In recent years, people have left their jobs in record numbers.
There are many theories on what is leading to the increase in turnover. Here’s the theory that makes the most sense to us: remote work, although often desired by employees, can lead to weaker ties to fellow colleagues and, ultimately, to the organization. At the same time, employees are no longer constrained by geography and have more options. In short, people are feeling less connected to their companies, and simultaneously while being solicited for more opportunities, increasing the likelihood they will take a new role elsewhere that either sounds slightly more interesting or pays slightly better.
Companies everywhere are responding to this increase in turnover with a renewed focus on recruitment. However, we believe companies – particularly high-growth companies – can’t simply hire their way out of this challenge. To scale, they must also focus on employee retention. In a recent roundtable discussion with human capital leaders across the Summit Partners network, we discussed the art and science of retention and shared strategies to help combat attrition. Below are three key recommendations that emerged.
Implement a Robust Employee Listening Strategy
There’s often a disconnect between what employees value and what company leaders believe to be important – and this divide has become more pronounced as employee preferences have changed over the course of the pandemic. To bridge this gap, we encourage implementing a listening strategy to improve employee experiences and ensure alignment of new policies and benefits with data on what employees truly value. We believe the following components are key to developing an effective listening strategy:
- Keep an open mind. We believe the most important part of an effective listening strategy is to approach the process with an open mind and a true willingness to create an improved employee experience. Let your employees know that you’re listening – and consider leveraging a survey tool to help. More sophisticated tools can help companies predict the elements of their employee experience that are most likely to lead to turnover – and this data can help prioritize your efforts.
- Begin early and check in regularly. For current employees, start asking questions early in the employee lifecycle and consider instituting more regular employee pulse checks. This “early and often” approach can help managers understand not only how a new team member is coming up to speed but can also help identify areas that are most closely linked to turnover in your organization more broadly.
- Conduct “stay Interviews.” If you’ve identified crucial talent you want to retain, consider conducting “stay interviews.” These individualized discussions allow you to express your commitment to key employees and gain an understanding of what’s most important to them. Your team members need to know that there are opportunities to grow, develop and be challenged as your business grows. To identify your MVPs, we suggest leveraging tools that include some form of organizational network analysis component, which can identify individuals who are most interconnected and vital to your organization’s success.
- Don’t exclude those who are leaving. To create a more fulsome view, we recommend including both current and departing employees in your listening strategy. When employees leave, make a point to connect with them 1:1 and work to understand their decision to leave and the opportunity they might be pursuing next. Do patterns emerge in this feedback? Are there changes the company should make to address these patterns? For your most talented team members: stay in touch! You never know when you might have an opportunity to hire them back.
Develop and Apply a Holistic Approach to Compensation
Employers across industries and geographies are seeing a rise in human capital costs – cash compensation and benefits – on an absolute and a relative basis. To help navigate this dynamic, we recommend developing a clear compensation philosophy and taking a thoughtful approach to benefits to help guide your approach.
A well-articulated compensation philosophy helps you understand the competitiveness of your total compensation package compared to the market. Companies that have created truly phenomenal employee experiences, however, can often attract great talent without paying at the top of the market, in part because they are offering an experience that employees care about. And we believe a compelling benefits package is a key component to creating that experience.
Certain components of a benefits package (e.g., health insurance) are table stakes. Others are more bespoke (e.g., workplace flexibility, 401k matches, educational support, social budgets, caregiver support, and more) and can go a long way in differentiating and elevating your employee experience. In creating the optimal benefits package for your organization, you need to understand and consider what is truly important to your employees (see employee listening strategy, above). To start, we recommend conducting a survey and consider taking a page out of your marketing team’s playbook to run a conjoint analysis for benefits. This will provide you with a prioritized list of what is most valuable for employees today and help HR leaders make a strong case of what to include next.
Finally, it’s important to remember that any increase in rewards for incoming hires must be matched for existing employees in order to prevent even greater churn, and they can’t easily be undone if/when the market returns to more “normal” terms.
Create Opportunities to Reinforce Connection and Inclusion
When it comes to retention, relational elements, such as a sense of belonging and feeling valued by an organization, are often more important to employees than their employers think. While opportunities for relationship building and meaningful connection – which can help build feelings of inclusion – are often easier in person, it’s very possible to build quality relationships remotely as well. (An effective communication strategy can help.) Whether your organization is remote, hybrid or in-person, finding ways to connect with employees is critical – especially for employees who started during the last two years.
Where possible, we encourage companies to consider bringing together teams (and the whole company if possible) on a recurring basis for in-person gatherings. If your company is mostly remote, you may consider doing this more often and create flexible travel policies to allow for in-person connection opportunities on a periodic basis. It’s especially crucial to spend time in person with new employees as soon as possible. If there are office hubs or central meeting spots for your team, consider bringing people together to offer some cultural onboarding in the first few weeks.
If in-person events are not feasible for your organization, leaders of remote teams can organize virtual events like 1:1 coffee chats/lunches, happy hours, or other creative events (trivia, cooking, painting, wine/beer tasting, or escape rooms, etc.), where employees can get to know each other on a more casual basis. In these settings, managers can opt to share more about their own lives and encourage others to do the same – working to create relationships that are based on more than just work. Companies that have “All Company” meetings can utilize the breakout group function at the end, to connect with colleagues in other parts of the organization.
This talent market is the toughest in recent history, and there is no silver bullet. We believe companies, particularly high-growth companies, can’t simply hire their way out of this challenge. A focus on employee retention – including developing a deep understanding of what matters to your team, a thoughtful approach to connection and development, and a holistic approach to compensation and benefits – can make a meaningful difference in mitigating turnover.
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The content herein reflects the views of Summit Partners and is intended for executives and operators considering partnering with Summit Partners. For a complete list of Summit investments, please click here.
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