How To Improve Employee Retention (5 Steps)

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Like many leaders, you’re seeing talented employees leave your company.

You’re not alone. More than 60 million US workers have voluntarily quit their jobs since January 2021. And 44% of global workers plan to quit in 2022.

Companies around the globe are short-staffed. Leaders have tried to boost hiring through higher wages and bonuses, but staffing shortages continue.

The problem? Many business leaders want to return to the “old normal”—in the office with a command and control leader managing staff. But for many employees and candidates, the old normal sucked! 

So they’re moving on to the “next normal”—an everyday normal that includes many high-priority workplace characteristics. 

To make this point abundantly clear, a recent Deloitte study found that Gen Z and Gen Y employees covet, in order of importance: work/life balance, development opportunities, higher salaries, and a positive culture. 

In other words: Money is not their primary motivator.

Here is today’s undeniable reality: Employees of all generations desire and deserve workplaces where they’re respected and validated for their ideas, efforts, and accomplishments, every day.

As a workforce veteran and a business leader, you may not have experienced this kind of work culture in your career. But they exist. And today, companies that offer an uncompromising, purposeful, positive, and productive work culture are the first choice of top talent. 

This means companies with an uncompromising work culture don’t have a retention problem. The so-called labor shortage, or “The Great Resignation,” hasn’t impacted them. 

Organizations as varied as NVidia, Trader Joe’s, In-N-Out Burger, Merck, Apple, Mars, and more, all included on Glassdoor’s 2022 Best Places To Work list, have top retention rates. In addition, many of these great companies have an attraction challenge: 

They have many more candidates seeking jobs than they have openings to fill!

Being in the enviable position of having many talented candidates vying for positions in your organization, and being able to retain these talented employees, may not be as complicated as you think or as difficult to achieve. In this article, we’ll explore five steps to improving employee retention in your organization:

1. Build a Culture of Respect and Results
2. Create Fair and Equitable Compensation Plans
3. Customize Mutually Beneficial Work Schedules
4. Foster Accountability
5. Define Values in Tangible, Observable, Measurable, and Coachable Terms

Be a Culture of Respect AND Results

How do you build a work culture that makes respect and results equally important, valued, and celebrated?

It’s best to start with a simple, yet powerful model.

Our Performance-Values Matrix, which we’ve used in various forms for over three decades and feature in Good Comes First: How Today’s Leaders Create an Uncompromising Company Culture, is the core of our culture refinement approach. 

Just as important, this matrix helps leaders decide which employees are worthy of being considered top talent and which should be “lovingly set free.”

Yes, we realize this article is about how to retain employees. But do you want to continue to invest in players who aren’t performing well and/or don’t demonstrate alignment with the company’s mission and values?

Let us explain…

As you can see, this matrix is an X-Y graph with the vertical axis representing PERFORMANCE (desired results) and the horizontal axis representing the VALUES MATCH (desired respect).

The quadrants represent the four possible combinations of high or low performance and high or low values match.

High Performance and High Values Match

The green upper-right quadrant is the best place for all leaders, managers, supervisors, and team members to operate. These players consistently meet or exceed performance standards and continuously demonstrate alignment to values.

As you build an uncompromising company culture where good people want to work, you’ll need to recognize and celebrate players in this quadrant. 

Every day, find a way to let them know how important their contributions are to respect and results!

Low Performance and Low Values Match

The lower-left quadrant is the worst place for staff to operate consistently. Players in this quadrant often fall short of performance expectations and don’t often demonstrate alignment to values.

Because these players don’t contribute often enough to results or a respectful workplace, one-on-one coaching is required. 

If coaching doesn’t improve their contributions to both performance (results) and values (respect), you most likely need to lovingly set them free.

Low Performance and High Values Match

The bottom-right quadrant offers an interesting opportunity. Players here are great values-led citizens but don’t demonstrate consistent performance.

You don’t want to lose the values match, of course. But the business suffers greatly when any player misses results standards. So you’ll need to invest in skill building or finding a role that leverages their skills, strengths, and passions. 

However, if after training and/or reassignment, that team member cannot consistently perform respectfully in their role, again, lovingly set them free. 

High Performance and Low Values Match

The upper-left quadrant is where the most damaging players operate. Players here are poison in your organization. They exceed performance expectations (which is good) while treating others disrespectfully in virtually every interaction (which is not good).

