How Leaders Can Create a Culture That Attracts and Retains Top Talent
In 2021, over 38 million Americans quit their jobs, leading to what has been coined “The Great Resignation.” From blue collar workers to service and retail to high level MBAs in business and finance, never has the American workforce been so empowered.
As this paradigm shift between employee and employer continues, today’s executives face an unprecedented dilemma. Not only are they tasked with finding talent in an ever-shrinking market, but they also need to be able to retain that talent once they find them.
No doubt Covid-19 spurred this movement, with people evaluating their priorities and weighing their wants and needs. Government funding also gave many financial stability, where they could, possibly for the first time, consider such a move.
Although Covid may have been the catalyst, it turns out it’s not the actual reason behind people leaving their jobs. One of the most cited reasons, according to research by the MIT Sloan Management Review, is a toxic company culture.
Compensation vs. Culture: The Real Reason Employees Leave
Though there’s been much talk about better pay for employees, and certainly higher pay can be warranted, particularly in today’s inflationary times, compensation ranks 16th among factors contributing to turnover.
Businesses that are attempting to lure back employees with higher paychecks and bonuses, are finding that these tactics aren’t working. In fact, a toxic culture is over 10 times more likely to motivate an employee to leave than compensation itself.
What Can Leaders Do to Prevent Attrition?
If you’re an executive that’s noticed a shift towards employee attrition, it’s time to take a good, hard look at your company culture. Even if you haven’t yet felt the effect of The Great Resignation, your company may not have entirely ducked the storm.
According to a poll by McKinsey in September 2021, 40% of employees were strongly considering leaving their job in the next 3-6 months. Chances are high that your company may be one of them.
The Laws of Employee Attraction
Americans (and the rest of the world) are burnt out. If anything has tested their patience and reserve, it’s been these last two years. Most people aren’t just looking for a paycheck. They’re in search of a deeper level of meaning within their lives and jobs.
Often that comes down to how a job supports their life, measures up to their values, and how they are regarded and treated within their workplace.
In order to attract the best and brightest employees, it’s important for leaders to understand their employees and what motivates them. Showering them with money doesn’t hurt, but that’s not what’s going to truly captivate and engage them.
Employees are people. Like all people, they want to be valued for their ideas, their talents and their contributions. They want to feel that they’re making a difference. Today’s employees are looking for experiences that are essentially more human.
Companies need employees in order to meet the everyday demands of their business and help their businesses grow. It’s in every leader’s best interest to understand their employees and to work to create a company culture that helps their employees thrive.
Understanding the Positives and Negatives of Company Culture
What Is Company Culture?
When we think of company culture, the first thing that comes to mind is usually perks. And while those are certainly a part of it, company culture encompasses far more than just free food and ping pong tables. Company culture is the shared values and behaviors that make up the personality of your organization.
It’s often what people refer to when they talk about “the way things are done around here.” It’s the intangible force that drives how employees interact with each other, how they work together (or don’t), and how customers experience your brand.
What Defines a Positive Company Culture?
Companies with positive cultures:
- Establish clear values for the company and make sure all employees are aware of them.
- Encourage open communication and feedback, from the top down.
- Create a culture of trust where employees feel comfortable taking risks and sharing new ideas.
- Make sure employees feel valued and appreciated. Recognize their contributions and go out of their way to show they appreciate them.
- Celebrate successes together as a team.
The companies where workers tend to be the happiest (and most productive) are those where the company is owned by its employees. Even if this isn’t a realistic path for your company, there is a big lesson to be learned in terms of the benefits of valuing your employees and creating a culture where they know they’re valued.
What Contributes to Negative Company Culture?
No one wants to create a negative company culture, but it’s important to understand what comprises one. Common traits of a negative company culture include:
- Establishing rules and regulations that are rigid and inflexible. Micromanaging everything.
- Encouraging an environment of competition instead of collaboration. Promoting secrecy rather than transparency.
