Any HR manager knows turnover is expensive, for many reasons. When filling positions, the HR staff is forced to take time away from other opportunities such as building a strong culture or ensuring employees understand compliance.
But turnover costs more than time: According to a study by the Society for Human Resource Management, employers will need to spend the equivalent of six to nine months of an employee’s salary in order to find and train their replacement. This is due to a variety of expenses, ranging from training to advertisement to recruiting to lowered employee productivity due to inexperience.
Additionally, high turnover can impact employee morale. If your employees are constantly leaving, there’s little reason for new talent to stick around, as a rapid hire-work-leave cycle becomes the norm.
This is why employee turnover rates are a key performance indicator for many CEOs. Simply put, lower turnover means lower costs. To a CEO, this is golden.
If you’re struggling to communicate the value of your HR department to the rest of the company, reducing employee turnover could be a good start. CEOs think in terms of numbers, and if you can show that you’re driving down costs by improving employee engagement, you will go a long way in grabbing the boss’s attention.
Why you should use sticky culture as a method to reduce turnover
The term “sticky” has lately become a popular way to describe websites that manage to consume hours and hours of users’ free time. This is why Facebook has been promoting the use of video and why social media sites ranging from Twitter to Instagram employ algorithms to show you the content you appear to be most interested in viewing.
Basically, if something is “sticky,” it means people like to stick around.
The same concept applies to a company. A company with a sticky culture has the following elements:
- Employee satisfaction is rated at least a 4 out of 5 stars
- 30 percent of employees are hired through an employee referral program (the industry average is 24 percent)
A sticky culture means your current employees are happy, and because of that, they function as ambassadors for your company and refer other qualified employees. As we’ll see in this blog post, this goes a long way toward reducing costs and keeping turnover low.
This is becoming especially relevant today as millennials (those born between 1981 and 2000) become more and more of a share of the workforce. Millennials are much less likely to stay longer than two years at a job than the older Generation X and Baby Boomers, because (as we describe in a later section) of their unique needs. By 2020, about half of the workforce will be made of millennial workers, and it’s in your best interest to meet those needs today to help you gain a competitive advantage over your competitors tomorrow.
How exactly can you create this type of sticky, strong culture? That’s exactly what this post is for. In it, we’ll describe the ways you can meet your employees’ needs (including the unique needs of millennials) and align employee values with your company values, to help create a strong culture that will encourage employees to stick around.
Your People Make Your Culture
Most people familiar with psychology have heard of the theory called “Maslow’s Hierarchy of Needs,” which uses a pyramid to illustrate the relative importance of what we need to feel safe, fulfilled and happy. The argument, as depicted below, is that before we can feel like we’re reaching our potential (Self-actualization), we have to first meet our basic needs of food, shelter, sleep and safety.
This is a good way to examine how you’re helping your employees reach their potential as well. Before you can expect them to be the dynamite superstars you know you hired, you have to first meet their needs on a basic level.
A 2014 study by The Energy Project and Harvard Business Review of more than 12,000 employees in a variety of industries found that employees who have supportive supervisors are 1.3 times as likely to stay with the organization and are 67 percent more engaged.
“Feeling cared for by one’s supervisor has a more significant impact on people’s sense of trust and safety than any other behavior by a leader,” the study’s authors write in The New York Times.
Leaders need to meet the basic needs of employees before they can worry about the higher needs of belonging and esteem.
How can you ensure you’re meeting these basic needs? In the job environment, you should focus on four categories: financial, mind, spirit and body.
1. Financial Needs:
Research has found that when tasks require some conceptual creative thinking (as most services-oriented jobs do), money is not the greatest motivator for employees. However, it is important in meeting the basic needs of your employees. If you don’t pay people enough they won’t be motivated to work.
We also advise you to include a 401k option, and other financial benefits such as generous insurance, and transportation stipends, if your office is located in an urban environment that requires the use of public transportation.
Essentially, your goal is to pay people just enough to take money off the table so the employee isn’t thinking about the money but the work.
2. Mind Needs:
Another finding of the Energy Project/HBR study is that only 20 percent of respondents said they were able to focus on one task at a time at work. Those who could were 50 percent more engaged. This naturally makes sense: If you cannot focus on what you are doing, you won’t be able to work on the deep, thought-intensive items required of a creative vocation. And if you can’t do the big projects, you aren’t likely to feel as if you’re accomplishing much.
