Decoding the Employee Experience: Top Retention Factors

Why does an employee stay with their employer? 

In the last few years, businesses have become increasingly aware of the impact employee experience has on retention. From “Quiet Quitting” to “The Great Resignation,” employees are not afraid to show their dissatisfaction when companies fall short of expectations. Today, even in an uncertain economy, many industries continue to encounter labor shortages and high turnover. 

To help organizations stem the tide of turnover, Paylocity evaluated common employee survey questions to determine what drives retention. These insights can help organizations identify and correct employee experience weaknesses so that workers want to stay longer.

In this article, we’ll discuss some of our conclusions and unpack three retention drivers to understand how they correspond to creating a positive employee experience.  

Why Employees Stay with Their Employer

Retention is just one way to look at the efficacy of your employee experience efforts. A well-rounded employee feedback program will provide insights into multiple drivers that contribute to a successful experience for both workers and employers.

Let’s consider how these top three drivers impact not only retention but also the overall health and resilience of your workforce.

1. Engagement

 When work is engaging, it is rewarding beyond monetary compensation. When work is challenging and stimulating, it can allow employees to operate in what psychologists call a “flow state,” which has been shown to be a highly rewarding experience. 

In the U.S. and Canada, 52% of workers do not feel engaged. In terms of retention, this puts half the workforce at higher risk of leaving. By measuring and monitoring employee engagement, you can determine if it is a weak spot in your company’s retention strategy. 

The fact that engagement ranks highly in our study confirms today’s modern workforce is looking for more than a paycheck. When employees feel personally satisfied from doing their work well, they are intrinsically motivated to do good work. This is a win-win for the employee and employer.

Measuring job satisfaction has long been a staple of employee surveys. Measuring whether employees find their work interesting and fulfilling offers a deeper insight into how invested they are in contributing to your organization’s success in the long term. 

2. Empowerment 

A survey of more than 1,200 working adults found 13% of employees in the U.S. do not feel appreciated by their managers, with 15% feeling underappreciated by the wider company they work for. 

It’s an old adage: People don’t leave jobs, they leave managers. But measuring if employees feel their voices are heard and have impact gets to the heart of the matter. Employees who feel empowered often have other powerful reasons to stay with their current employer, such as:

• Opportunities to learn new skills and take on more responsibilities, potentially resulting in career advancement or an increase in pay.
• Reduced stress and more room to innovate without fear of failure.

Of course, there are plenty of benefits for leaders who empower their people — increased creativity and productivity, to name just two. When we consider how empowerment impacts retention, we have another win-win situation.

Learn More: 4 Ways to Empower Employees

3. Enablement

In light of our increased reliance on technology to do work effectively, it makes sense employees want to have the right tools for the job. We’ve also become increasingly aware how important it is to support employees’ mental health and provide an inclusive workplace.

While feeling engaged and empowered are pivotal aspects of employee experience that predict retention, we also need to ensure we enable employees to be successful. If feedback data reveals employees do not feel they have the resources they need, the next step is to find out what they’re missing and address it before they decide to leave.

The Future of Employee Experience

Before implementing a strategy to improve retention, organizations need to first assess where the employee experience is falling short. Then, you have to decide what to do about it.

We used insights from this study to inform and optimize Employee Voice, a tool that not only collects and analyzes employee sentiment data, but also provides recommendations to act on employee feedback at scale. Because Employee Voice is integrated into the full suite of Paylocity software, the system can guide HR and managers to improve opportunity areas and track progress across the employee journey — directly in the platform.

Our research indicates several key areas of the employee experience that influence retention, which can help HR teams and organizations prioritize their efforts. Put simply, engaged, empowered, and enabled employees are inclined to stay.  

Appendix A  

We analyzed predictors of retention using survival models. A survival model is a perfectly suited approach for this type of question. Survival models were originally developed by medical researchers to identify what predicts patients’ survival rates, hence the name. Today, they are still called “survival” models, but can be used any time we want to study what predicts whether an event will occur.   

Survival models are ideal here for a few reasons. First, they solve the issue that at the time of analysis some participants will still be employed. For these employees, how long they will stay at their place of work is not yet known and these “missing values” would cause an issue for other statistical models. Survival models also allow us to control for multiple variables, similar to a classic multiple regression model. Additionally, they provide easily interpretable results — for any predictor we evaluate we can quantify concisely how it changes the probability of an employee leaving the company. This is especially valuable because when statistical results are easier to interpret, they are easier to act on.