Competitive pay can be reduced to a figure on a scale, but it’s trickier to measure what makes employees feel valued and take true pride of ownership in their work.
Yet it’s crucial for businesses that want to remain competitive employers and improve job satisfaction and retention. Making employees feel valued is the number one way to help retain and recruit employees, according to small and midsize businesses in a recent Principal® survey (128 business clients polled in May 2022).
Employees themselves ranked feeling valued as the No. 2 way to recruit and retain--behind only higher salary.
Here’s a spectrum of options to help employees feel valued and take ownership in their work, from more informal and universal to more structured and specialized:
1. Genuine, specific recognition of good work
Free food and other social perks can help forge stronger teams. But focused, individual feedback is important to show employees their work is valuable to the business--a substantive way to encourage them to stay.
A 2022 survey by Workhuman and Gallup found that when employees receive the recognition they need, they’re:
- four times likelier to be engaged, and
- five times likelier to see a path for career growth within their organization.
2. Greater job autonomy
On top of flexibility and remote work, greater job autonomy may be a lasting post-pandemic shift. Employees untethered from the clock and office also may assume more responsibility and leadership in their daily work--especially in flatter organizations.
- They’re meticulous in hiring to find the right employees and follow through with disciplined onboarding to set expectations.
- Autonomy is managed within loose guidelines, with an emphasis on open communication to prevent it from creating chaos.
- Accountability and high expectations are part of the work culture.
- Results matter more than process.
- Employee satisfaction is a core company value.
3. Customized employee benefits
A business that reflects the unique needs of its workforce through customized benefits helps model how employees can feel empowered to reshape their jobs to suit how they work best.
As a growing business you may start by offering a core set of traditional benefits and gradually offer more options. Group benefits (dental, vision, and disability insurance, to name a few), can be tailored to meet the unique needs of employees as well as the size and budget of your business.
“You didn’t start your business trying to do everything at once, and the same applies to benefits,” says Mark West, national vice president of business solutions for Principal. “It’s OK to start small. Find a financial professional who can help you choose the benefits you can afford and set goals for what you want to do in the future.”
Learn more: Get five tips for offering benefit packages.
4. Profit-sharing plans and other incentive pay
The classic “skin in the game” of a profit-sharing plan helps directly link employees to business growth and see how their jobs drive toward specific goals.
“Not only is it a very generous thing for the company to give us, but when new people come in it’s one of the things I try to point out,” says Eric Ruppel, assistant warehouse manager for Bob’s Red Mill in Oregon, a Principal business client that provides monthly profit-sharing. “It’s a huge motivator. It’s tangible; it changes you, and you realize that you want to stay.”
5. Nonqualified deferred compensation and other key employee benefits
The more you rely on a subset of key employees who become critical to the business’s success, the more you may want to consider how you provide them targeted motivation to stay engaged in their work. Special savings plans and other benefits for key employees can cultivate loyalty and a sense of ownership among your core business talent and leadership.
Learn more: key employee retention and retirement.
6. ESOP (employee stock ownership plan)
One of the most literal, direct ways to help employees own their work is to sell them the business. Bob’s Red Mill, on top of its profit-sharing, spent a decade transitioning to an ESOP and in 2020 became 100 percent employee owned. A committee of more than 40 employees, representing all shifts and departments, helps oversee the plan.
“Employees are a lot more dedicated not only to their career aspirations but to the company as a whole,” says Trey Winthrop, CEO of Bob’s Red Mill. “You’d never wash a rental car, but you’d wash your own car. We own our jobs--we don’t rent them.”
ESOP also works hand in hand with the company’s profit-sharing--building both short-term and long-term financial security for employees.
“Hopefully we’re able to remove some of the financial stress for employees so they can concentrate on being the best that they can be and bring their whole selves to work,” Winthrop says.
Compare your employee benefits with those offered by similar businesses with the Principal® Benefit Design Tool.
Bob’s Red Mill is not an affiliate of any member company of the Principal Financial Group®
This article is intended to be educational in nature and is not intended to be taken as a recommendation.
Insurance products issued by Principal National Life Insurance Co (except in NY) and Principal Life Insurance Company®. Plan administrative services offered by Principal Life. Principal Funds, Inc. is distributed by Principal Funds Distributor, Inc. Securities offered through Principal Securities, Inc., member SIPC and/or independent broker/dealers. Referenced companies are members of the Principal Financial Group®, Des Moines, IA 50392. ©2022 Principal Financial Services, Inc.