Keep the following in mind when planning your office environment:
Culture of renewal: Employees who take a break every 90 minutes report a 30 percent higher level of focus than those who take no breaks or just one during the day. They also report a nearly 50 percent greater capacity to think creatively and a 46 percent higher level of health and well-being.
Additionally, the more hours people work beyond 40 — and the more continuously they work — the worse they feel, and the less engaged they become.
Takeaway: Can you organize your office environment to promote employee renewal? Can you include a sleep pod? A napping room? Can you host frequent snack times or lunches that require employees step away from the computer screen for a break?
Culture of collaboration: Opinions are divided on the benefits of an open floor plan, with proponents saying it encourages collaboration and opponents saying it eliminates the ability to focus. However, as this Fortune piece points out, the office of the future may have a little bit of both worlds: “a hybrid office, which incorporates a range of spaces and gives employees the autonomy to move between them throughout the day.”
These spaces include:
- An open floor plan, which saves space and encourages employee interaction. Activities that do not require extensive focus can easily be accomplished here, often described as an environment with an energy and buzz.
- Quiet rooms, which will allow employees to escape the energizing, yet distracting environment to do deep work, such as writing or designing. Fortune magazine reports that some companies have even installed soundproof rooms.
- Collaboration/meeting rooms, which will allow employees to brainstorm and join thoughts. There’s no need for this to be completely formal either — Google includes bean bag chairs in addition to a more-conservative round table in its meeting rooms.
- Details oriented around a consistent message, including motivational posters, a layout that incorporates Feng Shui and other finishing touches that communicate your company’s unique personality. If you need inspiration for some really creative office ideas, check out this article from Inc.
Takeaway: Can you redesign your office to include any of the elements listed above? Can you turn your office into a hybridized environment, fostering both collaboration through an open floor plan and focus through the additional quiet rooms?
3. Body Needs:
Many studies have found that healthy employees are more productive employees. For instance, research from the Health Enhancement Research Organization (HERO), Brigham Young University and the Center for Health Research at Healthways shows:
- Employees who eat healthy are 25 percent more likely to have higher job performance, found one survey.
- Employees who exercise for at least 30 minutes, three times a week, are 15 percent more likely to have higher job performance.
- Absenteeism is 27 percent lower for those workers who eat healthy and regularly exercise.
There’s no reason to require that your employees do all the work when it comes to being healthy. According to a Quantum Workplace report, employees are 14 percent more engaged when provided time off to recharge, 10 percent more engaged when provided health food options, 18 percent more engaged when provided time for healthy activities, and 18 percent more engaged when provided a flexible schedule.
Takeaway: What benefits can you provide your employees to encourage them to live a healthy, productive lifestyle? Can you offer fitness memberships? Can you organize an employee outing centered on fitness, such as a 5K or yoga class? Are you offering generous health insurance to provide for the times when your employees get sick?
4. Spirit Needs:
The last section of needs is a little higher up on Maslow’s pyramid: The needs of the spirit. These are more emotional than physical, and they include:
- Flexible time to compensate for unforeseen life-events, as well as preferences in employee working schedules
- Appropriate levels of PTO and generous leave policies, to account for things such as pregnancy or caring for an aging loved one
- A social environment to allow for employee-employee bonding (This also can help collaboration!)
shows that employees are more likely to be engaged at work when they view their coworkers as “friends,” which is to be expected. Additionally, closer ties among employees promotes trust and reduces the likelihood of jealousy or other negative behaviors.
At Novareté, we recognize these needs for social connection, and it’s why we’ve built into our platform the abilities to give employees Kudos, share news and organize groups based on similar interests, such as rock climbing or reading historical fiction. These kinds of tools allow you to promote social engagements among your employees, driving up their satisfaction levels at work.
Takeaway: What can you do to promote social ties among your employees to help create a culture of collaboration? Can you install an office bar? If not, can you plan a weekly employee happy hour? Are you promoting employee-based groups centered on common interests, such as a book club or morning run group?
