As we edge into 2020, the issue of employee retention is as pressing a concern as ever.
The problem is perhaps even higher on our list of priorities as managers, business leaders and HR executives, given the fact that the war for talent shows no signs of abating and unemployment is at its lowest rate in years.
It appears roughly half of Brits are looking to change jobs in the next year, which means UK businesses could lose up to £195 a day. Employee retention is no joke — unfortunately, it’s not simple to solve, either.
The reality is, so many factors come into play when you explore why employees choose to stay or why they decide to leave. Employees have complex needs. They’re driven by different motivators — some intrinsic, some extrinsic. Companies have decided to react in different ways to retain their top talent. Some, such as Rise, believe the secret to retention is award-winning mentoring programmes to help employees develop confidence and to encourage career progression.
Other companies have decided to focus on employee wellbeing while combating burnout. Havas demonstrated their commitment to this area by opening up their Wellness Lounge, a sanctuary for wellbeing that employees can use to recharge throughout the day as needed.
To truly get to the bottom of the issue of employee retention and to explore why employees choose to stay at certain organisations for the long-term, we at People Insight decided to conduct an employee retention study. We are hoping that, by providing this information, we will help to improve the employee experience for many companies, while also reducing their voluntary turnover.
About the Employee Retention Study
At People Insight, we regularly conduct employee engagement surveys that help companies measure and assess their employee engagement levels while understanding their employee experience. Using the results of these surveys, they have carried out a large-scale regression analysis.
The objective of this analysis was to understand what aspects of the employee experience have the greatest influence on intention to stay, based on the statement “I’d still like to be working here in two years’ time”.
We used more than 4,000 responses and 130,000 data points. The analysis revealed that, above pay and perks, or any other extrinsic motivator, what most influenced an employee’s decision to stay related to company purpose — the positive reason the organisation exists, what drives it forward and what it stands for.
Why Does Company Purpose Affect Employee Retention?
Though we have conducted research that confirms the relationship between company purpose and employee retention, this is not the first time this issue and its role in engagement and retention has been discussed. Gallup has revealed that companies with a clear purpose have a competitive advantage and more engaged employees.
Another study by Korn Ferry showed that 90% of employees who work for companies with clearly defined and motivational purposes report feeling engaged in their work — while companies who aren’t purpose-driven average engagement levels of only 32%.
As Tierra Kavanaugh Wayne, CEO at TKT & Associates, says:
“A Company’s clearly articulated purpose is critical to the retention of its employees. Companies can vocalise their purpose and values via multiple mediums, internally and externally. However, the most important thing a company can do is to engage and interact with employees, stakeholders and the community at large. When this is done, employees become ambassadors and embody the company’s purpose.”
In short, employees don’t just work for money — they work to feel part of something meaningful. They want to contribute to a cause and they want to see it succeed with their help. This fact is becoming truer by the day, as Millennials generally seek purpose-driven companies to work for.
How Aligned Are Modern Employees with Their Company’s Purpose?
To support our research, we partnered with YouGov and commissioned a poll to explore how modern employees feel about their organisation’s purpose, ultimately polling over 1,100 employees.
We asked: “How meaningful, if at all, would you say your company’s purpose is?” When filtering for age range, we found some interesting results. Without exception, the younger generation, were less positive about their organisation’s purpose, with positivity being lowest among Generation Z.
As employers and HR professionals, we need to explore the reasons behind this pattern. It is likely down to the fact that older generations, such as Baby Boomers, aren’t as invested in work as a core element of their personality — they are more likely to cite family or religion as central to their identity.
For Generation Z, personal success and career aspirations are more core. But its members will only be passionate about work when they buy into their company purpose. Generation Z is investing a lot of energy and enthusiasm and it wants companies to return and reflect this passion and purpose.
We also looked at gender divisions and found that Generation Z women were less positive than their male cohorts about their companies’ purpose. This finding fits well alongside other research that shows women are more likely to job hop than men. Furthermore, younger women are also less aligned with company purpose than older generations. CEOs need to sit up and take note — employees want to work hard for your organisation. They just need a reason to, and this purpose needs to be meaningful and clearly articulated.
How Does This Impact Recruitment?
When companies live their purpose, it needs to affect every single decision made within the business. This, of course, begins with recruitment. Companies need to do a good job of showcasing their company purpose. It needs to be made clear and employees need to understand what drives the organisation — what it aims to succeed in.
Doing so at the recruitment stage will ensure the right candidates are hired — the ones who are motivated and inspired by your company’s purpose. It doesn’t matter if you hire an employee who is skilled if they are apathetic about what drives your company. Hiring employees who align with your purpose will ensure you retain the right candidates for the long-term while benefiting from their engagement and enthusiasm.
About the Author: Carolyn Nevitte is HR Director at People Insight, a company that helps organisations measure and improve the employee experience through employee surveys, expert consulting and 360-degree feedback.