Building on a firm foundation: How effective retention strategies set the stage for success

What motivates employees to stay?

The largest barrier preventing most organizations from having better retention rates is an over-reliance on outdated methods and mindsets. Employees will stay if they have the proper incentives; business owners who choose to incentivize people the same way they did ten years ago, or even pre-COVID, will almost surely fall behind.

Each organization’s retention strategy must be unique to them, aligned with their culture and employee preferences. Consider how the following tools and incentives could be working for or against you.

Salary

Salary is often the first thing that jumps to mind when you start thinking about staff retention, and given the current inflation rates, rightfully so. A study conducted in 2021 revealed that the majority of Canadians, particularly young people, said they would be inclined to leave their job and take the same role elsewhere, if they got a 10 percent raise.

Another study by Gallup in 2022 finds that it takes more than a 20 percent pay raise to lure most employees away from a manager who engages them, and almost nothing to poach most disengaged workers.

To understand why so many employees feel that way, you need to look deeper than salary. Would your employees leave for a small raise if the culture at the new organization was more dysfunctional than yours? Would they make that trade if your organization offered more fulfilling work, positive relationships with coworkers, and opportunities to develop?

Rewarding high-performing employees with raises, if circumstances allow, is by no means a bad idea. But other pieces of your retention strategy (discussed below) may provide equal, or even greater, incentives to stay.

Benefits and rewards

Most employees understand that getting a small raise at another company doesn’t make financial sense if the benefits package is weaker. But benefits are more than just a financial commitment or a means of saving money for your employees. They hold a certain symbolic value as well.

They show your people how well you understand their needs and wants — that you’re willing to “walk the walk” when it comes to their wellness and work-life integration.

When looking at the whole picture of compensation, also consider whether employee profit sharing plans (EPSPs) and employee share ownership plans (ESOPs) are a good fit for your organization. In many cases they’ve been shown to help create loyal teams that uphold business values and priorities.

Relationships

To work with a dysfunctional or toxic team for slightly higher pay is a trade-off many people, particularly young people, have decided they’re not willing to make. Relationships with coworkers and managers hold a lot of weight in an employee’s decision to stay or seek new pastures. The most common reason employees report for leaving companies is their relationship with their manager.

You can’t control whether your employees will become friends, but you can provide an environment that fosters team unity. Events, team building activities, and even how you choose to run a meeting can help your people build positive relationships at work, and by extension drive better retention rates.

The opposite is also true. If bullying, toxicity, or poor communication exist in the workplace — and if management is seen as complicit or lackadaisical in allowing it to continue — chances are your organization will see high turnover even if your salaries are the best in the industry.

Flexibility

The flexibility to work full- or part-time from home took centre stage during the pandemic, and for some businesses this remains a crucial part of their retention strategy. But it’s important to remember that flexibility means more than hybrid or remote work.

Today, the number of Canadian employers who offer some form of hybrid work arrangement is estimated around 61 percent, which means a large portion of Canadians still work in fields that require them to be on-site. What other forms of flexibility can you offer?

On-site or not, your employees want to have a say in what their day-to-day job looks like.

Another element of flexibility is ensuring you have enough staffing capacity to allow your people to have flexible lifestyles outside of work. If your people are regularly pressured to forego their kid’s sports games or piano recitals because your staff is too lean, they won’t feel like you’re providing them flexibility.

Education, advancement, and development

Employees who get proper recognition for their work are much more likely to stay. Recognition can take many forms, and your employees may not all want to be recognized the same way.

Opportunities for continuous education and advancement at your organization will often trump a salary raise somewhere else. Be thoughtful about who you give promotions to, and when. Investing in the development of your people requires you to check in regularly and find out what their goals are, where they want to be in two or five years, and then actively work alongside them to help make that happen.

Social impact and purpose

Particularly for young people, your organization’s social consciousness will be a key factor that drives, or diminishes, employee loyalty.

Your employees want to know the positive impact their work is having, not just on your company’s bottom line, but on society in general. They want to know that the organizational leaders they work for share their same values. They want to feel comfortable bringing their full and authentic self to work every day.

Your retention strategy is inseparable from your ESG strategy. If you’re perceived as not valuing inclusiveness, sustainability, or supporting vulnerable people in your community, retaining key employees becomes much more difficult.

Creating your retention strategy

As you build or update your retention strategy, don’t adopt a top-down approach. Solicit the opinions and feedback of your people — find out what motivates them and drives their loyalty. Remember, your strategy should be uniquely yours and mesh with your organizational culture.

Don’t base your strategy on the instincts of your management team, what your competitors are doing, or what external studies suggest you should do. Instead, leverage reliable internal data and people analytics: turnover rates, retention rates, patterns on taking leave, and more. While your HR team should be able to provide the hard data, the best way to understand the story behind the numbers (the “why”) is asking the right questions in exit interviews and regular engagement surveys.

A third-party advisor can be a useful tool as you create your employee retention strategy, providing an unbiased assessment of what your business is doing well and where you have opportunities to improve. MNP’s Consulting team offers skilled HR advisors that specialize in areas such as organizational culture, hiring strategy, workforce planning, and much more.

Contact us

To learn more, contact: 

Jaylene Cousins, CPHR, CTMP, Senior Manager, Consulting
[email protected]
306.531.5341

Mary Larson, MBA, ICD.D, Partner, Consulting
[email protected]
514.228.7905