvement.
Strengthen company culture with Lessonly
Employee-centric companies use Lessonly to cultivate their company cultures. Take a self-guided, five-step tour of Lessonly’s team learning software and see how your company can start doing the same. Sign up today.