Founder and CEO of Joveo, the global leader in programmatic job advertising. On a mission to deliver the right job to everyone!
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While fears of a potential recession hang over most U.S. consumers, hiring by businesses continues, with 261,000 jobs added in October 2022. It’s easy for HR and recruitment professionals to remain laser-focused on filling open reqs, but ultimately the hiring merry-go-round that is the Great Reshuffle won’t stop until we address a bigger issue: why employees resign. I believe that employee retention can be improved when employers think and act more strategically, starting before successful candidates join the company.
A classic customer loyalty marketing approach can provide an effective framework.
Why Do Employees Leave?
Just how dire is the employee retention problem? In 2021, over 47 million Americans voluntarily quit their jobs. Another 37.4 million U.S. employees are forecast to leave their jobs this year, a voluntary turnover rate still nearly 20% higher than the pre-pandemic annual average of 31.9 million. Employees are confronting two issues: misalignment with leaders and achieving the flexibility they desire.
Altogether, the values corporate leaders espouse, the way the values are realized (or not) in employee-boss relationships and the work-life schedule flexibility employees have (or don't have) form a large part of the corporate culture.
The question, therefore, shifts from “Why do people leave?” to “How can we get them to stay?” I believe that finding employees who fit an organization’s culture is the key; to do that, companies need to find and treat candidates like customers, starting with the recruiting phase.
What Loyalty Marketing Can Teach Us
Customer relationship management (CRM) software emerged in the late 1980s and gathered full steam in the 1990s, fueled in part by loyalty-marketing guru Frederich Reichheld, a Bain Fellow, author and inventor of the Net Promoter Score (NPS) who quantified the idea that a small increase in customer loyalty can yield a large increase in profitability. In his 1993 Harvard Business Review article, “Loyalty-Based Management,” Reichheld lauded affinity credit card provider MBNA, which found that "a 5% increase in [customer] retention grew the company’s profits by 60% by the fifth year."
Applying this thinking to employees is a short reach; improving retention even marginally in the near term could lead to significant downstream improvements in revenues and profitability. As it happens, company culture is one of the most powerful forces shaping employee retention.
Seek Cultural Alignment
In that same HBR article, Reichheld stated that “Companies should target the ‘right’ customers―not necessarily the easiest to attract or the most profitable in the short term but those who are likely to do business with the company over time.”
This idea, of cultivating customer relationships over time, ushered in lifecycle marketing and gave rise to CRM software. Finding the “right” candidates is comparable to finding the “right” customers. Just as Reichheld held that “people who buy because of a personal referral tend to be more loyal than those who buy because of an advertisement and those who buy at the standard price are more loyal than those who buy on price promotion,” the same principle can be applied to candidates. Candidates who are highly motivated by money are less likely to be loyal.
In an inflation-addled economy, employees have been asking for—and getting—more money. In fact, low pay is one of the top reasons people leave jobs. While switching jobs to get a higher salary can work out well for them—wage gains for job switchers generally outpace those who’ve stayed at one employer—organizations need to look beyond luring candidates with more money. They need to find candidates who will embrace and celebrate the company’s culture and values.
Here are five ways companies can find and cultivate culturally aligned candidates:
1. Communicate clearly in job ads.
One of the most effective, yet overlooked, ways to improve employee retention is through job advertising. Properly worded and placed, job ads can be remarkably effective at weeding out candidates who will fast-track to quitting. To do that, every ad must contain, in addition to a description of the role, responsibilities, and education and experience requirements:
• Salary
• Work environment (i.e., hours, location, WFH options, etc.)
• Benefits
• Why your company is different
Such ads are more likely to attract candidates who are motivated by factors beyond a competitive salary and who already share a degree of alignment with your company’s culture and values.
What’s more, ads need to be posted on the right job boards to draw from talent pools that are likely to stay longer. Consider programmatic job advertising to help provide precise, intelligent guidance with the right integrations with applicant tracking systems and HRMS solutions.
2. Remove bias.
Awareness is rising about hiring biases directed against candidates, such as prejudices against race, ethnicity, gender and sexual orientation. Job ads are the starting point for stamping out bias. Hiring managers can take important steps toward ensuring bias-free job postings while ensuring inclusivity by addressing hidden gender bias in job descriptions. Using blind résumés is another effective way to promote diversity.
3. Consider psychometric testing.
As candidates move through the interview process, how objectively are they checked for culture fit? Assessments can be useful tools in evaluating a person’s skills, personality, behavior and ability.
4. Seek out culturally aligned candidates.
Lookalike audiences are groups of social network members who share characteristics with another group. This technique can be used to attract talent based on employee personas and to source/hire candidates who are similar to long-term employees.
5. Cultivate the candidate pool.
Most companies have large databases of applicants who applied for certain jobs but were not chosen. These individuals form a large group of candidates who are potentially culturally aligned; taking a page from the lifecycle marketing playbook, companies can continue to engage with them through nurture campaigns.
Recruiting To Retain
In today’s job market, it’s no longer effective to think about employee retention after candidates are hired. By treating candidates strategically, with the same care given to customers, companies can reap the many benefits of a satisfied, here-to-stay workforce.
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