Employee Retention Theory

Businesses invest a significant amount of time, effort and resources into their employees, from hiring to training and motivation. The loss of employees not only removes talent from a business, it also represents a loss of the company resources invested in the employee. Employee retention theory is philosophy centered on considering why employees leave a company and what can be done to keep them.

In the 1950s, Frederick Herzberg studied employee retention and motivation and eventually came up with his duel dimensional job satisfaction theory, noted J. Michael Syptak, M.D., David W. Marsland, M.D., and Deborah Ulmer, Ph.D., writing on the American Academy of Family Physicians website. Herzberg believed that the two dimensions of job satisfaction are dissatisfiers (he called them “hygiene” issues) and satisfiers, also called motivators. His theory was that employees can be retained through minimizing dissatisfaction and maximizing satisfaction. Dissatisfiers include factors such as:

• administration
  
• company policy
  
• working conditions
  
• supervision
  
• relationships
  
• salary

Satisfiers include the job, promotion, achievement, responsibility and recognition.

Rules and policy have the potential to lead to employee dissatisfaction, with little potential to motivate employees. Administrators cannot do much about rules and policy to increase satisfaction, but dissatisfaction can be decreased through keeping rules to what is necessary and ensuring that everyone is held to the same standards. Fair and necessary rules help retain employees.

The enforcers of company policy can lead to employee dissatisfaction for the same reasons as the actual policy can frustrate employees. Supervisors have a difficult position and administrators can minimize the dissatisfaction of both employees and supervisors by ensuring that they pick the right leader for the supervisor position.

The work that the employee is doing is ideally a satisfier, though in some cases it can be a dissatisfier, one that can lead to losing the employee. Most people enjoy working in a job that they feel is a needed contribution to society. Administrators can enforce this idea through discussions on the importance of the work. Community value can be added through business outreach programs.

Responsibility seems like it might be a dissatisfier, but it’s really a satisfier. Employees enjoy the freedom that additional responsibility affords them. The idea that they are able to do work independently appeals to the majority of employees. To increase satisfaction and retention, added responsibility should not mean more work, just more freedom. Additional work should come as job advancement.

Advancement and promotion lead to employee satisfaction. Promotion should be earned, however; seeing others advance unfairly could lead to dissatisfaction. Loyalty, productivity and quality performance are all valid reasons to advance an employee. Opportunity for promotion helps retain employees because they feel that their work and financial future can be improved through effort. Promotion lets employees know they are valuable and that recognition also helps with the retention effort.