Think pay is what keeps your talent? Think again. While hiring might start with compensation, a culture of belonging, recognition, and growth is what retains them. Learn how making the strategic shift from pay to culture will give you a competitive advantage.
When it comes to hiring and retaining your top talent, we all know pay matters. But how much does it really matter in today's tight job market and tough economic times?
According to a recent study, not that much. When employees were asked for the top reasons for leaving their employers, only 11% cited pay or benefits. Instead, the number one reason people (61%) say they leave their employers is because of a toxic work culture.
While compensation may be the appealing consideration when you offer and onboard a new employee, culture is what keeps them. When it comes to culture, people want to feel valued and recognized, and to have a clear path to growth opportunities. If they don't get any of that, they'll look for it elsewhere: 57% of those who rate their organizational culture poorly say they are actively or will be looking for another job.
With culture at the forefront, company HR leaders need to take a more strategic and thoughtful approach to their talent acquisition and retention initiatives.
"Compensation is no longer the main lever on offer letters. Companies need to take a long, hard look at their retention strategies and focus on what an authentic and positive culture means to each prospect and employee," says Jeremy McGee, President at Radiant Digital.
What does a high-retention culture include?
A high-retention culture for an employee starts by focusing on these three pillars:
- This includes providing an environment where employees feel accepted, included, heard and where they can be their true selves. They feel their leaders listen to them.
- Recognition: Employees know they make contributions, and when they do, they want them noticed and celebrated frequently and authentically—not just in a once-a-year review.
- Growth: Employees want clear pathways for growing, learning and advancing and want their employer to help them get to where they want to go.
When these three pillars are the focus of a high-retention strategy, employers will notice higher engagement, better performance and increased productivity—leading to lower employee turnover.
Pillar 1: How to build a culture of belonging
To build a culture of belonging for employees, companies need to set an example with their communications and behaviors, not just their employee handbook policies. Key steps include:
- Make onboarding relatable—not just informational. This could include providing peer buddies and similar support.
- Train leaders to lead with inclusive practices, such as asking open-ended questions of their employees, initiating and accepting dissenting views, and normalizing different working styles.
- Create connections through regular structured one-to-ones, cross-team collaborative sessions, mentorship opportunities, and brief "coffee" type chats that all work toward relationship building.
- Make belonging measurable by using surveys and safe listening resources to help leaders track whether employees feel included or whether there is a disconnect.
Pillar 2: How to create meaningful recognition
Recognition is what employees seek when they make positive contributions to the workforce. But it doesn't work when it's just once a year during their review. It needs to be specific, more frequent and tied to certain behaviors. Several ways to create meaningful recognition include:
- Encourage communication of "small wins" such as acknowledging achievements in front of peers in team meetings or in internal communications.
- Diversify moments through using peer-to-peer shout-outs, manager-led feedback, weekly one-to-ones, and spot rewards for exceptional contributions.
- Make it timely and specific, which is more motivating than during the annual review. Example to tell your employee, "Thanks for how you handled the communication with XYZ client—your tone and guidance during that issue provided clarity and calmness"…
- Tie recognition to their development and use praise-type moments to reinforce performance and growth.
Pillar 3: How to build growth opportunities into your culture
Offering your employees growth opportunities isn't just about telling them to go through catalogs and make choices or having them meet certain hours of continuing education. It's clear pathways and everyday support:
- Map career trajectories with clear roles and skills needed to advance.
- Combine structured programs with informal learning and mentorship to accelerate development.
- Give employees time for development and make learning outcomes visible in promotions and projects.
- Encourage lateral moves and short-term rotations to broaden skills and reduce stagnation.
Sidenote: How managers impact culture
Part of the work culture that can lead to the most toxicity is how managers interact with their employees. According to a recent survey, 58% of employees said they quit their job because of their manager's management style.
How can you turn that around and help your managers develop and recognize their employees more positively?
- Help your managers with their coaching skills and identify problems so they can focus on their strengths and needs.
- Teach them to give frequent and actionable feedback.
- Set expectations to spend meaningful time on development and culture-building.
Where to start: Culture playbook
Changing your culture won't happen overnight. Here are some steps to help you get started in a positive direction:
Step 1: Get employee feedback through surveys to identify their biggest drivers of dissatisfaction (e.g., their manager, a lack of recognition, etc.).
Step 2: Mobilize and prioritize recognition through clearer communication and manager initiatives that show immediate commitment.
Step 3: Build a roadmap that uses feedback to design short- and long-term changes, including career pathways, inclusive practices, and recognition systems.
Step 4: Measure and track engagement and retention, and refine accordingly.
End goal: Higher retention + improved performance = business profitability
Let's face it, improving retention is a critical factor in business profitability. Replacing employees can be expensive and time-consuming, from the costs of the hiring process and onboarding to the loss of knowledge. So ultimately, improving culture would be a win-win for your business. It makes your employees happy, so they stay and help your business grow!
"Bottom line: When you build an open, fair, positive human culture, your people will stick around!" concludes Jeremy McGee, President at Radiant Digital.