Be sure you’re meeting the basic needs of your employees before you ask them to be superstars
The takeaway here is that everyone has limited space in their head to juggle their priorities. Your employees cannot focus on producing top quality work if they’re worried about making financial ends meet or if they do not feel comfortable at work because of weak social ties. Make sure you’ve met the financial, mental, physical and spiritual needs first — only then can you ask your employees to be superstars.
Of course, this approach is relevant to everyone, regardless of age bracket. In our next section, we’ll cover how millennials (people born between 1981 and 2000) behave differently from Gen Xers and Baby Boomers. While you’ll still need to meet the basic needs outlined above, you’ll have to treat them differently from your older employees.
Are The Millennials Different, Though?
Sometimes it can feel as if the millennial generation speaks a different language. For instance:
- The average employment span for millennials is two years. That’s much shorter than Gen Xers’ five-year and Baby Boomers’ seven-year averages.
- Millennials are much less likely to consider experience levels and merit when assigning credibility to someone. Instead, they value the person’s contribution to the organization or cause.
- Millennials are the least likely generation to identify themselves by their work. Unlike Gen Xers and Baby Boomers, millennials prefer to think of work as a means to live, and not the other way around.
In short, yes, millennials are different. Not because they lack work ethic or discipline, but because they don’t feel like their jobs define them. Millennials, therefore, are much more motivated by the feeling that they are pursuing personal development — and not a career or financial success.
“One of the primary reasons Millennials are more likely to change jobs is because they are not willing to stick around if they do not believe they are receiving any personal benefit or growth,” writes Forbes. “The most important thing to remember is that Millennials no longer work for you; they work with you.”
By 2020, half of the workforce will come from the millennial generation. Companies that do not take into account their unique needs will inevitably fall behind. Conversely, companies that adapt to these needs will gain a competitive advantage by raising employee satisfaction, which is linked to increased financial performance and lower job turnover rates.
What can you do differently to speak millennials’ language?
We’ve already shown you that monetary rewards are not motivating for complex, thought-intensive tasks common to the services or creative industries. We’ve also described above how millennials are much more interested in personal growth, rather than financial compensation.
So what do millennials want when it comes to day-to-day rewards? Three things:
- Millennials want to know they are improving themselves personally. Trainings, new projects at work, conferences, and access to mentor figures are especially helpful at communicating to millennials that you care about their development as an employee. According to Gallup, 87 percent of millennials say development is important to them in a job.
- Millennials want regular feedback on their performance. According to a survey conducted by TriNet, a company dedicated to providing HR solutions, 69 percent of millennials see their company’s review process as flawed. The survey also found that nearly 90 percent would feel more confident about their performance if they had ongoing check-ins with their bosses.
- Millennials want to be publicly recognized for their contributions. As we stated above, millennials are more likely to view contribution to group work as a better gauge for credibility than experience or merit. Thus, they expect that their contributions are recognized; in some cases, they value this kind of feedback more than money. In a 2013 study funded by employee-motivation firm Make Their Day, 83 percent of respondents reported that recognition for contributions was more fulfilling than any rewards or gifts. Additionally, 70 percent of survey respondents reported their most meaningful recognition “had no dollar value.”
Here at Novareté, we provide Recognition Software tools that will help you foster an engaged millennial workforce through public praise of their contributions. With our Kudos, not only can you recognize someone for putting your organization’s values into action, you can let everyone know about it.
Also, our Point System encourages participation, recognizing employees who send Kudos, organize activities or share useful information. Employees can check the Leaderboard to see where they rank compared to peers, groups, or the entire organization.
If you are interested in establishing some type of rewards system, that’s also possible with millennials. However, it will be much more effective if the system gives a reward unique to each person (The runner gets a gift certificate to her favorite athletic store; The chef gets the new set of cutlery he has been talking about; etc.).
This approach of personalization communicates that you value your employees as unique individuals, and not bland, replicable “office drones.” It’s also a great way to get to know your employees!
How can you make engagement work for your benefit?
We’ve gone through and discussed how you can ensure you are meeting the basic needs of your employees, of all generations. We’ve talked about how to make sure you are also meeting the unique needs of your millennials. Now what?
With these basic needs being met, you’ve set the stage for a much more engaged workforce. But how can you capitalize on this and ensure your employees are working to accomplish your company mission?
