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Understanding the Link Between Employee Engagement and Retention
Learn the top employee engagement and retention strategies to make employees feel seen, supported, and uplifted — and actually eager to go to work.
When it comes to keeping employees around, engagement is your fuel — yet many workplaces are running on empty.
A recent Paylocity retention factors study identified employee engagement as the top indicator of employee retention. Meaning that the more engaged an employee is, the more likely they are to stay at their job.
Of course, that also means the inverse is true: The less engaged an employee feels at work, the less likely they are to stay — and that lack of engagement is pretty common.
According to Gallup, only 34% of U.S. full and part-time employees report feeling engaged — on the contrary, they feel more detached from their work and less satisfied than ever.
Why does that matter? In 2021, employee turnover cost organizations across the U.S. over $700 billion. On the flipside, companies with highly engaged workforces were 21% more profitable.
In this article, we’ll explain the link between employee engagement and retention and how your organization can create an employee experience that improves job satisfaction and reduces turnover rates for good.
Key Takeaways
- Employee engagement and retention can dictate an organization’s success. Engaged employees feel a sense of satisfaction, commitment, alignment, appreciation, and belonging, encouraging them to stay put.
- Employee engagement and retention strategies should focus on making employees feel seen, accepted, and encouraged in their roles.
- With the right tools, HR teams can measure and improve employee engagement and even identify disengaged employees before they leave.
How Does Engagement Increase Retention?
Employees have specific wants, needs, and desires that extend beyond the basics of survival. Though this seems basic, organizations with competing priorities tend to overlook it.
To better understand this, let’s look at this from the perspective of Maslow’s Hierarchy of Needs. Most employers offer almost everything at the bottom of the pyramid and provide employees with the core necessities (a physically safe place, a paycheck, etc.). But they stop there.
Employers struggle to meaningfully move up the pyramid, particularly around “esteem, love, and belonging.” They often are strained to provide employees with a deeper sense of commitment, satisfaction, and care, which are the building blocks of true engagement.
But moving up the pyramid and providing these things is exactly what will encourage employees to stay.
When employees are appropriately engaged, they feel a sense of:
- Satisfaction: Engaged employees find their work fulfilling and enjoyable. According to Paylocity’s research, for example, employees who strongly agreed with the statement, “My work is challenging, stimulating, and rewarding,” had a rate of retention of 73%.
- Commitment: Engaged employees feel a sense of loyalty and responsibility toward the organization’s success.
- Alignment: Engaged employees’ personal values and goals align with those of the organization, making them feel that their work is meaningful and impactful.
- Appreciation: Engaged employees feel valued and acknowledged for their contributions.
- Belonging: Engaged employees feel fully accepted at their core, seeing themselves represented in ways that go beyond traditional diversity, equity, and inclusion (DEI) efforts.
How to Improve Retention Through Engagement Initiatives
While creating these feelings for employees might seem a bit abstract compared to providing basic necessities, the right employee engagement strategies make employees feel seen, accepted, and uplifted (and, ultimately, more likely to stick around).
See Employees
Employees are people outside of your office — they’re people with busy lives and competing priorities. To engage them, it’s crucial that employers not only recognize this but do something to support them.
Establish work-life balance
A whopping 82% of employees say they would be more loyal to their employer if they had flexible or remote work options. One reason is that flexible work options give employees autonomy.
Offer employees options like the ability to select and swap their shifts or operate asynchronously (i.e., employees can get their work done on their own time).
Perhaps enforce a strict no-contact policy after a certain time of day (like 5 p.m.) so your staff doesn’t join the 55% of employees who respond to work messages outside of normal hours.
Do away with multitasking
As technology advances, cultivating a true connection between employees and their work becomes harder, says Woodrie Burich, CEO and founder of The Integration Group, in an episode of Paylocity’s HR Mixtape podcast.
“Multitasking not only impacts [employees] cognitively, but emotionally too. It exhausts us,” he said.
To avoid multitasking burnout, encourage employees to set “deep work hours” where they aren’t responsible for answering emails or other messages and can focus on one task at a time. Provide templates or tools (such as calendar apps) that support time-blocking and focused work sessions.
Create time for inner connection
In the podcast, Woodrie also suggests that HR leaders create quiet spaces, even if this might seem counterintuitive.
“Quiet time allows us to think strategically and creatively and foster that inner connection that we have with ourselves in order to connect with others,” he said.
Allot time for employees to become unplugged, even for 30 minutes a day — and separate it from a lunch hour. Or create designated quiet spaces within the workplace, provide access to meditation apps or online resources, and establish a policy that encourages taking short breaks every couple of hours to recharge.
Accept Employees
Plenty of organizations have diversity, equity, inclusion, and accessibility (DEIA) efforts in place, but many programs are only “box-checking” initiatives. Employees still feel unseen or unaccepted.
Going beyond traditional DEIA means creating a culture in which differences are critical to the success of the organization.
“HR leaders should really lean into cultivating organizations that have a bias for and not against difference,” said CEO of DC Global Group Dee Kendrix in an HR Mixtape podcast.
To create this bias for difference, HR should encourage change at several different levels throughout the organization:
- Organization-wide: Create a cross-organizational culture for bias with “spotlight” sections in company communications to highlight diverse, individual achievements. Plus, organize cultural appreciation days where employees can share their heritage, traditions, and histories.
- Manager to direct report: Pew Research shows that 84% of workers who regularly get feedback from their manager say they are extremely or very satisfied. Empower the leaders in your organization to really get to know their teams by encouraging recurring, personalized one-on-ones that are both structured and flexible. This will allow direct reports to both prepare and have the open opportunity to express concerns, questions, etc.
- Employee to employee: Socialization among employees leads to better work performance and engagement. To foster this connection and build community, use an employee communication hub designed for employees to connect with each other in real time through video and messages.
Uplift Employees
Employee engagement and turnover are predicated on how valued an employee feels, too. While lots of organizations think pizza parties and custom swag do the trick, employees want — and deserve — much more.
- Create custom career and learning paths: Lack of advancement opportunities is one of the top reasons employees leave their jobs. Help employees feel committed and engaged at work by creating individual career trajectories that account for their specific skills and goals. And use a learning management system (LMS) to simplify and create engaging development opportunities for every employee, whether in-office or remote.
- Set expectations: A Gallup poll showed that only 45% of employees know what is expected of them at work. Remove confusion and improve engagement by establishing SMART goals (specific, measurable, achievable, relevant, and time-bound) that are tailored to their specific roles and objectives.
- Recognize and reward: Companies with good employee recognition strategies are 48% more likely to have high employee engagement rates. Use software that offers customized employee recognition programs, manages rewards and budgets, and tracks program metrics in real time.
Engage and Retain with Paylocity
While all these strategies are great for boosting engagement and retention, organizations need to understand which employees are disengaged and why — and whether or not their new engagement efforts are working.
Paylocity’s Employee Voice survey tool helps organizations identify disengaged employees before they leave in three simple steps:
- Audit: Create and send automatic and scalable pulse surveys across your organization based on key employee journey milestones.
- Analyze: Use robust dashboards and heatmaps to better understand feedback and filter for deeper insights.
- Act: Generate meaningful insights through Paylocity’s customizable action plans and track them directly within the platform.
Want to learn more? Request a demo of Paylocity today!
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