The objective of every organization is to attract the right talent and retain them for the longest time possible. We all know it is better to retain talent than to replace them. It is common knowledge that salary is one of the top factors if not the #1 factor in determining employee job satisfaction and the key lever in retaining talent. But it is also the factor that is the most outside of our control making the entire process more complicated.
The million-dollar question then is whether there are other levers that companies can use for the same purpose. While 29.82% of employees as part of Real Research survey have stated that salary is their top priority, they have also stated other factors like teammates, rewards & recognition as well.
Looking closely at all these other parameters reveals a more fundamental factor that is integral to all human-driven systems. That is perceived growth potential. We can try to understand it by observing an analogous system - Stock Market. While the top parameter driving stock price is company performance, it is also the one out of control. But what drives the stock price the most is the perceived future value of the company which can be controlled and tailored by companies.
Employees and Talent similar to shareholders also look for the future potential and giving clear indicators of a strong potential can drive employee satisfaction, more than salary hikes. Sharing a clear view of the employee’s future with the company, exhibiting behaviour that indicates a strong intent towards helping the employee realize the future that has been laid out and building a culture that acknowledges this through company ceremonies and rituals can have a larger impact on employee morale and satisfaction. This could also help companies to retain talent better and obviously can be cost-effective as well.
While most companies think increasing salary will retain talent, there are also studies showing that pay raise may actually make an employee unhappier. A Workwise study found that pay rise to employees getting north of 86,000 USD a year without any increase in job satisfaction or responsibility could make people unhappier. Rather than focusing on just improving the employees pay checks, companies should focus on providing a wholesome experience and improvement in employee experience within the company.
Companies should focus on presenting the big picture to their employees and how they fit in the big picture, how their career growth is not just aligned to the growth of the company but also is integral to the company’s growth. Creating an environment of more accountability and ownership all the while providing the flexibility to handle challenges in their own style can turn out to be more influential than just the pay. These actions build mutual trust and a sense of work-life harmony that are critical in turning an employee into an advocate of the company, a bond that is not broken by short-term pay hikes or a slightly turbulent quarter.