- Making employees feel like they’re expendable. Not valuing their contributions.
- Being overly averse to failures rather than celebrating successes. Blaming employees instead of supporting them.
If any of the above applies to your company, it’s time to reevaluate your corporate culture.
The “Coolest” Companies Are Not Always the Most Culture-Minded
Back when every startup had a ping pong table, the idea of working for one seemed great. The free food was pretty awesome too, until employees realized that the reason they were fed free meals and given ping pong tables was so that they’d stay at the office and work longer hours.
Creating an environment where employees are at the office around the clock and burnout runs rampant is no longer cool. People are accustomed to spending more time with their families and working from home. As a result of this round the clock mentality, some of the “coolest” companies are the ones suffering the highest employee attrition rates.
Let’s compare two different types of players in the automotive industry – Tesla and Ford. On the face of it, Tesla may seem more attractive because of its industry-leading technology. Led by one of the most innovative and brilliant minds of our time, Elon Musk, there’s an inherent appeal to working at Tesla. But statistics tell a different story.
Employees are 3.8 times more likely to leave Tesla than Ford. They’re also over 3 times more likely to leave SpaceX than Boeing.
Though it may be tempting to blame this on the demanding culture set by the CEO at the helm of both organizations, it’s not just an Elon Musk problem. Similar statistics surface when you compare other innovative companies with their less innovative counterparts.
Comparing Netflix and Warner Brothers, for instance, employees of Netflix are more than twice as likely to leave than employees at Warner Brothers. And employees at the more innovative Goldman Sachs are 3+ times more likely to leave than their counterparts at HSBC.
Although there are multiple reasons a toxic culture can form, there are certain reasons innovative companies can be more prone to this type of environment. The first is by their nature, they encourage overwork and are often bootstrapped in order to remain competitive and innovative, which eventually leads to burnout and a negative work/life balance.
Another reason is startups and innovative companies often have younger leaders who are thrust into leadership roles, often without any leadership training. Having no real executive experience can oftentimes result in bad management practices and weak leadership, which provides fertile ground for a toxic company culture.
In instances like these, providing less experienced leaders with proper leadership development early on in their careers, e.g. by hiring an executive coach, can help curtail some of these elements before they become rampant.
Developing a Company Culture and a Talent Retention Strategy for your Business
We know that toxicity is by far the leading reason why employees are leaving their jobs, and that creating a great company culture is essential to retaining top talent.
Other motivations for employees leaving jobs include:
- Job insecurity and reorganization
- Failure to recognize employee performance
Company leaders who are looking to create a more meaningful, human experience for their employees should focus on establishing strong company values, foster open communication, and create a culture of trust, and appreciation within their organization.
Adopting a long-term plan and reevaluating your corporate culture is key, but there are also some short-term steps a company can take to retain employees. These include:
- Offering lateral job moves that build key skills and experiences
- Hosting regular corporate social events outside the office
- Allowing remote work opportunities and flexible hours
Why Do You Need a Strong Company Culture?
Constantly replacing and training new employees is unproductive and expensive. Though adapting these principles may seem difficult, it’s well worth the effort.
A strong and positive company culture helps build trust and employee morale, which increases overall productivity and reduces turnover rates. This leads to business growth and improvement.
The Essentials of Creating a Positive Company Culture
A Clear Vision and Mission
Having a clear vision and mission provides employees with a sense of purpose.
Employees want to know that their work is important and has meaning beyond a paycheck; they want to feel that they’re making a difference in the world.
Make Sure Your Culture is Aligned with Your Values
When employees feel in tune in sharing the same values as a company, they’re more likely to be engaged and productive in their work.
Leaders should also take advantage of social media platforms to market their company culture to attract potential employees.
Purposeful Work with Opportunities for Growth
Encourage creativity and innovation. When employees feel they can be creative and are allowed to experiment and contribute, it leads to a more productive work environment.
