At the moment, the world feels like a frantic race to keep up with the level of innovation happening at a global scale, which is why 79% of CEOs worry about the availability of key skills.
What makes this even worse is that the average employee will hold 10 different jobs by the time they reach the age of 40. Add this to the fact that 43.3% of the workforce in 2020 is made up of millenials — a generational cohort of 24 to 39-year-olds that is infamous for being entitled, uncommitted and always looking for the next best thing — and we begin to believe that employee turnover, especially in skill-scarce areas, is an ever-increasing inevitability.
This leads to the following not-so-new, but burning question:
What is the risk of losing out on our investments in talent when the likelihood that they will leave seems to be increasing?
Why even consider that when we can leverage off of the gig economy? Why worry about finding the perfect fit or taking the time to upskill an internal employee if you can just plug in the right skills on a fixed-term contract? This removes the risk by patching the skill gaps we have without over-committing to a relationship that will end anyway. War for Talent over!
The gig economy certainly has its place in project-based work, but outside of projects, this thinking is like using duct tape to patch a hole in a boat; it may stop the leak, but it won't fill the hole. This is a problem you will become acutely aware of when a small obstacle hits you in the right place at the wrong time. This is why we use duct tape — it provides quick fixes to small problems, but not solutions to foundational issues.
When it comes to employee turnover and retention, duct tape solutions can help with reducing employee turnover, but it doesn’t improve retention. Here’s why:
Retention and turnover aren’t two sides of the same coin — they’re different coins
This is because satisfaction causes retention and dissatisfaction results in turnover. Now that might seem obvious, but here’s the kicker:
The opposite of dissatisfaction is the absence of dissatisfaction, just like the opposite of satisfaction is the absence of satisfaction. To understand what this means, I need to explain the difference between hygiene factors and motivating factors at work.
Hygiene factors are things like compensation, job security, status, supervisory practices, company policies and work conditions. If these things aren’t done right, it can cause us to become dissatisfied. But, if they are done right, then this won’t make us satisfied, it will simply make us not dissatisfied. No matter how much you get paid, compensation will never make you love your job, but it may prevent you from hating your job.
Motivating factors, on the other hand, are the “softer” things that are harder to pin down: challenging work, recognition, responsibility and personal growth. What satisfies us are the intrinsic conditions of the work itself, not the bells and whistles. These are the things that make us want to do more — and they can only be found inside ourselves and our work.
This is why retention is so complicated. You can’t use hygiene factors to solve the absence of motivating factors and you can’t use motivating factors to solve the absence of hygiene factors.
Being paid a good salary will prevent you from leaving, but it won’t make you stay. Just like doing work that you’re passionate about will help you stay, but it won’t prevent you from leaving. You need both if you really want to love your work.
You need to nurture both if you really want your talent to stay. But, first:
Start with the hygiene factors
At an executive level, there is very little control over the motivating factors of each employee in your organisation — that’s why you have managers. [Actually, that’s why you need good managers, but more on that later.]
You cannot systematise the motivating factors, but you can systematise most of the hygiene factors. There are only two hygiene factors that this doesn’t apply to: job security and status. Even without the macro-economic fragilities that COVID-19 brought under the spotlight, the nature of Industry 4.0 has turned organisation design and restructuring into a conveyor belt of continuous optimisation. Job security can no longer be guaranteed to anyone.
Status is also too dependent on the individual’s views of themselves, the structure they are in and your culture. By definition, status is the relative social or professional standing that one has. Keyword: relative. The rest can be systematised through a very simple set of principles that links well with best-practice corporate governance: Fair and Equal. If you want good hygiene factors, then this should be the foundation of your company policies and supervisory practices.
When it comes to compensation, everyone always wants more money, but there is an ideal point you want to reach and that is to pay them enough that money is no longer on the table. That’s it. Once all parties agree that they are being remunerated fairly, then the money is no longer an issue and people focus more on their work.
When it comes to work conditions, forget the ping-pong tables and fancy pause areas. People want to enjoy their work, but they know why they’re there. They just want the basics: better air quality, access to natural light, comfortable temperatures and the ability to personalise their workspaces.
After the hygiene factors have been established, it’s time for the fun stuff.
Discover the motivating factors
Now that you have the foundations to get your house in order and you’ve done what you can to prevent your employees from becoming dissatisfied, it’s time to focus on getting them motivated. Your house is built, but now you need to make it a home.
It’s all good and well to look around you to see how your neighbours make their families and friends feel at home, but this seldom gives you the right answer for how to do it yourself and in your house. The context is different. The same applies to people at work and there is only one way to understand how to satisfy someone — you ask them.
Of course, not everyone is going to be equally satisfied all the time. That’s normal. But, what works in one area of your company will very likely work in a different part of your company, too. That’s how culture works. So, when you do your bi-annual pulse of employee satisfaction, pay close attention to which teams/business units respond the best. [I guarantee that you will see this at a team level and not an individual level, which is why good managers are important.]
To find out how to maximise satisfaction across the board, find the most satisfied teams and dig deeper to find out why they are so satisfied. Go interview them and their managers. What are they doing well? Where are their strengths? What could other teams or managers learn from them? Most importantly, answer the question: how can we use this information to coach our other managers to make their teams more satisfied?
Once you have this information, see how this moves the needle. Do some analyses to see how these satisfaction levels relate to team or business unit performance and employee turnover. You will very likely see a correlation. Then keep measuring every six months. But, the most important part is to make sure you constantly update your thinking on what is working, reinforce this within the strong teams and help the weaker ones develop. This is not a once-off exercise.
Rinse and repeat
The world is never stagnant, and neither are people, which is why it’s important to keep up with them. As challenging as the younger generations are to manage, there is one lesson that millennials are giving us no choice in learning: Everyone wants the motivating factors.
The high quit rate that has become emblematic of millennials shows us that they would rather leave than accept the kinds of bosses that previous generations tolerated. Take a page out of their book and start asking them what makes them satisfied. But before you do that, you need to rinse out the fixable problems. Give your human resource management practices a rinse by re-evaluating your hygiene factors and ensuring that they are fair and applied equally. After you have systematised the hygiene factors, you will have the clarity and opportunity to take a closer look at where the motivating factors are most present in your organisation. Once you’ve found them, be intentional about implementing and measuring the most effective motivators across your teams.
You’ll be pleasantly surprised by the results that you see. Those results will convince you to do the most important part in maximising the factors that help retain your top talent…