Purpose Over Pay: Why Employees Stay

Everything we do in HR is about recruiting and retaining talent. Whether we’re talking about rewarding employees for a job well done or providing relevant training to help employees advance and progress, our aim is clear. While we want to engage, motivate, and inspire our employees to perform, we also put these measures in place to ensure they stay put in the long-run.

Staff retention is regarded by some as HR’s biggest issue. No matter where you are or what industry you’re in, you’ll be making strides to offer a great employee experience so you can keep tight hold of your best performing talent. But what is the real key to employee retention? Why do employees choose to stay when they can jump ship?

Recent research reveals that above all else — including pay — employees remain with companies when they align with the company’s purpose. When employees understand what their company stands for, they are more likely to stand with that company — and they are more likely to go the extra mile to further that purpose. Below, we discuss the ongoing war for talent, what companies are doing to retain their employees, and explore the key to employee retention and how to really engage and align employees with company purpose.

What exactly is “company purpose?”

Before we explore how and why company purpose is a great tool for employee retention, we need to look at what company purpose is.

What exactly is "company purpose," anyway?
What exactly is “company purpose,” anyway?

Put simply, company purpose is the reason why an organization exists — what it stands for and where it is going. Company purpose guides each and every strategic business decision. According to the Harvard Business Review, company purpose needs to be positive and about far more than financial gain.

Robert E. Quinn and Anjan V. Thakor, authors of “Creating a Purpose-Driven Organization” state,

“A higher purpose is not about economic exchanges. It reflects something more aspirational. It explains how the people involved with an organisation are making a difference, gives them a sense of meaning, and draws their support.”

The War for Talent

The war for talent is real, and it doesn’t look like it’s going to subside any time soon. It’s a worldwide problem, with both the US and the UK experiencing record-low rates of unemployment. These low rates mean top-performing employees now have the luxury of choice — do they stick with their current company, or do they take a chance on another? In such competitive times, high staff turnover is something organizations understandably wish to avoid, not only because it can be costly, but because of the resulting loss in productivity as the new hire gets up-to-speed.

3 Creative Ways to Retain Employees

When it comes to retention methods, there are several creative strategies you can implement. Modern companies are stepping up their game, particularly in the tech industry, where tech giants such as Google, Facebook, and Amazon have the resources and reputations to attract the best and brightest.

Ensure your training and development is tailored to your employees' needs to provide an efficient onboarding process.
Ensure your training and development is tailored to your employees’ needs to provide an efficient onboarding process.

1. Offer Carefully-Tailored Training and Development

Some companies are opting to retain employees through carefully-tailored training and development programs — Gallup has shown millennials want jobs with development opportunities. 

Similarly, Southampton FC prizes training and development as a means to retain employees. Since this football club rose to the Premier League and its management team launched “The Southampton Way,” the club set values to drive development. They ultimately saw an improvement in staff turnover from 16% to 9%.

2. Allow for Flexible Scheduling

Other companies see flexibility as the key to employee retention, understanding that greater flexibility demonstrates a higher level of trust in your employees, while allowing them to tailor a job or a working pattern that works for them and their lifestyle. 

Work from home options are among the most popular benefits employees look for when finding a new job.
Work from home options are among the most popular benefits employees look for when finding a new job.

Allowing for greater flexibility means companies can retain employees they might otherwise have to let go — for example, an employee who has to relocate due to family commitments. This is something Simon Haighton-Williams, CEO of Adaptavist, is well aware of; his company operates to retain their best people:

“We try to avoid gimmicks and instead focus on honesty, trust, and having an adult relationship with people. In practice, this means [providing] a very flexible work environment that’s personalized to suit each person and the team they work in,” says Haighton-Williams.

Our outcome-focused management style means that we concentrate on the end result and how we get there, rather than enforcing a prescribed number of hours in a day. We strive to empower our employees to be creative in the way they approach their roles and their work, [and] this means that people want to stay with us.”

3. Focus on Mental Wellbeing

Other companies decide to focus on mental wellbeing as a means of retaining employees. Mental wellbeing is an issue that has gained significant attention, particularly following an announcement by the World Health Organization (WHO) that confirmed employee burnout as a legitimate diagnosis

Many companies overlook the importance of mental wellbeing when reviewing their benefits packages.
Many companies overlook the importance of mental wellbeing when reviewing their benefits packages.

