Employee Retention As An Outcome and Employee Engagement As The Goal

With unemployment at record lows the war for talent is in full force.  Companies are aggressively working to poach talent from competitors and offering lucrative perks to attract top talent.  We wrote a piece a few years ago Business Is Good, Why Are My Best Employees Leaving which highlights the war for talent we are seeing.  That blogpost was followed by one Business is Good, Thanks To My Highly Engaged Employees. This war for talent has put additional pressure on organizations to retain their top talent, but many organizations approach this the wrong way.

Employee Retention

Employee retention should not be the goal, it is an outcome.  If your goal is to retain employees, that is pretty simple, overpay them and ask very little of them.  I know several organizations that follow this strategy.  They have employees who have retired on the job and when asked why they stay they say, “I get paid too well to leave and I have great work-life balance.”  That is a long term formula for disaster for a company.  Companies that want to win the war for talent and drive superior business results should drop the employee retention goals and metric and instead focus on employee engagement.  An engaged employee is also a retained employee.  They feel a connection to the company and their work.  They are delivering results and providing the discretionary effort required to move an organization forward.  Engaged employees are hungry for more and that hunger motivates them to work harder. 

Turnover is one of the key metrics tracked by human resources departments and while it can be an important indicator of an organization’s health it can also provide false readings.  There are thousands of companies with low turnover that are underperforming.  The focus on engagement will drive better results and the net effect of improving engagement will be higher retention.  Do not start with retention as the goal, begin with engagement and two metrics will align.

Aim to engage your employees and your retention numbers will improve
— Brian Formato

Many companies make a mistake when trying to measure engagement.  They use engagement and satisfaction as synonyms.  There is a big difference between engagement and satisfaction.  Those companies that overpay their employees and expect little of them have high employee satisfaction.  Employees get paid well with low expectations for performance.  Engagement is a measure of discretionary effort.  The way we like to phrase it at Groove Management is, employee satisfaction is what you get from an organization and employee engagement is what you give to the organization.  Too many “engagement” surveys focus the questions on hygiene factors, benefits and the work environment rather than on measuring discretionary effort and how connected employees feel to the mission and values of the organization.

We wrote a separate post Who Cares that explores the best ways to effectively measure employee engagement.  There is a science to effectively measuring engagement within the workforce. It starts with asking the right questions in order to solicit valid data.

The war for talent is going to let up anytime soon.  Smart companies will focus on employee engagement rather than retention.  One key to employee engagement is to invest in the development of employees.  Training and development programs create opportunities for employees and drive engagement.  When employees see their organizations making the investment in their learning they are more engaged and more likely to stay.