Factors that Influence Employee Retention in a Large Organization
The following contribution comes from the People Thrive portal, which defines itself as follows: Our Mission
We help managers and team members build and maintain work cultures that drive sustainable high performance, while also generating a positive impact on the well-being and growth of managers, team members, and the communities they serve.
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We aspire to a world where all leaders and work cultures generate a positive and consistent impact on the growth and well-being of team members.
This is authored by Matt Tenney, who has been helping organizations develop leaders who improve employee engagement and performance since 2012. He is the author of three books on leadership, including the groundbreaking and acclaimed book «Inspire Greatness: How to Motivate Employees with a Simple, Repeatable, Scalable Process.»
Matt’s ideas have been featured in major media outlets, and his clients include numerous national associations and Fortune 500 companies.
He is frequently invited to deliver keynote addresses at conferences and leadership meetings, and is known for offering valuable and practical insights in a memorable and deeply inspiring way.
The increased employee turnover we have witnessed over the past year and a half has led many organizations to wonder how they will win the battle for talent.
The Robert Half Job Optimism Survey, which analyzes workers’ perceptions of their current and future career prospects, revealed that, of the more than 2,400 professionals surveyed, 41% are currently seeking a new position.
Clearly, the COVID-19 pandemic has affected many workers’ attitudes toward their organizations and work in general.
While many employers may be determined to cling to pre-pandemic tactics to combat employee turnover, these outdated methods are ill-suited to the evolving needs of workers in recent years and fail to consider the factors driving employees to seek better opportunities.
Several factors influence employee retention.
The primary driver of mass turnover may vary depending on the study, but workers in the United States have cited several common factors that prompt them to resign.
Factors influencing employee retention in a large organization include culture, leadership, development and advancement opportunities, flexibility, inclusivity, recognition, purposeful work, and compensation. Implementing strategies that address these factors can be challenging for large organizations.
Designing retention strategies that address these factors can be challenging for any organization, but it is particularly difficult for large ones, where engagement can be more challenging and employees often feel easily replaceable.
In this article, we will examine these factors and how they influence retention.
Culture
According to MIT Sloan, corporate culture is a much more reliable predictor of industry-adjusted turnover than compensation.
Compared to the predictive power of compensation, a toxic corporate culture is 10.4 times more powerful than compensation in predicting a company’s turnover rate compared to its industry.
A lack of promotion of diversity, equity, and inclusion, disrespect, and unethical behavior are considered key factors contributing to the creation of toxic cultures. Companies that strive to build a strong organizational culture, hire staff who align with the company culture, and have leadership that consistently represents the culture and core values in a positive way will achieve greater employee retention.
Leadership
The length of an employee’s tenure is primarily determined by their relationship with their direct manager, according to a 25-year Gallup study. Between 50% and 70% of an employee’s perception of their work environment is linked to management’s actions and behaviors.
Daily interactions with management significantly impact the employee experience and can determine the likelihood of an employee remaining in their position.
Ensuring that leaders at all levels of the organization exemplify core values and foster trusting relationships with staff is a key component of any organization’s retention strategy and can help companies avoid toxic cultures, a major driver of employee turnover.
Development and Growth Opportunities
Employees who feel they are growing professionally are more likely to be engaged in their work and stay with the company. To retain talented employees, it is essential to let them know they have a future with the organization and that management is committed to their development.
Offering learning opportunities, whether through in-person or online training, tuition reimbursement, leadership development, job redefinition, and career plans are just some of the ways companies can leverage professional development opportunities to improve employee retention.
Even offering job changes within the organization can help retain employees dissatisfied with their current roles. Giving employees the opportunity to grow in a different position demonstrates that the organization invests in them and is committed to their development.
Flexibility
As the pandemic appears to be subsiding, some employers are beginning to ask their employees to return to the office, and these employees are not happy about the situation. Many employees who have been able to work from home for the past two years don’t understand why they should give up that option, along with the improved work-life balance and reduced stress levels it offers.