Providing employees with growth options gives them a sense of control over their lives, and their future. Whether that equates to lateral job opportunities and/or upward mobility, most employees want to feel like they’re moving forward and growing in their careers.
Nurture your staff and give them a chance to grow within the company. When opportunities arise, promote from within the organization instead of defaulting to looking outside. If your talent is a good fit for a new position, even if they’re not quite fully ready, invest in that talent and let them prove themselves in the new role. If they’re not yet a at the level they need to be, commit to helping them to get there.
As a leader, it’s important that you communicate to your employees that they have the potential to grow in their career and contribute more to the company as they learn and develop new skills.
Create a Positive Work Environment
Develop a sense of community and trust, where employees feel psychologically safe and free to bring their full selves to work. When employees feel like they belong to part of a team, they’re more likely to be engaged and motivated.
Offer your team challenging and interesting work. Let them contribute ideas, and be sure to value their ideas, explaining your rationale when some ideas are adopted and others are not adopted.
Offer remote work and flexible work hours if possible.
Practice trust over suspicion. Rather than installing spyware on your employee’s computer, start with a level of trust that they’re being productive and contributing to the team, even as they work remotely.
Your team needs a good work/life balance. As a leader, encourage these things by setting the example for them to follow. When team members see their manager practicing healthy habits and achieving a sense of balance, it gives them permission to do the same.
Meaningful Relationships with Co-workers
A work environment where your team doesn’t get along can be problematic and extremely unproductive. If you find you’re facing internal conflicts on your team, address them quickly.
Meaningful relationships among your employees help create a sense of community. Positive social interactions create happier and more productive employees in their jobs.
Encourage collaboration over competition. When employees feel like they have strong relationships with their co-workers, they’re more likely to enjoy their overall work environment.
A Sense of Belonging
When employees feel like they belong, they’re more likely to be loyal to the company and less likely to leave when another opportunity arises. Remember, employees decide to go or stay largely depending on whether they feel valued.
Encourage Employee Feedback
Be open to change and to other opinions. As your business grows, your company culture will need to adapt as well. Listen to your team and consider their ideas and suggestions.
A good leader doesn’t just give feedback, they also ask for it. Employees who feel like their voices are heard are more likely to be engaged and invested in their work.
Post-Pandemic Corporate Culture Challenges
In a PwC US Pulse Survey, 79% of executives said their leadership is inclusive, with 77% of employees in agreement. However, 36% of executives state that the loss of a company culture has been a major challenge when it comes to hybrid work, especially during the pandemic.
If you find yourself in that 36th percentile, know that these challenges are real, but not impossible to overcome. It’s important to take a good hard look at what you have been doing (and what you haven’t) and where you can improve. Then work to take those steps towards rebuilding a positive corporate culture.
Why is Employee Retention Important?
High staff turnover rates can be costly and disruptive to your business. Having to replace an employee can cost up to 150 percent of that person’s salary, and it can be an arduous process to find and train new employees who are a good fit for your company culture.
Talented employees are essential to the success of your organization. They’re the lifeline of your company. They’re the ones who drive the innovation and growth. They’re more likely to be productive and engaged in their work, when they feel valued and supported by their company.
Talented employees are more likely to want to work for a company that has a good reputation and rapport between leadership and staff, in addition to an environment that offers opportunities for growth and development.
In the end, it also helps your brand. Some of your best ambassadors can be your employees. If they are positive and your team is productive and especially happy, then it can help enhance the reputation of your business over time.
Attracting and retaining top talent takes effort, even more so in today’s post-pandemic world, but your business will only thrive in the process.
As a leader, it’s essential to have a work environment where employees feel valued and appreciated.
By providing a clear vision and mission, purposeful work, meaningful relationships, and a sense of belonging, you can create an environment that employees will love to be a part of each day. In the end, your employees are more likely to be engaged in their work and stay with the company for longer periods of time. That’s a win-win for your company.