My latest article in Forbes is about letting go of the false notion that we can keep good people just by paying them more.
In January, MIT Sloan School of Business released the results of an exhaustive study of the reasons why a record number of people quit their jobs in 2021, a time often referred to as the Great Resignation—or as I like to call it, the Great Reconsideration. Despite the business media and C-suite leaders claiming low wages are the culprit, it turns out that the top contributor to employee attrition is, “a toxic work environment.” In fact, compensation was 16th on the list of reasons why people are leaving, far below other important organizational culture factors such as “job insecurity and reorganization” (second on the list) and “failure to recognize employee performance” (fourth).
Years before the pandemic, we began asking participants in our leadership training programs why they stick around instead of heading off to find another job. Their reasons are myriad: Many talked about liking their work, their colleagues or both. Others mentioned they didn’t want to move, needing the health insurance, appreciating the growth opportunities offered by their current employer or the fear that they might have to start over in their career if they left. Very few mentioned compensation as their primary reason for staying.
So, the point is, raising wages isn’t the magic bullet that will prevent your best and brightest employees from leaving. Instead, if retaining employees is the goal, then organizational leaders—who I call “culture creators”—should take a hard look at themselves and their companies by asking these key questions.
1. Are you respectful?
Toxic work cultures are defined as those that fail to promote diversity, equity and inclusion, where workers feel disrespected and unethical behavior is tolerated or even encouraged. While every organization has some level of disrespectful behavior, respectful leaders and cultures are those that value and reward respectful behavior and civility and are on the lookout for micro-aggressions and unethical behaviors, nipping them in the bud before they grow into bigger problems.
Respectful cultures are those where everyone treats everyone else not only by following the Golden Rule but also in keeping with the Platinum Rule: Do unto others as they would have you do unto them.
2. Are you promoting psychological safety?
Recent studies examining why some teams are effective while others aren’t, including a major study at Google called “Project Aristotle,” indicate that psychological safety is a key success factor in organizations. In essence, a psychologically safe culture is one where employees are comfortable taking interpersonal risks, such as voicing an unpopular opinion without fear of retaliation or being labeled as disruptive or “not a team player.”
Leaders who encourage and listen to diverse perspectives and opinions, who clamp down on negative labeling and ensure that dialogues—even about controversial topics—are respectful are more likely to have teams with positive business outcomes and lower conflict and turnover.
3. Are you being open and honest?
Leaders who typically withhold important information, or sugarcoat bad news, are often considered untrustworthy. This behavior makes it that much harder for their colleagues, who will be second-guessing themselves, seeking out other sources and wondering if the assumptions they’re operating within are valid.
This is an extraordinary waste of time for everyone. While no one is saying that leaders need to tell everyone everything that’s going on, those who are willing to “declare reality” thoughtfully, even if it’s bad news, are more likely to rally the troops than drive them away.
4. Are you looking for diamonds in the rough?
It’s a leader’s job to point out mistakes and correct them. But it’s equally important to, as Ken Blanchard says, “catch people doing something right.” This means pointing out and acknowledging people for the contributions they are making, not just for the mistakes they’ve made. I call this “looking for diamonds in the rough,” and I once coached a senior manager on the concept who then asked me, “Why should I praise people for just doing their jobs?” It was everything I could do to not bop him upside his head (I didn’t) while I explained.
Most people, without being acknowledged occasionally for good performance, will eventually become demotivated and perform poorly, then end up thinking that nothing will please their boss. Those folks, I added, won’t stick around very long. I’m sad to say he still didn’t get it, even when I pointed out how his failure to praise was related to the high turnover of his team. Do yourself and your team a solid: Genuinely acknowledge them for their good performance now and then.
5. Are you kind?
Years ago, we started looking at what we call a “too nice” culture, where leaders are uncomfortable giving any negative feedback, where there’s a veneer of niceness and friendliness that seems insincere, and where people feel blindsided when they’re put on a Performance Improvement Plan (PIP) or let go without warning. But while having a “too nice” culture can be severely problematic, in today’s work world being kind, decent and civil to people always pays dividends.
Being kind means being clear with expectations rather than assuming people know what you want; it means first assuming positive intent before investigating a problem or complaint and cutting people slack when work or life seems to be overwhelming them (as they have for so many of us during the pandemic).
Sure, you could raise wages in the hope that some of your best and brightest will stay with your organization. And that might work in a few instances. But you’re more likely to retain your employees and save yourself some money if you take a candid look at your culture and root out toxicity first before you start bumping up salaries.
