The #1 Obstacle to Employee Retention

Great employee retention is the ultimate goal of most HR professionals, yet many organizations are held back by a common obstacle: not sharing enough employee appreciation.
A lack of institutional support for regularly shared workplace gratitude — often the unintended consequence of other factors — actually repels employees.
A 2013 Glassdoor survey found that more than half of employees would stay longer at their company if their bosses showed more appreciation. U.S. Department of Labor statistics echo these survey results.
Read on to find out why employee retention is so important and how to make sure your company isn’t inadvertently sending employees out the door.

Why Is Employee Retention So Vital?

When workers choose to stay with your organization, everyone benefits. Over time, longterm employees improve job skills and problem-solving abilities, deepen relationships with coworkers and customers, strengthen teamwork, and build institutional memory.
Unfortunately, many companies accept and even expect high employee turnover, according to HR expert Josh Bersin.
“I had a conversation with one HR manager who told me ‘we design our organization around high-turnover: we make sure jobs are easy to learn so we can rapidly assimilate new people,'” he writes in the LinkedIn article, “Employee Retention Now a Big Issue: Why the Tide Has Turned.”
This may be a reality for some companies, Bersin writes, but his research shows “that it’s not a sound strategy.”
Tenured employees — no matter what role they play — “drive far greater value than those who are ‘cycling through’ the business,” according to Bersin.
A workforce that constantly comes and goes is downright expensive. Employee turnover costs are estimated at tens of thousands of dollars per employee and up to two times annual salary. Among the costs involved:

• Hiring (advertising, interviewing, vetting)
• Onboarding and training
• Lost productivity while a new hire learns the job
• Customer service errors caused by new hires’ inexperience
• Lowered morale and lost engagement among employees who see high turnover and ask “Why?”

How Appreciation Drives Employee Retention

Appreciation is about more than saying “thanks.” A vibrant culture of gratitude is built on management’s capacity to convey why employees’ work matters.
Bersin uses Maslow’s Hierarchy of Needs to explain how engagement and recognition matter to employee retention. Once basic needs like fair pay and safe working conditions are met, “they look for more meaningful value at work.”
Employees whose basic needs are met start asking:

• Is this work taking advantage of my skills?
• Do people appreciate me?
• Is the environment inclusive and diverse so that I feel that I fit?
• Does this company do work I feel proud of?

Successful recognition connects your “thanks” directly to the behavior you’re rewarding, whether it’s qualitative (perseverance in helping a customer, for example) or quantitative (a quick turn-around on a project).
The very best recognition ties specific appreciation to the company’s greater goals and successes.
Simple enough, right? Unfortunately, effective employee recognition becomes a sticking point for otherwise well-meaning companies because of a lack of institutional support for it.
Forbes contributor Louis Efron breaks down this discrepancy between what what employers know is right and what they actually do in his article, “Three Reasons Your Best Employees Don’t Feel Recognized.”
“Sadly, most employees, managers and organizations see recognition as simply a tool to reinforce good behavior and have given it little strategic thought,” Efron writes.
But sincere and targeted recognition is “much more than a check-the-box exercise – it is an important part of caring for your employees.”
Three questions for your organization to consider:

• Are all levels of management in your organization trained in recognition best practices?
• Are managers empowered and given the resources they need to share their appreciation?
• Are the lines of communication between management, HR and employees open and clear?

Employee recognition was an issue “in literally every employee survey I was involved with over several decades in management,” writes Victor Lipman, a retired corporate executive and author of “The Type B Manager.”
In Forbes post, “Why Appreciation Can Make the Difference Between Employee Engagement and Turnover,” Lipman writes that recognition is critical to retention because it satisfies a deep human need.
“Whether you call it recognition, appreciation or simply feeling valued, the desire to receive positive reinforcement for a job well done is deep rooted,” he writes.
For more great tips and insights into building a vibrant culture of engagement, loyalty and appreciation, be sure to download our free e-book, “The Top 20 Employee Engagement Blogs You Should be Reading”.

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