When it comes to employee retention, company culture is crucial. David Nast offers guidance on diagnosing ailments in employee engagement
According to just about every resource available most companies have a “less than ideal” culture. What’s at stake when your culture is at risk?
Well, most importantly – your people. To quote valuation expert, Dave Bookbinder, the author of the best-selling book, The New ROI: Return on Individuals, “The value of a business is a function of how well the financial capital and intellectual capital are managed by the human capital. So, you better get the human capital right.”
Let’s extend what’s at risk to bottom-line profits and shareholder value. We can beat the horse about how engagement hovers near an all-time low for the past decade, but engagement is only one component of what makes up a company’s culture.
The cost to replace an employee can be as high as 213 per cent of an employee’s base salary
Let’s look at the entire life cycle of an employee, from hire to retire. On the talent acquisition/hire front, making a bad hire can cost companies potential earnings, replacement costs, ineffectiveness, or worse, cause a drain on morale. The cost to replace an employee can be as high as 213 per cent of an employee’s base salary.
From a management perspective, ineffective leadership can result in stagnant growth, bungled initiatives and even corporate collapse. Attrition, team dysfunction, failed acquisitions or strategic initiatives, and lack of productivity are all directly attributable to a lack of leadership, mismanagement of people, and/or not putting the right people in the right roles.
And when it comes to succession-planning and identifying the future leaders of your company, it’s hard to promote the right people when the top performers keep exiting for greener pastures.
That begs the question: when your company is put under the microscope, does your culture need a boost to stay healthy (a vitamin), or is your company’s culture a real pain point in need of some relief (an aspirin)?
Let’s diagnose this further…
What is the number-one concern of chief executives for 2018? According to Deloitte, 87 per cent say it is employee retention.
The economy is better and the job market has improved. It’s a talent-driven market, and 75 per cent of employees get at least one phone call a week from a recruiter looking to entice them away.
And it’s not just about money; 10 per cent of employees will leave for more money. And if someone has stayed just for money, or leaves for money, whether they are a top performer or mediocre, they’re a mercenary. They’ll leave when the next highest bidder comes along. Not great for culture…
New research from ADP shows that over 60 per cent of the United States workforce turns over each year, and 65 per cent of this is voluntary. Some 85 per cent of employees leave their job because of their relationship with their manager. So how do you improve that relationship?
You need to find out what drives your employees.
When companies identify the key drivers of their employees, align them to the company’s goals, and determine culture-fit and job-fit, not only does engagement increase and morale improve, productivity and employee retention increase. As a result, bottom-line profits go up.
We tend to hire employees for what they know and fire (or lose) them for who they are. When we look at the entire life cycle of an employee, from hire to retire, we need to account for both. Analytics bring awareness. With awareness you can leverage the diversity of strengths within your workforce.
Objective and scientifically valid workforce analytics can help take the guesswork out of what drives employees. And if you guess wrong, you could actively disengage an otherwise engaged employee. Actively disengaged employees are the epicentre of office politics, the source of gossip and purveyors of negativity. Misery loves company. They are not benign. They are malignant. There goes your culture…
Conversely, what does a superstar employee look like? They’re easy to spot. They’re in the flow. They’re magnetic. They’re the “go-to.” They bring others up. They attract other superstars. They manage change, complexity, and adversity well. Therefore, they stick around when they face challenges.
How do companies measure the results of an improved culture? There are the usual indicators, such as a decrease in turnover, increase in morale and engagement, etc…
When employees are matched to a job and culture that not only fit their skills and experience (what they know) and their natural drives (who they are), they are in alignment and able to give discretionary effort.
Therefore, the telltale sign of winning culture is discretionary effort. If you want to increase the “return on individuals” in any culture, then analytics (that reveal what drives employees and utilise that data to match job-fit and culture-fit) are the aspirin.