Making Culture Sticky Through Alignment
While it would be great to say that all you need to do is set the stage for your employees by meeting their basic needs and expect them to be wildly successful, there’s more required. You have to give your employees the capacity to become superstars, but you also need to give them a little direction.
Why, you ask? Simply, because an aligned workforce performs better. Values-based organizations outperform other types of organizations across every important performance outcome, including: higher levels of innovation, employee loyalty, and customer satisfaction; lower levels of misconduct; and superior overall financial performance.
In 2013, Gallup released the results of a meta-analysis of 49,928 business units across 192 organizations representing 49 different industries in 34 countries. In the end, they found that profits and company mission are not at odds with each other; just the opposite.
“As employees move beyond the basics of employee engagement and view their contribution to the organization more broadly, they are more likely to stay, take proactive steps to create a safe environment, have higher productivity, and connect with customers to the benefit of the organization,” Gallup writes.
How can you ensure your employees are aligned with your company values?
Gallup also found that only about four in 10 employees (41 percent) know what their company stands for and what makes its brand different from its competitors’. It shouldn’t be surprising, then, to find that only 33 percent of U.S. adults say they feel engaged at work. Thus, step one should be simply to communicate your values.
This starts with the hiring process (which we’ll get more into later). HR managers have the responsibility to ensure all prospective hires know the organization’s values by discussing them in the interview and onboarding process.
With current employees, the approach can be divided into two areas:
Individual Mission Discovery: Novareté’s CEO, Fulton Breen, is founder and principal of XSInc, a firm that specializes in big data management. Nearly a decade ago, while XSInc was a startup, Fulton and his partners emphasized the importance of the natural law and the cardinal virtues in company values.
In 2005, these principles were integrated into the company’s intranet presenting virtue-ethics and values as a congruent system. Partially as a result of this system, XSInc won the North Carolina “Psychologically Healthy Workplace Award” in 2009.
However, before he could implement these values, Fulton had to figure out what exactly these values were, just as you also should do. Here are a few questions to get you started:
- What are your personal values, or what are the personal values of your company’s CEO?
- How committed are you to these values? Would you be willing to hire or fire someone based on how they align with your values?
- Have you examined other value systems, such as the Aristotelian code of ethics or Plato’s four cardinal virtues? Note that there’s no reason to limit your search to humanist systems, and you can also examine the value systems of major religions.
The point is that you want to be crystal clear about what your company values are, because a strong culture starts from the top. It’s important to constantly reassess your approach to ethics, personally. Only then can you move onto the next step, which is to address these values with all employees through Company Mission Training.
Company Mission Training: If you’re struggling to understand how well your employees understand your company values, we can help. Surveys are useful, but aren’t nearly as engaging or high impact as weekly Dilemmas.
Novareté’s weekly ethical Dilemmas give employees “practice swings” at how they would handle difficult situations, plus a way to share their perspectives. Novareté takes culture beyond self-assessment surveys, offering real context to let employees place themselves in a situation and choose their action.
In practical, “What would you do?” style assessments, employees use response choices to gauge their understanding of your company values and their own values. At the end, we provide expert evaluation to prompt thinking and debate.
Reducing employee turnover can cut costs, save time and boost employee morale. To help achieve these goals, you’ll need to ensure your culture is one worth sticking around for first.
Here are some things to ask yourself, as you examine whether or not you have created a “sticky culture” at your workplace:
- Am I seeing high turnover rates, average turnover rates or low turnover rates for my industry?
- How much time am I spending finding new talent to employ? How many of my company’s new employees come through the referral of an employee?
- Am I meeting the needs of my employees, in terms of financial needs, and the needs of their body, mind and spirit?
- Am I giving millennials everything they need? Am I promoting personal growth and providing a culture which encourages a life outside work?
To crush turnover in your company, you have to create a strong culture that attracts the world’s superstars. In the end, this means you need to meet your employees’ needs, align their values with yours, and then let them loose. They will shine.
Novareté can also help through our Free Culture Calculator, which you can access by clicking below. The whole assessment (including registration) should take under 30 minutes. At the end, we’ll calculate your Culture Health Score, helping you identify areas of focus as you continue to grow your culture.