Offering flexibility (when possible) in work schedules is the first step in providing employees with the tools they need to work autonomously, another important factor in fostering engagement and retention.
This flexibility provides a better work-life balance, although it’s important to prevent work time from encroaching on personal life, and it can help reduce the stress associated with long commutes and toxic work environments.
Inclusion
According to Trish Foster, executive director of the Center for Women and Business,
employees are shaped by their backgrounds, culture, experiences, and personalities.
Foster states: “Organizations that integrate people with different thinking styles—analytical, conceptual, creative, or meticulous—can generate the energy needed to drive new ideas and productivity.”
Inclusion helps foster a culture of belonging among employees, which is fundamental for building trust, commitment, and a positive work experience. The quality of the work experience has a huge impact on employee retention, and inclusion is essential for creating a positive experience for all employees.
Recognition
Recognition should always be part of the feedback provided by leaders, as employees are motivated by it. When their contributions are not recognized, this lack of recognition can lead them to look for another job.
Recognition is a powerful tool for fostering commitment because it satisfies a basic human need of both the employee and the manager. Praise can be a powerful motivator.
Psychology tells us that praise is the primary source of positive reinforcement, the process of modifying behavior to achieve a more positive outcome. Leaders can use praise to recognize and reinforce positive employee behavior.
Purposeful Work
Those who work in large organizations can feel like mere cogs in a machine if they don’t find meaning in their work or perceive its impact. Employers can help their employees fulfill this need for purposeful work by connecting it to the company’s mission and vision.
A Great Place to Work study has shown that these three questions
can predict employee turnover, regardless of the worker’s age or job type:
Are you proud of your workplace?
Do you find meaning in your work?
Do you enjoy your work?
By ensuring that employees do meaningful work, can see the impact of their work, and do so in a positive and supportive environment where they feel valued, the foundation is laid for high engagement and high employee retention.
Compensation
While other factors certainly contribute to the current increase in employee turnover, compensation, including salaries and benefits, remains a key factor, and equitable compensation continues to be a challenge for many organizations.
An organization that does not offer decent (and equitable) salaries and benefits that are attractive to prospective employees will struggle to recruit talent.
Organizations may think that fair and equitable compensation is not economically viable. However, when considering the costs associated with employee turnover, and that inadequate compensation is a major contributing factor, it becomes clear that maintaining strong profitability will be difficult if an organization cannot recruit and retain talented employees due to a lack of competitive compensation.
Employee Retention Strategies: 5 Factors Driving Turnover
The following contribution comes from the Perceptyx portal, which defines itself as follows: Why Perceptyx?
Transform your employee experience, drive your business success.
In today’s dynamic business environment, people are your greatest strategic asset. We help organizations optimize talent retention, foster high performance, and successfully navigate transformation through our unique combination of technology and expertise.
This article is by Oliver Lee Bateman, Director of Content and Editorial at Perceptyx. Before joining Perceptyx in 2022, he worked as Content Marketing Manager for CBRE’s Global Workforce Solutions division (2017-2022) and as an Assistant Professor at the University of Texas at Arlington (2012-2016).
He holds a PhD in History from the University of Pittsburgh, where his research focused on the intersection of sports, marketing and sales, law, and popular culture. Her work on marketing in areas such as fitness, nutrition, bodybuilding, professional wrestling, and artificial intelligence has appeared in The Washington Post, The Wall Street Journal, The Paris Review, The Atlantic, BBC Radio, CBC Radio, and NPR.
Key findings: While compensation is often cited as the reason employees leave, retention relies on deeper factors: feeling valued through empowerment and growth, addressing burnout and excessive workload, offering clear career paths, maintaining a strong culture and autonomy in flexible work environments, and ensuring compensation keeps pace with inflation to prevent loss of loyalty.
