This post has been updated for 2021.
“Fun” and “happiness” are the BS red herrings of employee satisfaction. Still, many companies go for the free beer company culture band-aid instead of defining their real problems. You’re not going to solve employee attrition with team-building games, an office slide, and a forced, over-articulated sense of “culture” (although nap pods would be nice—we can all agree on that).
One study shows that nearly 40 percent of employees that quit do so in the first year, and about 75 percent of those employees could have been retained. An employee attrition rate that steep can mean losing thousands of dollars in personnel investments and spending hours every week trying to fill the gaps.
But when you look closer at your turnover rate, you’ll probably find that not all turnover is bad. Redundancies and poor performance, for example, are two great reasons to let folks go. Not only that, but some employees don’t live up to expectations, despite our best efforts to nurture and grow them. You can bring the horse to water, but you can’t make him finish his TPS reports on time.
The importance of free beer is overstated; people don’t come to work for the beer. So why do they come to work, other than to earn a living? And what makes people stop doing their work, leave companies, or get fired? Turns out, psychologists and human resources professionals have been working on this for years, and they’ve found some answers. We just need to listen and implement.
Table of contents
- Analyze your workforce
- Build teams according to personalities
- Goal setting and engagement
- Learning and training metrics
- Hire and fire the right people
- Offer flexibility
For help building the best workforce, check out our Product Selection Tool. Answer a short survey, and you’ll get a customized list of performance management tools that will meet your needs.
1. Analyze your workforce
Because we spend so much of our lives and workdays on computers now, we have the power to use workforce analytics to find out what goes wrong in high turnover departments and how high retention managers can transfer skills. Make sure you’re building your models based on standardized metrics across the company; don’t use different rules for different groups. Analysis can also happen through conversations with managers in those same high and low-performing groups if you don’t have a system in place for crunching numbers yet.
Use performance management software
When managing people, it can be difficult to remember who you’ve given feedback to, and what the feedback was. That’s where performance management software comes in. With performance management software, you can write accurate job profiles and set goals and expectations for your direct reports to ensure they’re meeting your needs.
It also allows you to track meeting notes and record performance evaluations to keep everyone on the same page. Providing transparent feedback is a great way to motivate employees by showing them where they’re excelling and where they’re not quite hitting the mark.
2. Build teams according to personalities
This doesn’t mean you should give your employees a Buzzfeed personality test before hiring, but understanding how people work and what motivates them can help you get projects going faster.
If you build a team that only includes risk-taking leaders, you may get a lot of projects started, but the chances that those same folks can suss out the details are slim. Likewise, if you fill your teams with detail-oriented taskmasters, you may never innovate. Take advantage of leadership personalities to get decisions made and move projects forward, but also build teams that include people with an eye for detail. To round things out, it doesn’t hurt to have a couple of people-oriented relationship builders to help different personalities work together.
Work-appropriate personality assessments
Not all personality assessments are going to be right for a work environment. Obviously, the love language quiz doesn’t translate well to work (although there is a similar work-related assessment), but there are some solid options out there that can help you hire the right people and learn how to motivate them and communicate with them. The DiSC assessment, Enneagram personality test, and Core Values Index are three great examples, although they aren’t the only ones.
3. Goal setting and engagement
We wish all of our employees were intrinsically motivated to do a good job for its own sake, but without goals to meet and exceed, many of us struggle to get started. And you can’t solve the problem just by throwing money at it. Instead of raising salaries 10 percent across the board, set aggressive but attainable goals to get people moving. When it comes to evaluation time, use these same goals to measure what works for your teams.
Engagement is a little harder to get right, but satisfied employees feel like they contribute to the good of the company and have a sense of choice in their projects. A company shouldn’t run like a democracy, but perhaps a little bit of republican (yes, little “r”) decision-making won’t hurt. Employees want to feel like their voices matter, that they have a hand in moving the company toward its larger goals, and they want to choose (to some extent) the projects they work on. These all contribute to those top levels of Maslow’s hierarchy of needs, which any Psychology 101 student will remind you leads directly to a sense of well-being and higher engagement.
4. Learning and training metrics
How much of their workweek do your employees spend on learning? Overworked employees have little time for learning, and learning increases engagement, so that’s bad. A company that values learning and development sends the signal to its employees that they want people to build careers, not just do a job. Learning and training can also pay off for the company, making it easier to promote from within.
Learning fosters a work environment where employees feel safe to experiment and even fail at some projects. Google famously budgets 20 percent of employee time to let people work on projects “they think will most benefit Google,” a program that Google employees said didn’t work in the ways it intended. The policy did give employees permission to try creative projects without needing their boss to sign off. Most employees actually pursued their creative projects outside of normal working hours, but it was the sense of accomplishment, learning, autonomy, and creativity that made them work this hard — not the free beer.
Learning management systems improve training
Training a new hire is difficult, especially as remote work grows in popularity and necessity. No one wants to be on a video call for hours while one party shares their screen and walks the trainee through different tasks. Learning management systems can make this way easier and more engaging. Using customized curriculum and quizzes, new employees can learn at their own pace, and the interactive, gamified experience actually improves retention.
5. Hire and fire the right people
This may sound reductive, but spend more time finding and engaging the right people and ensuring that the benefits and pay you offer line up with regional and industry benchmarks. Spend time defining the skills, values, and personalities that work best for the roles you need to fill. The right fit could stay for years. The wrong fit can cause trouble, cost revenue in stalled projects, and waste time trying to find a replacement.
Get rid of these people before they poison the waterhole.
It’s not easy, but you have to be willing to fire people who don’t “get it.” Whether they can’t handle the workload, values, culture, whatever; get rid of these people before they poison the waterhole. Engaged and productive employees will leave and find a better environment when surrounded by ineffective co-workers who frustrate their efforts to make progress. And you can’t just threaten to fire them. You can try that once, but if once isn’t enough, they’ve got to go.
6. Offer flexibility
Turns out, your employees are adults. Working from home, working remotely, flexible time off for family needs, paternity and maternity leave — all of these increase employee satisfaction, and good employees stay productive anyway.
Good managers know that flexibility doesn’t equal loss of control. In fact, a Boston College Center for Work & Family study found that 76 percent of managers and 80 percent of employees believe flexible work arrangements have positive effects on retention. Why? Because a flexible work environment shows that managers trust employees to get their work done, even when life gets in the way. If you find that employees start to take advantage of a flexible work environment, maybe you need to revisit the previous point.
Reducing employee attrition in your business
If you want to reduce employee attrition, concentrate on employee engagement through meaningful work, goal-setting, and communication of worth. Respect and recognition are helpful too, but not just a pat on the back. Giving folks more responsibility and building their skill sets works even better.
Need help hiring and analyzing your workforce? Our Product Selection Tool has hundreds of recruitment tools, employee engagement solutions, and human resource management systems to help you build — and keep — an amazing team.