The 5 C’s of Employee Retention

One of my favorite things to do is browse Merriam-Webster’s Words of the Year. In 2023, the word of the year was authentic, a familiar term that received a high volume of searches. In a world increasingly influenced by AI, deepfakes and disingenuous social media posts, our society is more vigilant than ever, craving authenticity and truth. Authenticity resonates deeply not just in our personal lives but also in our professional environments. In fact, fostering an authentic workplace culture is closely tied to one of the biggest challenges organizations face today: employee retention.

To explore this further, I have asked former nonprofit executive and fellow Fuqua School of Business alum, John Troy, to share some tips to help you improve employee retention. John is the founder of WorkTogether Talent Consulting, a talent advisor and workforce solutions firm in the social impact sector. And you guessed it, authenticity is at the heart of all his tips.

You’ve likely heard that it’s cheaper to keep a current customer than it is to get a new one. The same is true for employees. The Society for Human Resources Management (SHRM) estimates that replacing an employee can add up to as much as 60 percent of their annual salary. Additionally, total turnover costs range from 90 to 200 percent of an employee’s annual salary.

More simply, hiring new employees is costly. Organizations must search for the right candidates, go through a selection process and spend resources onboarding new hires. These expenses, coupled with lost productivity, negatively impact both the bottom line and a social impact organization’s ability to achieve results toward its mission. The best strategy for all organizations, especially mission-driven organizations focused on social impact, is to hire the right candidates for a role and retain them as long as possible.

Invest in Your Employees

According to the U.S. Census Bureau, just over 37 percent of adults in the United States hold a bachelor’s degree or higher, representing a significant increase over the last several decades. However, hiring quality people isn’t always easy, especially in today’s competitive market in which high-quality jobseekers hold considerable power in the hiring relationship. The best candidates have the upper hand and can shop for the right position with the right organization. Additionally, those who find themselves unhappy can often find another position.

The best way to ensure you retain top talent in your social impact organization (and avoid that costly next hiring process!) is to invest in your employees. You can invest by focusing on the five C’s of employee retention: Compensate, Commend, Challenge, Career and Culture. Below is a broad overview of each of these areas and actionable steps you can take to reduce your turnover rate and keep your best employees.

Compensate

When employees take on meaningful roles that lead to incredible, positive social impact, we typically assume they did not take the position for the money and downplay the importance of compensation. The best employees indeed find their motivation in the mission of their work, but they also want and need a livable wage that rewards them for the quality of their work and their level of responsibility. After all, savvy jobseekers know that in today’s market they don’t need to choose between mission-driven work and a decent paycheck?—?they can have both!

Moreover, the trend toward salary transparency has further empowered employees, making it crucial for organizations to offer competitive and fair compensation. Direct compensation, however, is not the only form of compensation that matters to employees; indirect compensation also plays a role in the entire package you offer new hires. Some forms of indirect compensation cost money, and others do not. In either case, you can create a compensation package that contributes to why they love where they work, making them far less likely to think about going elsewhere.

Examples of indirect compensation you can leverage to invest in your team include:

• Flexible work hours, such as four 10-hour days or the ability to begin the workday at different times
• Allow employees to work from home more frequently or entirely remotely
• Free or discounted parking, if applicable to your organization
• Medical and dental insurance
• Retirement plan, retirement matching
• Generous paid-time-off/holidays (giving people their birthday off is always a favorite!)
• Gym membership or discount
• Tuition or student loan assistance
• Childcare
• Home office or cell phone stipend/reimbursement

Ultimately, it’s better to spend the time and money upfront creating an incredible compensation package that keeps your best employees instead of spending resources to search for new employees with unknown track records.

Commend

The mission-driven work of nonprofits and social enterprises keeps people focused on reaching organizational goals and truly making an impact within a community. However, sometimes managers and supervisors forget about staff appreciation as they strive to ensure their team completes work quickly and effectively.

New York Times bestselling author, Dr. Gary Chapman, has written extensively about love and relationships, including relationships in the workplace. In his book, The 5 Languages of Appreciation in the Workplace, Chapman shares that employee motivation heavily depends on the extent to which a team member feels appreciated at work. This isn’t a new idea, but Chapman takes his argument to the next level?—?employees feel appreciated in different ways.

