March 26, 2019
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Mat Vogels

How to improve employee retention rates? Incentives are only part of the solution

The greatest investment you will make is in ensuring your employees return year after year.

If you have ever spoken with your parents about “company culture,” they might do one of two things: laugh dismissively or scowl. While your relatives reserve the right to react this way, Baby Boomers and Gen Xers who run multigenerational companies with Millennials and Gen Zers have no such privilege if they want to retain the best people.

Good companies with good supervisors recognize the need to foster a positive culture. Smart companies with smart supervisors recognize that the way to create great company culture—and therefore improve employee retention—is to meet each employee’s needs on an individual basis.

Retention rates matter

CFO asks CEO: What happens if we invest in developing our people and then they leave us?

CEO: What happens if we don’t, and they stay?

This common notion is mostly thrown about in connection to the concept of professional development and higher salaries, but it could also very easily be applied to employee happiness and job satisfaction. Studies show employees with higher job satisfaction are more productive overall; they are also more likely to stay with a company. Productive employees and high retention rates are a winning combination, and money spent on customer retention strategies is a great investment.

Having to replace talent can disrupt the existing team, divert focus away from revenue-generating tasks, and negatively impact customer loyalty in the short term, with long-term consequences.

The primary reason that retention rates are important is that they affect the bottom line significantly. High turnover is expensive—the Society for Human Resources Management estimates it at 50-60 percent of an annual salary just for direct replacement costs of a skilled employee, with other associated costs rising even higher.

High turnover can also create low morale and uncertainty in the workplace. This is bad news for any employer looking to form a cohesive and effective team.

Improve retention with a happy workforce

It’s been well established in recent years that good company culture is essential. In order to retain increase retention and cultivate a positive work environment, employers are using an array of strategies and principles. For example, some executives are eliminating hierarchies to ensure their employees feel heard and appreciated.

To ensure a happy workforce, handling conflict should be done in a timely manner and with integrity. Connection between colleagues should be encouraged and fostered. For  managers, going the extra inch to merely say “thank you” or showing genuine care for workers demonstrates that they are more than just profit makers; they are valued as a human being.

Some flexibility (working from home, leaving early for family commitments, etc.) also goes a long way towards a positive environment and a low turnover rate. As technology improves, so have executives’ attitudes towards flexibility in their employees’ schedules. Showing some trust and a little regard for people’s lives outside of work is a great way to inspire loyalty.

Incentivization is a popular method of encouraging employees to stay, and it works—it just shouldn’t be considered the only way to create a positive culture! When done well, incentivization can increase employee performance by 22%. Companies promoting both financial and non-financial rewards for those who excel in their areas are more likely to keep their employees engaged in their work and productive, as well as reduce turnover. Successful incentives programs don’t just throw the same generic rewards at everybody, but are tailored to suit individuals and situations.

When a workforce is happy, suitably incentivized and valued, people are more likely to stick around. It’s that simple.

Zestful can help!

Given that fostering company culture and building community have climbed up the priority chart only recently, it’s not surprising employers are still learning how best to accomplish either. Many are still bringing in store-bought cakes for birthdays and creating the equivalent of “Hawaiian shirt Fridays” (Office Space, anyone?) because they don’t necessarily understand how to gauge employee receptiveness. Every employee is an individual with different interests, and occasional cakes don’t always cut it as a way of showing appreciation. When employers not only recognize this but support it at an institutional level, they’re far more likely to retain high-level talent.

Zestful is a solution that helps employers implement bespoke employee appreciation programs by offering company-supported perks as they see fit. If employees would like to use their perks to enjoy a Saturday binge of the latest Netflix Original, they can. If they would rather take advantage of their company perks to improve their health and wellness, they can do that too. Zestful is not here to offer an employee package; Zestful is here to offer employees the freedom to choose for themselves—and that is how you show genuine appreciation for (and retain) top talent.