HR & Management

What people want is to be recognised – financial rewards do nothing to reduce staff turnover

7 min read

18 August 2016

High employee turnover hurts a company’s bottom line and can damage morale among remaining staff. With it arguably being one of the most intense challenges, we canvassed the business landscape for advice on how to stop the churn.

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Recruitment is generally an expensive and time consuming process, so the more you can do to keep the staff you have the better. That means offering up some money, right? We’ve all watched Jerry Maguire and itched to say the phrase “show me the money”. But unlike the famous scene suggests, it is by no means the miracle power needed to reduce turnover.

In fact, Declan Fitzsimons, leadership professor at Insead, believes this is one of the biggest corporate myths.

“It’s obviously a factor, but paradoxically when people look for more money it’s usually more to do with the absence of more important things,” he said. “Ultimately we seek, as human beings, purpose to our lives. And that means doing something that has meaning beyond ourselves. So the challenge for business owners and managers of SMEs is how to convey to employees a purpose for how their work contributes to a vision that has power and meaning.”

That may sound easier said than done, but some of the UK’s business leaders have revealed a few small steps that can make all the difference in the world.

For example, Cathy Hayward, managing director of Magenta Associates, suggested fostering staff enthusiasm and engagement heralded Disney magic-esque results – and proved an important factor in retaining clients as well. And the biggest benefit, she explained, was that it aligned staff with the company’s vision.

She said: “We deal with clients every day, as PR is a people business. Clients buy into us as individuals as well as the wider company ethic and brand. If we weren’t enthusiastic to be working at Magenta, it would soon come across to clients and we would lose business. If our account managers were resigning every six months, our clients would become disillusioned and leave us very quickly.

“A committed, stable workforce provides certainty for clients and means that when personnel does change, it’s handled in a calm, professional way and they are introduced to their next long-term account manager.”

Similarly, Jonathan Le Page, MD of Microform Imaging, claimed keeping staff informed and building a foundation of what the company stood for from the get-go, helped foster a sense of belonging.

Your employees are part of something bigger than themselves, but do they know it? If the answer is “no” then you already ran face-first into a brick wall. He said: “Get staff involved in the decision-making process – ask ‘how do you feel about the changes?’ At Microform we get their input and they then get to see changes being implemented and know they’ve had a part in that. They are not being overlooked and they are being listened to together as a team rather than the guys at the top making all the decisions and overlooking everyone else.”

Read more about how boosting employee engagement could work wonders for your business.

Meanwhile, Fitzsimons provided further advice, suggesting that bringing on the fun would prove beneficial to any company. More importantly, however, staff should be able to proudly put on display their feelings in the workplace.

“But often employees feel they can’t do this,” he said. “Why? Because of the way they experience their relationship with their manager. Research suggests that individuals join a company but leave a manager.”

This is largely due to a lack of appreciation. Employees are the lifeblood of your operation, so you want to make taking care of them your highest priority. And showing that you care can come in all shapes and sizes, from giving them their birthdays off and providing a fruit basket, to enabling them to leaving early on Friday’s or discussing a discount for staff at the local gym.

And as they say, improving employee engagement and loyalty is the key to a great corporate culture – one that will reduce the flow of staff leaving your firm.

The 5 keys you need to retain staff

“A stable workforce is hugely important to us, as training people about the way we work and like to treat our customers takes time and effort,” John McMahon, managing director of MCM Net, explained. “People really do become part of our culture and adopt our ethos and customers can feel this when we work with them. By looking after staff and keeping them engaged, you actually cut down on the level of turnover and it’s a cost-saving exercise because the price of recruiting someone from scratch – assuming you can find the right person – is very high.

“What people want is just to be recognised, for someone to say, ‘Yes, you are doing a good job’, for someone to understand their role, to understand what the company hierarchy is, what opportunities there are. It’s much more than simply financial. Most of what I recommend either costs nothing or very little. Rewarding someone financially is a starting point but, in my experience, it’s not their first concern.”

The common theme in all of these ideas? Caring, recognition, rewards and appreciation may be small steps but they can go far.

Elsewhere, columnist Jan Cavelle suggests that firms ignore turnover, have as few staff as possible, and not be afraid to cash out.