Put your workers first, your customers second and your shareholders third, says Richard Branson, and the rest will take care of itself.
Prioritising staff ahead of customers bucks the “customer comes first” mantra corporations have held dear for decades. Yet a gradual power shift has seen employee well-being, remuneration and physical health become more vital than ever before.
Research shows better staff retention is better for business. Fostering a workforce of happy and engaged employees lifts productivity levels and drives business growth.
What’s more, an effective retention strategy saves companies time and money. It also means organisations avoid the expenses involved in engaging recruitment firms and the time spent interviewing and training new staff.
A high turnover of employees can place pressure on workers forced to pick up the slack, resulting in a drop in staff morale. It can also expose businesses to a loss of corporate intelligence, which can leave them vulnerable in a competitive marketplace.
Why are employees leaving?
AIM has identified the chief reasons for taking on another job role.
New challenge – 81.9%
Limited career advancement opportunities – 56.5%
Insufficient financial reward – 44.4%
Conflict with Staff/Manager – 29.6%
Logistically difficult – 21.8%
Lack of development/training -18.5%
Lack of recognition – 16.7%
Feeling unsupported/overworked – 12.0%
Insufficient non-financial reward – 8.8%
Underutilised – 8.8%
Lack of flexible start-finish times – 4.6%
Unrealistic goals being set – 4.2%
Lack of flexible working arrangements – 3.2%
Other – 11.1%
Source: AIM 2016 National Salary Survey
The latest research into staff retention reveals the smartest strategies are multi-pronged, proactive and sustained.
The 2016 Staff Retention Report by the Australian Institute of Management shows 54.6% of Australian organisations are concerned about how to keep their employees, compared to 48.8% the previous year. However, an increased focus on ways to improve engagement of in-house talent may be responsible for a falling resignation rate.
Since 2012, resignations have fallen by 13.4% to 10.3%.
To reduce resignation rates businesses used a range of methods including exit interviews, reviewing or updating staff remuneration and conducting job satisfaction surveys.
Local Government Association Queensland (LGAQ) HR manager, and AIM Corporate Member, Angie Gibson says job satisfaction surveys have helped her keep a pulse on employee engagement. For the past three years the LGAQ has recorded job satisfaction scores of 93%, 85% and 92%.
“If you look after your staff, they will look after you and that’s reflected in our survey, and I’m really proud of that,” Gibson says.
The LGAQ uses various methods to ensure staff retention and chief among them is a program called Well At Work. The program is steered by an eight-person Wellness Committee, which assesses the effectiveness of current practices. The program has been recognised by the Queensland Government’s Happier. Healthier. Workplaces initiative and with an Australian Human Resources Institute award.
Gibson says it includes everything from pedometer challenges to family social days.
“We look after emotional, physical, mental, social and occupational areas of an employee,” she explains. “Some people think its all airy-fairy, but its very physical, emotional, social – all those sort of things. We really support people.”
A new 12-program will be launched at the LGAQ this month to check and encourage employee health and promote inclusion through social activities.
“We’ll do things like ergonomic assessments, healthy heart checks in May, flu vaccinations, our social day at Simpson Falls, Mount Coot-tha, on a weekend so all families can get together,” Gibson says.
“We’ll do a Walk to Work day and have a breakfast here, we’ll have end-of-year functions, a Melbourne Cup function, mental health days. There’s something every month and every second Wednesday is Wellness Wednesday where we have massages and meditation in our rooms.”
In addition to the wellness program, the organisation also has a reward and recognition scheme that acknowledges outstanding work in the form of a presentation and a gift voucher.
As all-encompassing as these initiatives are, they mean little without measurement and assessment. Throughout the year, Gibson conducts job satisfaction surveys that quiz staff on everything from healthy eating at work to the issue of bonuses.
Gibson also performs a thorough remuneration check to ensure they are not falling behind industry rates.
“I do a remuneration benchmarking report every year, so I use the AIM National Salary Survey which is one of my main things for the corporate side of the business,” she says.
“I look through all the State Government public sector wages and federal and always request reviews from the larger agencies like our Hays, Robert Walters and I research particular jobs on Seek. And every three or four years I’ll go out to a specialist company like Mercer who survey say the top six roles in the organisation to make sure their work value’s there, to make sure we’re not getting too far behind the ball.”
The Pay Factor
So what’s more important – pay or job satisfaction?
The AIM 2016 National Salary Survey shows the top three reasons for employees taking on another job role are: seeking a new challenge at 81.9%, limited career advancement opportunities at 56.5% and insufficient financial reward at 44.4%.
Charles Go, Research Product Manager at AIM, says remuneration should be a top priority for those developing retention strategies.
“No matter how cool your office is, how many benefits they have or how supported they feel at work, at the end of the day, people still need to pay their bills, save for holidays and afford to live the lives they want,” he says.
“At the very least, review and benchmark your employees’ salaries on a yearly basis and provide increases that are in line with inflation.”
Sales staff traditionally receives salary bonuses, but Go says it’s now becoming common for support, technical and finance staff to receive bonuses. He recommends clearly defining expectations, checking performance to make sure that they are on track and ensuring the bonuses are based on the company’s overall targets so the company doesn’t pay them if it is not making any money.
“Go one step further by encouraging and supporting them to reach those stretch targets to get their bonus,” he says.
“You’ll be surprised at the increased level of engagement when people truly feel like they are closer and closer to the finish line.”
Not every company can offer cash incentives or raises. Instead, they should consider giving better benefits, says Go.
“It could translate to long run savings for the employee,” he says.
“For example, if a staff member can work from home one day a week that will save them $100 a week on day care expenses, which will be about $4,800 a year.”
Flexible benefits can have a surprising affect. Organisations offering time in lieu to reimburse overtime had resignation rates of just 9.8% compared to 10.9% for those who didn’t compensate staff for extra hours worked.
Additional super contributions also make a difference. Organisations that made extra super contributions had a lower than average resignation rate at 9.5% compared to 10.5%.
Developing a supportive learning environment is key to keeping workers challenged. More than 18% of employees report resigning because of a lack of professional development and training.
Research shows personal interviews are the most effective way of evaluating training, followed by pre and post training surveys and training feedback forms.
Building an effective staff retention plan is about more than just meeting an employee’s needs. It’s about surpassing them.
In today’s disruptive market, staff retention strategies need to take a holistic approach to give employees the support they need to do their job well. A continual, proactive strategy creates a happier, more engaged workforce and safeguards organisations against the eroding effects of continual resignations.
Visit AIM National Salary Survey and find out how we can help your organisation to attract and retain top talent.