A Brief History of Employee Retention
It used to be that there was no secret to retaining good employees. Company men and women stayed with the company, worked their way up the corporate ladder, and retired with a pension, party, and gold watch. Companies didn’t have to work to keep people.
All of that changed in the 80s. People started to realize that maybe the company that originally hired them was not the company that would value them the most. Maybe the grass was greener in another yard–so they started moving around.
Companies tried a lot of things to keep their good employees in place. First, they tried legal means. Non-compete and draconian employment contracts were the all the rage for a while. Then, courts started taking the teeth out of most of those tactics. People were free to use their skills for any company they wanted to.
That takes us up to the first dot-com bubble. That’s when things started to get weird. Big tech companies were poaching each other’s best talent. Limo companies thrived because corporate suitors would send cars to pick up prospective employees right at their current office. Everybody tried to find new ways to show potential hires that they would be better off at Company B instead of Company A.
When the bubble crashed–and options in startups were as plentiful and as worthless as bathroom tissue–companies started taking a long hard look at what they were offering employees. Soon, foosball tables were only mentioned in Bubble One jokes. Many companies retained free lunches and some of the perks, but a lot of them simply went away.
Good companies (I’ve been a part of a few like this) started talking to their employees, asking them why they worked there and why others had left.
These days, you can tell which companies actually paid attention and which ones felt that they knew better. I worked at one company as a contractor. While I was there, I saw an employee celebrate their twenty-second anniversary with the company. A tech based company that is holding on to their employees for decades is unheard of. It’s also a testament to the fact that they know how to build a company that respects their employees.
What is Currently Working
When companies talked to their employees about why they’re staying planted, the good ones learned the following lessons:
In every employee survey I’ve seen, salary is still the number one reason most people are at their jobs. Every time I think about this, I think of the TV show “Man Men” and the conversation between the characters Don Draper and Peggy Olson.
Don: It’s your job! I give you money, you give me ideas.
Peggy: And you never say thank you.
Don: That’s what the money’s for!
Salary is still the number one way that companies say thank you to their employees. If you are having trouble retaining employees, this is the first place you should look. If you don’t offer competitive salaries, none of the rest matters.
Side note: I had a friend who was VP of IT at a mid-sized company in Nashville, TN. He told me once that his secret to retaining employees was to pay 10% over market rate. This made it more difficult for people to just up and leave for another company. He was a smart man.
Every other idea hangs on this one. If the individuals within your company don’t respect one another, none of the rest matters. While this has to be an all-company effort, it has to be driven top-down. If the CEO berates, dismisses, or just ignores employees down the ladder from them, then everybody else will take their queue from above. You have to build respect into your company culture, and it can’t be “respect for those that agree with me”.
If you get respect right, the rest of these ideas make perfect sense. Until you do, you are going to have to hang your entire retention plan solely on salary. I know this from experience. As someone who took a job because a large bucket of money was placed on the table, salary alone is not enough to keep someone in a bad situation.
Invest in People
If you’ve figured out compensation and respect, the next thing people are looking for is a company that invests in them. Investment in employees can take different forms.
- In some companies, this means a budget for developers to attend conferences.
- In other companies, this means a corporate account to LinkedIn Learning.
- In small companies, this could be as simple as a book club or a brown bag training program.
- Larger companies might invest in a college tuition reimbursement program.
The exact details of the program are less important than the fact that the company shows that it cares enough about its people–all its people–to invest in making them better people. People want to work for companies that care enough to make them more than just better employees or–and I am loath to say this phrase–more valuable resources.
In order to be effective, these programs can’t be limited. You can’t only pay for conferences, books, or classes that apply to the employee’s immediate job. Many people want to move beyond where they are. If you are worried about them getting trained and then leaving, go back and reread Sir Richard Branson’s quote at the top of this article. Keep reading it until you understand it. Companies need to be invested in the growth of their employees.
Train people well enough so they can leave, [and] treat them well enough so they don’t want to.
– Sir Richard Branson
Back in the 80s when I was just starting my career as a programmer, I never thought about “interesting work”. Being able to bend computers to my will was interesting enough. I didn’t really care that I was working for my parent’s little company. It wasn’t until I got out into the real world and realized that some jobs are better than others that I began to understand the concept of “interesting work”.
Most employees place a high value on interesting work, or work that means something. They want to be engaged, and they want what they spend a third of their life doing to be meaningful.
Perks aren’t typically that important to employees when it comes to making a decision to stay at a company or go. Free dry-cleaning service, a beer fridge, and a foosball table are all nice things to have, but at the end of the day, nobody has ever said, “Yeah, the manager sucks–but dang, I like this beer fridge!”
Perks are great if you’ve already done everything else. Until then, don’t waste your money on them.
Retaining good employees is simple, in theory. All you have to do is build your company’s culture in such a way that people feel respected, fairly compensated, and engaged.
In practice, things get difficult in a hurry. The longer a company puts off dealing with culture and retention, the harder it will be to change. The best companies to work for have spent time early on deciding that they wanted to build a culture of respect.
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