Organizations lose an average of 18% of their workforce to voluntary turnover annually, costing them millions in recruitment and lost productivity. Understanding what motivates employees to stay or leave has become a business imperative. Despite the attention layoffs often generate, particularly in high-profile organizations, the overall job market presents a complex landscape of simultaneous hiring spikes and strategic workforce adjustments across various sectors.
At Perceptyx, our research and consulting teams work with organizations worldwide to develop employee listening and action strategies tailored to specific industries and talent challenges. Our listening strategies identify concrete actions leaders can take to improve retention, transforming employee feedback into measurable business results.
Five Perceptyx consultants analyzed retention data from client organizations to identify the factors that most influence employees’ decisions to stay or leave. The data reveals five factors that consistently predict employee retention or departure: feeling valued, salary alignment, career clarity, cultural fit, and autonomy.
- Why does feeling valued drive retention?
Michael Mian, Ph.D., Principal Consultant: “In customer-facing roles, feeling valued significantly influences an employee’s decision to stay with an organization. Feeling valued includes employee empowerment, career growth opportunities, and development investments, not just salary. It encompasses factors such as employee empowerment, career growth opportunities, and the organization’s investment in employee development.” Employees’ perceptions of compensation, work-life balance, and flexible scheduling influence their overall job satisfaction. In a world where work and home often overlap, balance is vital.
Provide access to mental health resources and wellness subsidies.
Subsidize gym memberships or virtual training programs.
Organize team-building days without in-person meetings.
Train managers to monitor workload and encourage time off.
Another crucial aspect is the alignment between job expectations set during the hiring process and the actual role once the employee joins the organization. When the reality of the job doesn’t match the hiring promises, 43% of new employees quit within the first six months. New employees often enter a position with certain expectations, and if reality doesn’t meet them, it can generate feelings of disillusionment or even betrayal. Similarly, performance expectations should be clear and realistic. Unclear or unrealistic performance expectations lead to frustration. Employees who report unclear expectations are 3.1 times more likely to be actively seeking a new job.
- Does Compensation Alone Retain Employees?
Crystal Perel, M.A., Principal Consultant: “One key theme that emerges from conversations with Chief Human Resources Officers (CHROs) across various industries is clear: making employees feel valued drives both engagement and retention.”
“In my work with different organizations, I have consistently found that compensation is often the primary reason employees decide to leave a job, and usually by a considerable margin. Complaints about compensation often mask deeper issues: overwork, burnout, poor leadership, and limited opportunities for professional development. When employees cite compensation as their reason for leaving, they are often pointing to multiple underlying problems. Beneath the surface of compensation lie more complex challenges that contribute to an employee’s decision to leave an organization.”
«Beyond the surface, employees point to several everyday pressures:
Excessive or unpredictable workloads
Early signs of burnout
Leaders who fail to provide guidance or recognize effort
Lack of a clear path for skills development or advancement
These factors, combined, create a work experience that can be unsatisfying and demotivating. When employees face these challenges daily, the appeal of better compensation at another company extends beyond money and also focuses on the possibility of a more rewarding and balanced career.
It is important to address these underlying issues to create a more satisfying and stimulating work environment. It’s not just about increasing salaries, but about understanding and improving the overall employee experience. Organizations that address these underlying issues reduce employee turnover by an average of 31%.»
(See Perceptyx’s research on why your employees care more about career development than compensation.)
- How does clear career direction affect employee retention?
Sarah Jorgenson, Senior Consultant: “Two critical factors can significantly influence an employee’s decision to stay with an organization: feeling valued and having clear career development opportunities.”
One of the key issues I see in many organizations is a lack of career direction. Employees are finding it increasingly difficult to envision a long-term future with their current employers. Employees need to see how their current role relates to future opportunities within the organization. When they don’t see themselves growing or progressing within the company, it begins to affect their perception of having a viable career path. Employees who can’t visualize their career path are 4.2 times more likely to leave within 12 months.
Our internal research at Perceptyx supports this view. We have found a significant correlation between an employee’s perception of their professional development opportunities and their
