Your Company May Be Sacrificing Millions If You Are Not Implementing This 1 Critical Strategy
Employee retention is a challenge every business faces, but by honing in on this one thing, you will positively boost your company’s bottom line.
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Are you having issues retaining your employees and engaging them long-term? Well, you're not alone.
Employee retention is one of the most challenging problems business owners face. According to the Society for Human Resource Management's report, the direct cost of replacing an employee range between 50 to 60 percent of the employee's annual salary, but the total associated cost of the turnover is between 90 to 200 percent of the employee's annual salary. To use simple math, if your employee was earning $100,000, it can potentially cost you $200,000 to replace them. Then, multiply this cost by 5 employees who churn annually, and it becomes a $1 million problem.
Failure to retain your employees comes with some indirect costs that negatively impact your bottom line:
- Relationships. When you lose an employee, you lose the relationships that employee had -- with customers, clients and other critical stakeholders.
- Morale. If an employee was well-liked, it's common for morale to fall at their departure, even if they leave on the friendliest of terms. And if they don't leave on good terms, it can dip morale enough to turn the staff against the company en masse.
- Institutional Knowledge. When an employee leaves, so does everything they've learned. You can train your new staff on skills, policies, and procedures, but the internal know-how, the deep understanding of people's personalities and quirks, and the most efficient ways of getting things done are much harder to replace.
As a business leader, you can spend years searching for the solution and trying to implement every trendy new workplace perk (like Bring Your Dog to Work Day or Nap Lounges). But there is one strategy that is both sustainable and deeply impactful -- and it's closer than you think: purpose.
"An organization's culture of purpose answers the critical questions of who we are and why we exist through a set of carefully articulated core beliefs. A culture of purpose guides behavior, influences strategy, transcends leaders-and endures," says Punit Renjen, CEO of perfessional services network Deloitte Global.
By helping your employees connect with their purpose, you can ultimately increase their engagement, their sense of meaning behind the work, and make a measurable impact on your bottom line because of it. Deloitte has published previous research exploring the link between purpose and performance.
Research conducted by Gallup has also documented a relationship between employee engagement, customer ratings, profitability, and productivity. In short: engagement raises customer feedback and perceptions, improves safety, quality, and productivity, drops turnover and absenteeism and enhances the quality of employees lives at work.
Given the relationship between purpose, engagement, and performance, your company is missing out if you're not infusing your organization with purpose. So how can you do that?
Start by asking yourself "why."
In Simon Sinek's book, Start with Why, he details how beginning with the end in mind can ultimately create a more mission-driven organization. Start by determining the ultimate purpose of your company's work, beyond making a profit (even before determining who will do the work and how the work will get done), which will help to build the foundation for a purpose-driven culture.
Try job crafting.
Research from Dr. Amy Wrzesniewski demonstrates the power of job crafting, or reframing your employee's role in a way that speaks to a bigger purpose. In her studies, she found that custodians at a hospital weren't all performing equally. While some clocked in, completed their tasks and left, others went the extra mile: like changing the art in a comatose patients room to stimulate brain activity, or using special cleaning agents to avoid exacerbating any medical conditions. They didn't see themselves solely as custodians, but "sanitation experts that created sterile conditions that helped patients recover more quickly."
Unsurprisingly, those employees were the happiest and highest-performing because they tapped into the deeper meaning and purpose behind their work. By job crafting, you are changing the way that you think about your work so that it resonates with you more deeply.
Search for meaning in the moment.
There are always going to be parts of the jobs our employees won't love. But we can reach a bit deeper to find the meaning and significance of that particular moment. If a customer service agent is on the phone with an angry customer, they can feel huffy or annoyed, or they can think about how they have an opportunity to change someone's day.
If an accountant is slogging through paperwork during tax season, they can think about the messiness behind the numbers, or they can broaden their view to appreciate how their skills are helping people stay compliant.
Whether it's a top-driven organizational mission or encouraging managers to develop strategies for employees to tap into their own deeper meaning, significant change can be driven by helping your employees connect with purpose.