Havas, a marketing and communications company, went as far as setting up a wellness lounge in January 2019, as part of its ongoing Equalise Wellbeing Programme. This lounge is technology-free, giving employees a mental health sanctuary where they can relax, recharge, and unwind at any point throughout the day. Havas has seen incredible results, stating 96.4% of employees who took part in the program remained with the company.

The Secret to Employee Retention

People Insight recently conducted a multiple linear regression analysis to uncover the secret to employee retention. The regression used more than 4,000 responses across 130,000 data points and looked at what employee engagement factors had the greatest effect on the statement, “I’d still like to be working here in two years’ time.” 

There's a critical step to employee retention that most businesses ignore.
There’s a critical step to employee retention that most businesses ignore.

This employee retention study found that the number one reason employees stay with companies relates to company purpose — employees are looking for meaning and fulfillment from their work. They stand by organizations that stand for something and empower their employees to advance this purpose. 

Though it might at first sound surprising that purpose means more to employees than pay, this study is backed up by other sources. For example, Harvard Business Review once claimed 90% of employees are willing to earn less to do more meaningful work. Furthermore, a 2016 Cone Communications study revealed 75% of millennials would take a pay cut for the opportunity to work for a socially responsible company.

As Graham Kenny of HBR says:

“[Purpose] is what we’re doing for someone else. And it’s motivational because it connects with the heart as well as the head […] it’s the philosophical heartbeat.”

5 Ways to Engage Employees with Purpose

So, now we’re armed with this information, how can we use it to improve our retention rates? The first step is to have a clear, simple, and meaningful company purpose. The second step is to communicate it. Ensure all employees are aware of your company’s purpose and how they can support it. Show them how their daily efforts play an important role in furthering this purpose. This will help them engage with the purpose while making them feel a part of a larger team with a crystal clear vision. Here are a few more ways you can communicate your company’s purpose:

Leadership needs to buy in to your company's purpose, otherwise your message will fall flat.
Leadership needs to buy in to your company’s purpose, otherwise your message will fall flat.

1. Don’t Forget the Importance of Authentic Leadership

A clear, meaningful company purpose doesn’t mean much unless your company’s leaders reinforce it. Leaders need to use company purpose to drive their choices and business decisions. When employees see leaders are behind your company’s purpose, they will realize its importance and rally behind it, too.

2. Use the Power of Storytelling

No matter how practical we are, we respond more to stories than to facts and figures. When we hear stories, we can better understand messages and meanings. When purpose is provided in the form of a story, people remember it in a far more meaningful way. To communicate your company’s purpose and get employees engaged with it, use the power of storytelling. Provide real-life examples to help harness a real connection. As an example, you can look to Innocent Smoothies’ story.

3. Update Employees on Your Company’s Purpose and Its Progress

If you want to engage your employees with your company’s purpose, you can’t just communicate it once and draw a line under it. Purpose needs to be regularly and openly discussed. Keep employees informed of any updates, progress, and challenges. Be transparent and keep avenues of communication open — this will encourage your employees to take part and to care.

Your company's purpose should be top-of-mind when recruiting.
Your company’s purpose should be top-of-mind when recruiting.

4. Remember Your Company’s Purpose When Recruiting

Your company’s purpose needs to guide every decision you make, beginning with recruitment. Communicate company purpose throughout the recruitment process. Make prospective employees aware of it and tailor your recruitment process to attract those who are motivated by your particular purpose. No matter how skilled an employee is, if you hire someone who isn’t motivated or inspired by your company’s purpose, they won’t be part of your team for long.

As Matt Weston, Managing Director of Robert Half UK, says:

“During the recruitment process, there are several opportunities to communicate the purpose of the company to potential new hires — during the interview, in the job description, and looking soft-skills you want. However, this framing of the purpose must continue through the onboarding process or beyond.”

5. Reward Employees Who Work for Your Company’s Purpose

Finally, you should weave company purpose into your reward and recognition programs. For example, companies should reward behavior that directly supports the company’s purpose or drives it forward. Doing so will keep the company’s purpose alive and fresh in the minds of your employees. It will also excite and incentivize employees to support the purpose. In this way, the employees remaining at your company and the ones who excel will be genuine spokespeople for your company and its purpose. They will be the ones who ensure you succeed and the ones who will stick around to give your company a competitive edge.

Carolyn Nevitte is HR Director at People Insight, a company that helps organizations measure and improve the employee experience through employee surveys, 360-degree feedback, and expert consulting.