Engagement vs Retention

by Marla Baum

Employee retention affects everyone at a company. Whether it’s a constant turnover that promotes stagnant work or loyal employees that have outgrown the companyIt’s difficult to ensure that both the company and its employees are always moving in the same direction.

Finding the right talent and keeping them have both become a challenge for companies, especially those in the growing tech sector. Competition is fierce and their the constant anxiety that once you’re lucky enough to find the “perfect fit” how do you make sure that they are happy and won’t leave when a potentially more lucrative offer comes along?

Leading HR at several startups I have always found that the majority of firms focus on the ‘retention rate’ as a core metric of success. But, what does that really mean? Well, simplistically it’s the overall ability of a company to retain its employees and maintain a lower turnover rate. After spending a large part of my career focusing on the ‘retention’ rate I asked myself – is retention/attrition rate really the metric I should focus on; The answer is no. If you are only concentrating on the retention rate you are potentially missing out on some glaring problems underneath the surface that are preventing your company from succeeding.

What I’ve learned is that a”retained” employee does not always mean they are happy or engaged at work. Companies should take into account that there are short-term employees.We have all had colleagues like this but the question to ask is; can you grow your company and deliver on your vision with people who don’t really want to be in your company and are just going through the motions? Colleagues like this create a false positive in a company, they keep your retention rate high, but often have a longer-term impact on your team morale and engagement levels. This is an incredibly high price in any company, especially those in the startup space.

The focus for all companies should not be on retention but rather engagement.  If you have an engaged team, you will have high retention. Low engagement will result in low morale and low retention of high performers (who coincidentally want to be engaged).  Employers need to put their energy toward what impacts retention. Specifically, employee engagement – this is the extent to which someone feels passionate about their job. HR professionals have been hit over the head with the message that engagement is the biggest predictor of retention, more so than the cliché of free food and foosball tables. A recent study by Dale Carnegie found that 71% of employees are not engaged in their work, directly impacting billions of dollars lost due to turnover. 71%! That is a scary number and should make any HR executive or leader wonder “what is my engagement rate”?  Do you know? Not coincidentally, the same study also found that companies with engaged employees outperform those who fall into the 71% by up to 202%. This is a competitive advantage for anyone who embraces it.

In a perfect world every employee would be fully engaged in their job, right? First, let’s acknowledge that is not possible. So how do we increase engagement to the most ideal state or improve it from where it currently is today? It’s not an easy task and one that requires a cadence of attention vs. an antiquated metric.  The way I chose to approach it is with communication and transparency. A management and HR team should always have a good handle on what makes their employees happy, who is feeling disengaged and work with employees to collaborate on their needs. By showing genuine concern, interest and effort in an employee’s satisfaction at work lead to increased engagement. At Freckle, we conduct an internal survey every quarter to gauge employee engagement. Our employees have placed growth and learning at the top of their priority list every single quarter – so this is where we have chosen to focus our efforts.

Retention will never be perfect and will always keep me on my toes. What counts is the effort and consideration you put into your employee’s desires for what gives them energy in the work that they do every day. Focus on what you can control and not a metric that does not speak to the root of the challenge.  In the end, if someone chooses to leave you can sleep soundly at night knowing you’ve done everything you could.

Good luck.

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