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How to Use Psychology to Increase Your Employee Retention Rate

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What could you do with $25,000? A lot, most likely. Buy new equipment, start a new marketing strategy, hire a ton of interns to get you coffee.

Well guess what? Losing even one recent hire after training can cost your company $25,000, if not way, way more.

Employee tracking software can help, but first you need to understand the psychology behind your employee’s behavior.

Let’s crack open a few brains and see the real psychology behind keeping your employees happy at work, and reducing your turnover costs for good.

What makes employees want to stay?

Like ants, chimpanzees, and elephants, humans are social critters. In situations where we aren’t given an in-group or tribe, we’ll create and self select into them, which explains the existence of subcultures and cliques.

We don’t do well when we’re alone, as evidenced by the horrific impact solitary confinement has on the human brain.

The human desire to be part of a group is so powerful that we love rooting for teams, even when we aren’t personally on them.

Employees don’t want to be all alone, physically or mentally. But if they feel like they’re part of the group? It’s no coincidence that companies that have very set corporate identities, like Google and Apple, have more high-performing employees than other companies. Apple’s employees are playing for Apple’s team—it’s part of their identity, so they play harder.

Remember what I said about employees not wanting to feel physically alone? Employees are happier in open office plans, and 93% of American employees list cubicles as their most hated part of the office.

What makes employees want to leave?

So if employee retention and employee satisfaction come from a workplace that feels like a bonded, appreciated, well-utilized team, what causes the employees to leave?

The opposite of course.

Humans hate feeling unappreciated. Which makes a lot of sense, really.

If people have a need to be part of a larger group, a need that goes back to early humans, being pushed out of a group is a scary thought. And if your work is going unnoticed, if you’re not being appreciated and supported and valued by the group, then that sends a message that your work isn’t actually needed. And, if you’re not needed, your lizard brain is going to start stressing out that the group might kick you out since you’re not offering anything to it.

So it’s understandable that someone who feels unappreciated at work might want to leave before you can kick them out.

People also really dislike shooting in the dark. They want to have open, clear feedback on their work so that they can work more effectively. Yes, even if they seem to gripe about it.

Workplace stats back up these thoughts. According to a study conducted by Officevibe, 63% of employees feel unappreciated, while 69% of employees say they’d work harder if they had better feedback. So what can you do to help?

What changes do you need to make to keep your employees?

If humans love being on teams and hate feeling left out or unnoticed, make them feel part of an engaged team and you’ll have their loyalty, too.

There are a few ways to achieve this:

  • Invest in team-building activities. Take the focus off of hokey workplace lessons on leadership or trying to make Excel sheet fun, and instead invite your team out to have some fun that’s totally unrelated to work, like a concert, a volunteer service day, or a sporting event.
  • Find ways to recognize the contributions of people at work. Support them as part of the team and acknowledge the difference they make. When companies have strong employee recognition systems, 90% of their employees report feeling that they make a difference at work.
  • Don’t just pay lip service, actually use your staff’s unique skills. 81% of employees are happier when they feel their skills are being used at work.
  • Learn to balance feedback and praise. The key is finding each employee’s sweet spot where they feel both guided and appreciated.
  • Management involvement is key—a team can either be helped or hurt by their leader. In one survey, 83% of companies say that management is central to a solid company culture. Make sure that your company’s leadership is on board.

If you want a little extra help recognizing your employees’ accomplishments, try employee recognition software to help you design and maintain an effective method.

Use psychology to bump up your employee retention today

Do you have a plan to hack the human brain and improve your company’s employee retention? If so, tell me about it in the comments below, or tweet me @CapterraHalden. And check out these links to help you on the way:

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About the Author

Halden Ingwersen

Halden Ingwersen writes about HR and eLearning at Capterra. She’s a graduate of Agnes Scott College and a TEDx presenter. You can follow her on Twitter @CapterraHalden, just don’t get her started about her zombie survival plan.

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