Given ongoing turnover troubles, many employers have turned to a longtime retention strategy: giving employees more money.
It’s not a new approach. For instance, pre-pandemic, Salesforce trotted out annual bonuses that averaged $39,959, while Meta’s annual bonuses averaged $33,225 pre-pandemic. However, their average retention sits at only 23 and 25 months, respectively, according to a Paysa blog post.
Given those attrition rates, it raises the question of whether monetary incentives really addressed the underlying cause of employee departures.
“If you think about it, unless there was a financial reason for individuals to leave in the first place, and in many cases that is not the case, then you’re just addressing a symptom and not the underlying cause,” says Michael Puck, senior manager of human insights for HR services and solutions company UKG, during a recent HRE webinar titled “Work As We Know It Is Broken.”
Knowing the difference between the symptoms and causes of turnover is imperative for HR leaders, Puck says—because, when the organization isn’t treating the true driver of turnover, it suggests leaders are disconnected from what employees really expect from their organization. When that understanding is improved, employers can deliver a more successful employee experience—and reap the retention benefits.
For example, this year’s Fortune 100 Best Companies to Work For have half the turnover rate as companies not on the list, Puck notes. And Great Place to Work-certified companies outperformed the market by 9.2%, he adds.
And employers should be concerned about turnover. Gartner, for example, noted the U.S. quit rate jumped 20% last year to an average of 37.4 million employees leaving their jobs, from 31.9 million pre-pandemic. The research group also notes that, on average, each departing employee costs an organization $18,500—a figure that could be alleviated with a better understanding of employee expectations.
How the employee experience gap gets created
According to UKG, when it comes to what employees want, only 37% of those surveyed cite fair pay and relevant benefits. Instead, most are focused on non-monetary factors.
In fact, 63% of employees expect three pillars from their employer: to be seen, to be heard and to be connected, Puck explains. Unfortunately, it doesn’t appear those needs are being met, as reflected in 79% of workers who say they are not actively engaged. Meanwhile, 37.9% of employees leave their jobs within the first 12 months of employment, Puck adds.
“Do employees feel seen, heard and connected? I would propose if they did, they probably would be engaged to a higher degree,” says Puck. “And they probably wouldn’t be leaving in such high percentages.”
A number of obstacles are making it difficult for HR leaders to narrow the gap between employee expectations and the experience the organization is delivering. One is having a company-centric culture, in which employees are defined by their role and function, rather than being an employee-centric organization, where workers are defined by their interests and passions.
Another obstacle is a perceived economic imbalance between the CEO’s salary and that of the average worker at the organization. Indeed, the CEOs of S&P 500 companies earn an annual average of $16.7 million, reports Fortune—a whopping 269 times more than employees making $62,000 at the same company.
Leaders may also contend with a fractured employer-employee dynamic. For example, an employer may offer a bonus to employees but require them to be in the office five days a week—while the employees would prefer the flexibility over the money.
“If employees perceive that their expectations are not being met, how likely do you think they will exercise their discretionary effort? Not very likely,” Puck says. “And if employees don’t exercise discretionary effort as they could, where does it put the employer as far as business performance is concerned? Not looking good.”
Narrowing the gap between expectations and experience
HR leaders can narrow the gap between employee expectations and employee experience by taking three steps, Puck says.
Identify and address employee expectations
There are several steps employers can take to help identify employee expectations, such as onboarding interviews to assess if new hires are receiving what they expected upon joining the organization, as well as stay surveys to learn what an employer is doing well to keep employees in the fold and how it can improve. Puck points to UKG’s Triple E Gap Analysis tool, which can assist employers in self-assessing how they are positioned to address employees’ expectations.
While expectations will vary by industry and organization, Puck advises HR leaders to start by setting the tone—such as through fair pay and relevant benefits, intentional DE&I, shared valued alignment and ESG accountability.
And when delivering on the promise, don’t forget to provide a human experience, offer transparent communication and hire people-centric leaders.
Lastly, as you enable people to do their best work, remember to provide holistic support, agile development and growth, an empowering environment and personalized flexibility.
Companies that are employee-focused see their workers as human beings with emotions, challenges, passions, desires and dreams, Puck says, adding that the hallmark of an employee-centric company is that work is optimized for employees—with leaders soliciting their feedback, acting upon it and respecting employee preferences, according to UKG. It also means companies and employees are treated as the key stakeholders.
Employers with a life-centric focus seek ways to support employees in all facets of their lives. For example, a small digital marketing company called Common Thread Collective with less than 100 employees developed a program called “Tell Me Your Dreams.” The 12-week program helps employees pursue their personal goals, even if they are not related to the company, its business or industry, says Puck.
Puck also pointed to manufacturing company Barry Wehmiller with 15,000 employees as a life-centric employer. According to a video from its CEO, Bob Chapman, the manufacturing company takes steps to recognize and demonstrate that it values its employees and gives consideration to how working at the organization impacts employees’ behavior once they get home.
Satisfied and happy employees are more likely to come home in a better mood, which in turn can help their family life, Chapman says in the video, noting he has used the divorce rate of his workforce as a barometer for measuring employee experience.
As Puck wrapped up his webinar, he advised HR leaders looking to improve EX to take a page from the late author John Steinbeck, who once wrote: “If you understand each other, you will be kind to each other.”