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The link between leadership and employee retention

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What difference does strong leadership really make in whether an employee chooses to stay or go? Sam Alberti and Robert Hicks, Group HR Director, Reward Gateway, examine the relationship between leadership and employee retention.

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With employment rates soaring in recent years and the gig economy growing, acquiring talent has become an increasingly tricky task for employers of late.

And yet, with the disruption of COVID-19, 2020 has seen this space become even more challenging still.

So, in order to maximise productivity and profitability, logic indicates that organisations must now focus their efforts more closely on retention strategy – but how?

Whilst myriad factors can influence this process, much of it can be attributed to the style and approach of senior leadership with a company.

In simple terms, strong and effective leadership can improve culture, engage a workforce and instil a level of motivation and inspiration that may otherwise have been absent.

There is no shortage of evidence to support this. One report, for instance, shows that 100% of its survey respondents cited leadership as a key factor in tapping into employee happiness and impacting retention.

“There’s a phrase: ‘people don’t leave jobs, they leave managers’, and I think that describes the link perfectly,” said Robert Hicks, Group HR Director, Reward Gateway.

“Leaders who don’t engage their staff will inevitably lose them.”

Hicks expanded on this, saying that employees must feel like they are supported and that they can bring their whole selves to work.

He said: “It is up to leaders to create an environment of honest and open communication where employees feel respected, valued and have a purpose.”

This is a theme that echoes through the world of HR at present. With remote working becoming the new normal, leaders must demonstrate a range of soft skills that convey a compassion and a vulnerability that employees can relate to.

Communication is crucial in this regard, and must be abundantly present in order to compensate for the potential challenges of interacting without co-location.

This can be a greater challenge than many might think. Research conducted in the 1970s concluded that tone of voice and body language make up 93% of what is conveyed during communication, and these findings are still considered to be accurate today.

“Always default to transparency,” said Hicks.

“Employee trust can only be obtained and retained by having open and honest conversations. Ultimately, they should feel at ease approaching you.”

Hicks went on to further outline how leadership can affect retention, this time citing employee recognition as a major category.

“This link cannot be ignored,” he said. “One of the primary benefits of this is to make an employee feel appreciated, accomplished and important to the overall success of the organisation.”

He cited appraisal programmes as a key factor in achieving this and added that this should not be merely a sporadic, ad hoc occurrence.

“Leaders must understand and put in place a culture of continuous recognition,” he said.

Once again, this is a theory very much grounded in various research. One study even found that 63% of employees who were ‘always’ or ‘usually’ recognized said that they are ‘very unlikely’ to job hunt in the next 3-6 months.

In contrast, it also found that just 11% of those who are ‘never’ or ‘rarely’ recognized would agree with this.

But whilst communication and recognition can play their part, disengagement and high turnover rate can often come down to pitfalls within the wider company culture.

Hicks cites Reward Gateway’s own data in outlining this point. A 2018 study found that just 32% of employees felt completely informed on the values of the organisation they worked for.

To put things further into perspective, the study goes on to point out that 89% of employers say it is critical to the success of their business that employees understand their mission.

“A leader should always model their company’s values,” said Hicks. “They should embody the type of culture they’d like their workforce to have.”

Overall, in order to have the greatest possible impact on improving employee retention, leaders should be consistently displaying compassion, transparency and accountability in the workplace, and must remain proactive in their approach to enacting change.

“Understanding what makes a good leader and making the necessary changes to improve will benefit you and your workforce immensely,” said Hicks.

“This is the different between a company with a high staff turnover compared to one with employees who are committed to helping you succeed today, tomorrow, and further down the line.”

“At the moment, everyone is working in unprecedented times and is looking for even more from their leaders. How leaders behave now impacts how key talent will behave in the future.”

A certain clarity stems from this in terms of what action leaders should be taking at this present time.

With retention a greater risk than ever before and acquisition presumed to not be viable solution, leaders must step up to the plate in order to safeguard the talent within their organisation.

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