With these upper-lefters, don’t hesitate to align them to results AND respect. Coach and mentor them to consistently demonstrate your values. Then, monitor them—after all, they have already demonstrated a low values match. Your coaching may lead them to become legitimate upper-righters.

Granted, while this type of personal and professional transformation is rare, it does occur. But, if it doesn’t, and these players don’t shift to the desired upper-right quadrant, lovingly set them free. 

You must, because you’ll never enjoy a purposeful, positive, productive work culture, and thus won’t retain the top talent that will no longer tolerate these misaligned players, if you tolerate ANY disrespectful treatment of others by anyone in your organization.

The Four Keys to Retaining Upper-Right Talent

While faced with what many perceive as a labor shortage, many leaders make the mistake of trying to keep everyone. 

But as the Performance-Values Matrix shows, the only good quadrant in which your leaders and team members can operate is the high performance-high values match quadrant.

Your immediate call to action is to retain those upper-righters, move players from the other quadrants into the upper-right, and attract players who will embrace your requirements for respect AND results.

But how? The next four items on this list are key to retaining and attracting top upper-right talent for your organization.

Create Fair and Equitable Compensation Plans

“Fair and equitable compensation” sounds simple, right? After all, why should anyone working for a company that values respect as equally as results do anything less?

And yet, fewer than 1 in 4 of America’s largest employers have analyzed their pay gaps based on gender. And many watchdog groups believe that fewer than 1 in 20 companies have performed a pay gap analysis by any other demographic (race, religion, geographic location, etc.).

And it isn’t just the old-school, patriarchal companies that find themselves on the wrong side of many employees’ lines in the sand. 

For example, in 2017, Google was forced to respond to accusations that it systematically paid women less than men. Five years later, Google agreed to pay affected employees $118 million in compensation to balance that scale.

Now, let’s get back to the oft-included “integrity” value. If your company hasn’t yet analyzed any pay gap, how likely are you to be seen as a go-to employer? 

Worse yet, if your company has performed an analysis but hasn’t taken corrective action, women and their allies aren’t only going to jump ship; they will tell their friends. 

Word will spread in professional circles and on social media, and your organization will become a statistic rather than an employer of choice.

Don’t want to offend approximately 50% of the workforce? Don’t assume your compensation package is equitable. 

Instead, measure it—then prove it. Or you will lose good people looking for fair (which for many means “higher”) salaries, and you won’t be able to attract good people to replace them. 

Soon, you’ll be among the many business leaders complaining about a labor shortage.

Customize Mutually Beneficial Work Schedules

During the pandemic, albeit not always willingly, many employers offered employees work-from-home opportunities. 

While some organizations (and their employees) thrived in this “new normal,” many more with roles that require employees to return to the office, even while certain strains of COVID-19 wreak havoc on population centers, seemingly can’t wait to get back to the old normal.

For those employees aware that many companies will offer hybrid or remote work for the foreseeable future, this rigid stance is unacceptable.

It’s almost as if they’re being told, “Hey, you know all that freedom and autonomy you had the last 2+ years? Know how nice it was to be home when your kids got home from school, and your elderly parents knew they could count on you? Forget all that. Get your butts back to the office!”

To that position, many employees are graceful and emotionally intelligent enough to supply a one-word answer (versus the more colorful two-word answer):

“No.”

So they pursue taking their talent elsewhere. Specifically, they look for companies that offer work schedules that benefit both the employee and employer. 

And, empowered by the knowledge they can handle work-related responsibilities while they live a better, more fulfilling life, aware employees know that a new normal exists, where all contributions, regardless of where we set down our laptops, are valued. 

And they’re here for it.

Foster Accountability

For several decades, leaders have done a decent job of stating their organization’s core values. But how many actually hold themselves, fellow leaders, and employees accountable for living those values?

Let’s get more specific: How many leaders would show their top salesperson the door for telling a sexist joke? 

Despite how many fellow employees might be offended, the answer is obvious: Almost none. Because for most leaders, results have historically been far more important than respect.

