The #1 thing that matters for employee retention

Employee turnover can be a huge cost for businesses. Some companies do have high turnover and to a point, it’s can be a good thing .

In an interview with Business Insider, Katie Bardaro — lead economist at PayScale — said that “If employees have more options and can easily move, they’ll do it. You’ll see it happening first with top performers … in this environment, companies will need to evaluate what causes employees to leave and improve these areas, such as pay, work environment, [and] vacation policies.

It can be difficult to keep employees in a certain place when the job market is good and salaries are high — particularly in places such as Silicon Valley where tech giants such as Apple, Facebook, Google, Netflix, Tesla and more are all located — , so companies need to foster an environment that makes their employees want to stay with them and develop in their role.

One crucial factor for retention, and something that can be overlooked to an extent, is the organisational culture.

So, what is organisational culture?

Every organisation has a culture, whether they are aware of it or not. So, what is culture? It can generally be defined as the beliefs, values, and all other factors that guide decisions made within an organisation. It is generally not expressly defined, but is something that grows and becomes more apparent as the business evolves.

Work and play in the same place?

Which company would you rather work for?

Some businesses have a culture that everyone wants to be a part of. For the eighth time in eleven years, Fortune has ranked Google as the Number 1 place to work in the world. Google provides the classic example of a company with a culture that every employee would like to be part of. Some benefits include free food, free haircuts, ping pong tables…

But, it’s not just the freebies that create the company’s successful work culture. Google are interested in the personal development of their employees, making them feel valued and that their ideas matter to the company. The embodiment of this is their “80/20” policy, where they encourage employees to spend 20% of their time to work on a project of their choice. This has resulted in the creation of Gmail, Google News, and Adsense. The employees at Google feel empowered by the culture there and it leads to greater business performance. In an interview with Fortune, one Google employee said that “the company culture truly makes workers feel they’re valued and respected as a human being, not as a cog in a machine.”

Yet, not all companies are like this. A recent disaster story is that of Uber. The innovative transport company has had a cultural horror story emerge. Susan J. Fowler, an ex-employee of Uber, tells the story of a workplace that pushes individuals to the sidelines. In the time she worked there, she found situations that shouldn’t be happening. She wrote in her blog post documenting her time there that “every manager was fighting their peers and attempting to undermine their direct supervisor”. When you compare this to Google, who encourage a flatter hierarchy of communication, the element of direct competition between employees is reduced. Instead of competition, there is teamwork and development.

Recommendations for organisations

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It proves that organisations — particularly those that are growing fast — that have not had time to decide what type of culture they will be promoting, must take the time to decide and promote the type of company culture they want, as it reflects on them as an organisation.

In an article on culture’s impact on employee retention in Forbes, they argue that culture fit is the most important aspect of retaining great employees above anything. It would therefore make sense that organisations should heavily focus on creating a culture that employees want to work in, and don’t feel like they’re being held back because of this intangible, yet important element of an organisation.

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