According to Chapman, the five languages of appreciation are:

• Words of Affirmation. Some employees feel appreciated most when they receive praise. It doesn’t need to be excessive but should be sincere. Offering a “well done” often suffices, but any words that affirm a team member’s positive qualities and contributions will do.
• Quality Time. Another way some employees feel appreciated is when senior leaders give them quality time. When you take the time to sit down and ask them how it’s going, they feel valued.
• Acts of Service. Another great way to show you value your employees is by chipping in or providing resources to help them get their work done. Actions speak louder than words, and offering a helping hand promotes a team environment and shows employees that you care.
• Tangible Gifts. For some team members, a small token of your appreciation can go a long way. Depending on the situation, you can offer gifts to employees in various price ranges to show appreciation. Whether a gift card, organization swag or a cash bonus, for some of your employees these tangible gifts are what will truly show them that you value them and their contributions to the team.
• Physical Touch. Chapman’s final language of appreciation, physical touch, is tricky in the workplace. The most important thing to remember is that what is comfortable physical touch for you might not be comfortable for your team member. Touching that typically affirms the team member without raising concern includes an extended handshake, a literal pat on the back, a high five or a fist bump.

Ultimately, you need to know your team members and find out what makes them feel most appreciated. When you take the time to learn how to communicate appreciation and commend them in an individualized way, you will notice increased employee retention.

Challenge

After working for an organization for months or years, many team members become comfortable in their positions. The best employees are always looking for a new challenge because they want to learn and grow. When team members get bored and fall into a routine, they start looking for new jobs. When I was an executive director at Education Pioneers, we learned that assigning stretch work projects increased employee engagement while providing team members an opportunity to develop new skills.

Here’s the idea: assign team members projects that are just beyond their current capabilities. As they tackle new challenges, they become more engaged. Additionally, they learn new skills they can apply to future projects, ultimately advancing their career. Most importantly, this reduces their need to look elsewhere for opportunities for professional growth, increasing your employee retention.

Career

Hiring top talent often involves finding ambitious employees willing to engage in the hard work it takes to reach organizational goals. However, ambitious people also want to climb the ladder because advancing their careers comes with more responsibility, influence and compensation. You need to show top talent the pathway to advancement within your organization. If you don’t make it clear that advancement opportunities exist and show them the steps they need to take, they will look to other organizations to advance their career.

The easiest way to begin this pathway is to ask your team members about their short-term and long-term goals. What kind of work do they want to do in one year? In two years? In five years? Use their answers to work with them to develop a game plan to build the skills and background necessary to reach each goal. Take the time to revisit their plan and help them stay on track. As time progresses, you’ll often find you have prepared a team member for internal promotion and avoided spending money searching, hiring and onboarding a new employee.

However, you should be prepared that your employee might tell you they want to work at another organization in a few years. Don’t let this deter you from helping them meet their goals; be happy you know their plans ahead of time, so you won’t be shocked if they leave after a few years. When you work with them to help them advance their career, you will reap the benefits of having a more engaged employee. Additionally, other team members will appreciate your efforts, and it will likely result in greater employee retention when people see how much you care about your team.

Culture

Organizational culture plays a large role in employee retention, primarily because of its relationship to employee engagement. Organizations with a strong culture have employees who are engaged and enjoy coming to work. The research is clear?—?engaged employees are far less likely to look for different jobs. In fact, a Gallup Poll found that engaged employees are 59 percent less likely to search for a job with a new organization over the next 12 months.

The staples of a strong organizational culture focus on nurturing employees’ minds, bodies and souls. However, culture varies among organizations, making it important for employers to define their culture and hire new team members accordingly. For some organizations, their organizational culture is part of their brand. Strong cultures often equate to strong, positive employee brands?—?making it easier for an organization to cut through all the noise in the talent marketplace and hire the best people who are a right fit for their teams.

Large organizations in all sectors are full of examples of programs and policies that help define and brand a strong organizational culture. For example, Google is one of several companies that encourages tired and burned-out employees to take a power nap. They have a nap area with individual pods where employees can catch some much-needed zzz’s during the workday.

Diversity and inclusion, or lack thereof, also influences an organization’s culture and can greatly impact employee retention. Leaders of color, for example, will often look for a new job when they don’t feel included at an organization. Even team members who are not from traditionally marginalized communities often prefer and seek out diverse workplaces to join. Research shows that strong teams are diverse, equitable and inclusive; this is especially important in the social impact sector, given the diversity of people and causes we serve. A diverse team that gives everyone a voice benefits those we serve who also have diverse backgrounds.

TBH (the new acronym for “to be honest” now recognized by Merriam-Webster), it is a myth that passion alone is enough for social sector employees to survive; nonprofits need to view employees as their greatest resource and treat them accordingly. If you have successful techniques you’ve used in your nonprofit or social enterprise, we’d love to hear them.