How Company Culture Affects Employee Turnover

Deloitte study revealed “82 percent of respondents said that culture is a potential competitive advantage. However, only 28 percent of survey respondents believe they understood their culture well, while just 19 percent believe they had the “right culture.” Company culture affects turnover, and we’ll discuss that in detail below!

Company culture isn’t the easiest thing to measure and track. For this reason, its precise impacts in a company are often unknown. All business owners know the importance of fostering a healthy culture, but studies show that many still struggle to define and build the culture they envision.

“Organizational culture comes about in one of two ways. It’s either decisively defined, nurtured, and protected from the inception of the organization, or — more typically — it comes about haphazardly as a collective sum of the beliefs, experiences, and behaviors of those on the team. Either way, you will have a culture. For better or worse.” – Brent Gleeson

Also, research shows that millennials, in particular, see culture as a critical factor determining where they apply for jobs, how satisfied they are at a job, and ultimately, how long they stay. This has many leaders questioning how company culture affects turnover rates and what they can do to strengthen culture and boost employee retention. We’ll cover some of the most important pieces of company culture that your workplace should focus on to take control of employee turnover.

Flexibility and Work-Life Balance

A significant aspect of company culture is whether it supports employees in creating a comfortable life, or hinders them and causes stress. Decisions around flexibility can often shape your employer brand faster than anything else – especially when workers perceive their jobs as too rigid or negatively impacting life outside of work.

To determine if your company culture provides this critical component, consider the element of choice. How many choices are available to your employees? This may include choice in regards to benefits, remote work, how and where breaks are taken, etc. The more choices employees have, the more they feel supported. Life obstacles are less likely to derail them at work, and they’ll feel a sense of loyalty to a company that helps them create sustainable income and work-life balance without having to compromise one or the other.

Internal Communication

Crafting a culture of open communication isn’t always easy for leaders, as it requires them first to master the skill themselves. But when it comes to struggling employees, a simple conversation can make or break their allegiance to the company — especially if they feel misunderstood and hopeless. Employees that feel overwhelmed are much more likely to leave, become unproductive, or speak negatively about company culture.

To determine if communication is healthy in your culture, consider whether systems are in place for providing and receiving feedback from employees. Find out whether employee collaboration is encouraged, or if day-to-day problems serve as barriers to communication. Ask employees for suggestions on how to eliminate those barriers to get a deeper understanding of their experience.

Management Style

Different managers have different leadership styles, and these can complement or clash with employee preferences. Research shows that 66% of employees who feel unappreciated would leave their workplace, and it jumps to 76% for millennials specifically. One common problem is that managers intend to create a certain culture, but fail to fully embody it (e.g., claiming open communication, but not being available for one-on-one meetings). The most powerful way leaders can create culture is simply by modeling it to the best of their ability. This sets the climate and gives employees a concrete example of the expectations that exist. 

Along with having a management style that aligns with the intended culture, leaders can consider the hiring process itself. Think about whether your hiring style (the questions asked, the environment, etc.) helps to assess cultural fit or not. The hiring process should give candidates a clear glimpse into what working for the company is actually like, especially if you are hiring a remote worker. Similarly, it should include direct questions or exercises that reveal a candidate’s personality and values.

Productivity and Purpose

An engaged team is a productive team. A Gallup poll estimated that billions of dollars are being lost each year in the U.S due to disengaged, unproductive workers. Creating opportunities for career advancement, innovation, and problem-solving helps team members feel that their work matters. Eliminating or automating drudgery tasks frees up your employees to use their skills and find creative solutions.

The reality is: hiring is expensive and time-consuming. According to the Society for Human Resource Management, “the average cost-per-hire for companies is a little more than $4,000, while the average time to fill a position is forty-two days.” By addressing this problem from the inside out, you can forge a company culture that makes high employee turnover a thing of the past.

Final Thoughts

Clearly, company culture has a big impact on not just employee turnover, but employee satisfaction, and overall job performance. At Projections, we believe that you can become an employer of choice, and stay ahead of the curve with effective training for your leaders and supervisors. We understand that a strong company culture will help you connect with your workforce and improve communication. We’d love to provide our 40-years’ worth of expertise to help you develop an involved and focused workforce.

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