How Workplace Culture Can Affect Employee Retention and Impact Growth
Are you still not sure if you should care about culture in your workplace? If you're one of the few still deciding on the importance of improving company culture, here are a few reasons to consider a change immediately: employee retention, attracting top talent, and your ROI.
According to Built-In, 46% of job seekers believe company culture is 'very important' when choosing a company to apply to, and 91% of managers in the U.S. say a candidate's alignment with the company culture is equal to or more important to the bottom line than skills and experience. It's also one of the most common reasons for quitting a job, with those who don't like their current workplace culture being 24% more likely to leave.
Here's the connection between organizational culture and employee retention and how it impacts business growth.
Let's Talk About Workplace Culture
The quality of your workplace culture should never be underestimated. According to the U.S. Bureau of Labor Statistics, about three million Americans quit their job every month. There are a couple of reasons for this:
- Lack of happiness — more than 60% of people are unhappy with their jobs and consider leaving.
- Not feeling valued — more than 65% don't feel recognized or valued at work.
- Too little money — almost 70% of another survey responded that low pay is the primary reason for leaving their job.
- Too little flexibility — in a survey of 800 U.S. workers, 42% of respondents said they would leave their current jobs for more flexible work.
However, when companies own and explain their culture, employees know how to be successful, contribute, and feel more empowered. They're also more likely to remain engaged, helpful, and productive.
Likewise, hiring employees who share the same values as the company leads to lower employee turnover. This is because an employee that fits in with the culture is more likely to stay due to their own happiness with their work and is less likely to cause problems or stress for other workers.
Does a Healthy Culture Lead to Better Employee Retention?
Yes! Two significant factors lead to better performance and retention:
The definition of well-being comes from five elements: purpose, social, financial, community, and physical, according to Gallup and Healthways. Liking what you do, having positive social interactions, supportive work relationships, economic security, and good health contribute to better workplace culture.
Better workplace culture increases loyalty and satisfaction, motivating more engagement and productivity. Happy employees who like what they do are less likely to be vulnerable to common distractions that slow productivity and cost companies as much as $650 billion per year.
How Improving Culture Improves Your ROI
High employee retention and high ROI go hand and hand. Bottom line: happy, engaged, and respected employees are more likely to stay. Lower employee turnover can save a business thousands of dollars in hiring costs like the time it takes to find a good fit, onboarding, training, benefits, etc.
Gallup's research even notes that companies should expect to pay as much as one and a half to two times the salary of the employee they're replacing every time — combine that with several employees throughout the years, and the money adds up quickly.
It's simple. Hiring based on company fit leads to better retention, and better retention means a higher ROI. When you focus on your company culture and the satisfaction of your employees, you can count on them to get the job done and stick around to watch your business grow.
It's expensive to hire new employees and have them leave
According to Gallup, engaged employees are 59% less likely to look for a new job within a year, which is significant considering how expensive it can be to replace current employees every time they leave. Gallup’s research shows that an average salary of just $60,000 can cost companies up to $660,000 to $2.6 million per year to replace. So, a culture of high turnover can severely impact ROI.
Trusting employees and promoting their well-being leads to better cooperation and productivity. Providing benefits and perks leads to more happiness and feeling appreciated. Essentially, when you take care of your employees by keeping the work environment healthy and positive, you can rest assured your employees will take care of you and your business.
Did You Know PEOs Improve Culture and Employee Retention?
For the best results, working with a PEO can improve culture and better employee retention. PEO clients not only gain access to the best practices of company culture and best ways to drive engagement among your teams but also enjoy the following benefits:
- Retirement benefits
- Wide range of PEO-provided services
- HR service offerings by PEOs are priced lower
- PEO clients experience faster growth (compared to other small businesses in the U.S., PEO clients experienced 7% higher employment growth).
Contact us to learn more about other ways we can take your company culture to the next level, so you can focus on growing your business.