Keeping Your Best Employees in a Fierce Labor Market

​An employee decides to stay or leave based on whether or not his or her most important needs, both professional and personal, are being consistently met at high level.
 
Common wisdom about what drives employee retention is wrong.

This well-meaning common wisdom advises:

• “If employees are engaged and the culture is good, then the employees will stay.”
• “Employees leave or stay because of their manager.”
• “All they want is money. You just have to pay them more.”

Each piece of this advice contains grains of truth, but a thorough review of these show that the thinking behind them is incomplete and the definitions are too imprecise.

These flaws cause this well-meaning advice to lead to wasted investment, with missed opportunities for improved employee retention.
 
There are four components that an employee considers, often times unconsciously, when deciding to stay or leave their job.

      Employee Retention Equation: ©
​           Equitable and Adequate Compensation
        + Needs-based Engagement
        + Culture
        + LIFE
It’s critical to understand each of these components and how they work together in order to retain your most valuable employees.

The good news is that this each component is based on common sense and most people can readily test this equation against their own experiences and decisions that they have made throughout their careers.

The ideas are simple, but powerful, when it comes to employee retention.
 
Equitable and Adequate Compensation
Most people these days understand that retention is not all about money. And it’s true. But money and compensation do play a factor.

​Dan Pink puts it well in Drive:
“People have to earn a living. Salary, contract payments, some benefits, a few perks are what I call baseline rewards. If someone’s baseline is not adequate or equitable, her focus will be on the unfairness of her situation and the anxiety of her circumstance…”
 
As Northern Nevada adds 50,000 or more new jobs in the next few years, there will be a shortage of workers. This will cause the competition for talent to be fierce. A natural result will be wage and salary inflation, as competitors will use increased compensation as a way to lure employees away. Historically, Reno businesses have enjoyed a discount for labor compared to comparable talent in other regions of the country. This fact is not lost on the workers.
Compensation must be equitable both within the industry and within the company itself. If an employee feels that he’s vastly underpaid compared to similarly skilled workers at other companies, or compared to fellow employees, then they will focus on the unfairness of the situation.

Employees at the lower end of the payscale can, by definition, assume to be living in economic anxiety. That’s why it’s not uncommon to hear stories of distribution center workers moving down the street for $.25 more an hour. When someone is living with that type of pressure, engagement and culture mean little to them. 

Contact Workforce Retention Solutions to learn more about the other components of employee retention.

Mike Brooks
858-518-4893
mike@workforceretentionsolutions.com