Employee Retention and Psychology

One of our previous posts discussed turnover and the significant cost companies incur as a result of employees quitting their jobs. So what can management do to improve employee retention and minimize their turnover costs? A possible solution lies in one of the most famous psychological theories on motivation.

The “Hierarchy of Needs

Back in the 1940’s, a man named Abraham Maslow presented the idea of the “Hierarchy of Needs”. This concept explained how all humans have innate needs and motivations which help steer and dictate human behavior. Maslow utilized the idea of a pyramid to help better explain his theory. The “Hierarchy of Needs” begins at the bottom or base of the pyramid, and as each person achieves or meets that need, they move up each level to the top of the pyramid. For example, the base of the pyramid represents psychological needs. After one’s psychological needs are met, they can move up the pyramid until they reach the top, which is self-actualization.

Why is this Relevant to Employee Retention?

Maslow’s “Hierarchy of Needs” is an example of human motivation, something every human possesses (although you may argue some of your employees are more motivated than others!). Humans are motivated by these needs in many aspects of life – including their work lives. Because these needs are transferrable to the workplace, understanding these needs and motivations can help organizations improve employee retention by better understanding employee wants and needs. Below, we discuss how employers can contribute to each level of an employee’s “Hierarchy of Needs” and improve their rates of employee retention.

Physiological

The physiological portion of the pyramid refers to the human need for food, water, air, clothing, and anything that would be essential for daily life. While a job doesn’t directly solve any of these issues, receiving a paycheck certainly assists with checking off most of the items on this list. Needless to say, if someone has a job, these needs are most likely being met, and therefore, one can move up in the pyramid to the next need.

Safety

After one has established they can feed, clothe, and provide shelter for themselves and their family, an employee is likely concerned about the “safety” portion of the pyramid. Typically, this section refers to personal and financial safety along with concerns about health and other safety nets. In the workplace, employees are going to want to be happy with their pay, benefits, PTO, and any other perks or benefits offered to them by their company. When the safety need is met, employees feel they are able to live a secure life and be somewhat prepared for the unexpected events life throws at us.

Love and Belonging

This next section of the pyramid refers to the basic human need for friendship, intimacy, and familial bonds. While at first glance this may not seem very transferrable, it is actually a very important aspect of the organizational atmosphere.

Employees want a connection at work. They want to form relationships with their coworkers and management, and they want to be able to feel supported. Utilizing two-way communication methods, open door policies and offering frequent feedback are excellent ways to promote this support. Company events and forming a collaborative atmosphere will help employees to form that connection they want to the people they work with and for.

Esteem

After experiencing love and belonging, people become concerned with esteem. Everyone wants to feel valued, accepted, independent and competent. This is where proper training and continuous coaching comes into play. Properly train your employees so they can feel competent and confident in what they do. Give your team feedback. Training isn’t just a one-time thing; give your team feedback as much as possible. They want to know how they’re doing so they can continue to improve or know where improvements need to be made.

Self-Actualization

After meeting all of the previous needs, people reach the top of the pyramid: self-actualization. This occurs when one reaches their highest potential and becomes the best they can be. Give your employees the opportunity to excel and be their best self. Offer opportunities for further education or professional development opportunities. Give them the chance to get more involved with company, and encourage employees to get involved with sponsored charity work or events. Work on succession planning with your team. Plan out measurable goals and outline promotions or compensation accordingly.

In the end, successful employees create successful organizations. Give your employees the tools and opportunities to succeed and success will inevitably befall the company.

So, What?

After the lesson in Psychology, you are probably asking yourself, “why does this matter?”. Ask yourself this: why do people leave their jobs? It is because they’re not satisfied with some aspect(s) of the job. People want to feel fulfilled, and they ultimately want to be happy. Surveys show that employees are 15% more likely to consider quitting if they don’t like their work culture and 11% less likely to stay at their current position if they don’t feel appreciated or recognized.

There will always be turnover, but, if you work on fulfilling the needs of your employees, they will be less likely to leave. Would it be great to be able to offer the best pay and vacation packages to every employee? Yes, I’m sure they’d all love that! However, by coupling what you can offer financially with an obvious dedication to employee wants and needs, you’ll be able to see less turnover, higher employee retention and significant cost savings.

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