3 Ways to Retain Your Top Employees
Entrepreneurs know how to make customers happy: We learn their needs and then create products and services to match. But too often, we don’t do the same thing with our employees. We make incorrect assumptions about what workers value — and, in the process, overlook what will give them long-term stability.
It’s based on good intentions, but the delivery is bad.
For example, some employers offer profit-sharing incentives. People like more money, right? But in the U.K., when researchers surveyed more than 13,000 employees across nearly 1,300 workplaces, these profit-sharing incentives got mostly bad reviews. Why? Because profit sharing is based on the company’s overall performance. Employees don’t feel rewarded for their individual effort. In fact, they feel like the rewards go to the people with the best positions — not the best workers.
So how can you offer something better? In my experience, which spans work with corporations and venture-backed startups to my own bootstrapped businesses, I’ve learned that all employees value three things: compensation and personalized bonuses, upward potential and respect. Consider the following as you look at these variables through the lens of an employee.
1. Compensation and personalized bonuses
Everyone wants a higher salary, of course — but your employees’ feelings about money may surprise you. Research from Princeton found that higher income does lead to more happiness, but only up to $75,000 per year. Beyond that, pay increases don’t necessarily lead to greater job satisfaction. What does matter is employees’ perception that their value is rewarded fairly.
To do that, link bonuses — in the form of salary, benefits, or equity and stock — to personal contributions. Your company is set back every time you lose a valued team member; a short-term investment in employees (at the slight detriment of your P&L) could be your biggest unlock for long-term growth.
2. Upward potential
The general expectation is that better titles mean bigger salaries, but don’t overthink that relationship. Many employees join smaller companies for the opportunity of accelerated growth in terms of titles, responsibilities, and mentorship.
To help people who want to grow, attach personal meaning to what they do. A paper published in Qualitative Organizational Research stated that people are more incentivized when they feel personally connected to their work and feel that their work is tied to the success of the business.
Achieving this is as simple as understanding your employees’ personal values and then making sure they have the opportunity to find those values in the work they do. When that leads to growth within the company, it will create a strong bond that’s hard to break.
All employees want to feel heard — otherwise, research has shown, they can withdraw into apathy. Once that happens, not only will your business suffer, but your employee may move on.
The best way to establish trust is to give your employees the ability to challenge the status quo. Research from the University of Texas at Austin supports the idea that upward feedback is empowering (assuming it’s delivered in an appropriate way), and the way you solicit feedback matters less than the culture you create. In my businesses, I try to listen first to all criticisms and hold off on challenges until the end of the meeting. If your team knows that you’re willing to listen, you increase the likelihood that they’ll share feedback.
Remember, there’s no magic number when it comes to compensating an employee or making them happy; they’ll stick around when they feel valued. It will give you a better chance of retaining talent, and a reputation as a good employer. And that’s a big part of attracting the right people in the first place.