In Good Comes First, we offer a proven mechanism that breaks down accountability into five independent, non-sequential leadership tools for each of an organization’s core values:

• Leaders and key influencers must model the company’s values—they must lead by example.
• Leaders must coach people to align to the values; once values are understood, this usually occurs immediately after someone fails to live one of the core values.
• The organization, first for leaders and then all players, must objectively measure alignment to core values (done simply enough through confidential surveys).
• A leader must publicly celebrate when a fellow leader or player demonstrates alignment with core values and exceeds performance expectations (upper-righters).
• When any player fails to align with the organization’s core values, a leader must mentor that player until they demonstrate alignment, or until they are lovingly set free.

Once people know they’ll be held accountable for meeting both performance (results) and values (respect) expectations and find themselves in the upper right quadrant of the Performance-Values Matrix, they’re far less likely to leave for greener grass.

Define Values in Tangible, Observable, Measurable, and Coachable Terms

Too many leaders assume that every player knows what their core values mean. Unfortunately, many values, no matter how simple, are often left to interpretation. 

For example, many of our clients list “integrity” as one of their values. At one such client, we asked twenty leaders to define “integrity,” specifically as it applies to their organization.

We received 19 different answers. 

If twenty leaders couldn’t provide a specific definition, how can those leaders (and those who work for them) be expected to demonstrate that value in daily interactions?

This is why a company’s values must be defined in tangible, observable, measurable, and coachable terms. Keep it simple! For instance, a behavior that would show alignment to the integrity value might be:

“I do what I say I will do.”

And now that everyone understands the integrity value in behavioral terms, any player can be measured on alignment with that value. A pulse or 360 survey entry might be:

“Mark does what he says he will do.”

The survey we leverage asks respondents to rate Mark’s alignment on a scale of 1 (strongly disagree) to 6 (strongly agree). Any measurement below a 5 indicates that a respondent does not feel that Mark lives that core value. 

Knowing the value has been defined and modeled, a leader can coach and, if and when necessary, mentor that player toward alignment. And when the player demonstrates a higher level of alignment in the following survey, leaders must celebrate.

Few organizations provide the coaching and mentoring required to move people to the upper-right quadrant of the Performance-Values Matrix. But, when leaders do, employees sense the organization’s leaders don’t just care about the work, they also care about the people doing the work. 

In our post-pandemic workplace, this sense of caring combined with development opportunities is a requirement of the new normal that many people (especially Gen Y and Gen Z) seek from employers.

Recognize That No Quick Fix Exists

The pandemic changed much about our workplaces. As employers, we must be willing to embrace that change. As leaders, there’s no option; we must adapt.

To compete in this job market, we must pay people what they’re worth and offer flexible schedules that enable a more fulfilling work/life balance. At the same time, we must steadfastly hold our people accountable for meeting both performance expectations and aligning with clearly defined values.

Commit fully to these four keys to retaining and attracting talent. Inspire as many leaders and employees as possible to work from the upper right quadrant on the Performance-Values Matrix. 

Soon, you’ll be seen as a go-to employer. And you’ll have more highly qualified applicants than open positions.

As many old-school leaders have already learned, retaining key employees and attracting talented candidates will NOT improve if you have an old-school, autocratic, command-and-control work culture. 

Because today, employees won’t tolerate disrespectful work environments. They don’t have to anymore. They have many job possibilities to pursue, so they’re not accepting the first job offer that appears in their inbox. 

Instead, they’re selective, scouring their options to find workplaces and leaders that provide work/life balance, development opportunities, higher salaries, and a positive culture.

The bad news is there’s no fast, easy solution to today’s attraction and retention issues. There’s no silver bullet.

The good news is there’s a proven approach, which we’ve outlined here, to building and sustaining a purposeful, positive, productive work culture. 

Implementing these key steps requires intention and attention by senior leaders to champion their uncompromising work culture. Leaders typically see measurable results within six months.

Within eighteen months of dedicated implementation, senior leaders see significant improvement—35% or more—in retention, employee engagement, customer service, results, and profits.

Mark S. Babbitt is President of WorqIQ, a firm that helps organizations understand leadership’s impact on culture, the company’s collective level of Workplace Intelligence (WQ), and what “good” means to them. He is also the author of the best-selling book, Good Comes First.

S. Chris Edmonds is a speaker, executive consultant, and founder of The Purposeful Culture Group.  He’s also the author of two Amazon best sellers: Good Comes First and The Culture Engine.