Employee Morale & Turnover
In the business environment, employee morale and turnover are closely linked. As employees become disillusioned with their work environment or compensation, their morale declines sharply, increasing the chance that they'll seek employment elsewhere. Replacing an employee who leaves a company because of morale issues negatively affects the company's bottom line due to the cost of training a replacement.
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Outside Headhunting and Staff Turnover
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The internal factors of work environment and compensation aren't the only processes that influence employee turnover; in some cases, headhunting by competitors can play a part in the overall employee turnover situation of the business. One of the key methods corporate headhunters use to attract recruits from other companies is simply offering a higher base rate of pay. To remain competitive, a company faced with outside headhunters needs to ensure that their compensation programs are in line with other industry competitors.
Maintaining Neutral Morale versus Building Positive Morale
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According to Herzberg's motivation-hygiene theory, factors that companies often mistakenly attribute to generating higher levels of morale such as stability, a positive work environment and adequate compensation only serve to prevent damaging morale. The theory goes on to state that employees suffering from low morale eventually have lower productivity and may even leave the company if the chance presents itself. Actively increasing workplace morale requires that a company invest in the higher-order needs of individual workers, such as the need for achievement and personal recognition.
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Specifics of Renewing Workplace Morale
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Easily quantifiable performance-incentive programs are a staple of nurturing higher-order employee psychological needs. To adequately administer performance incentive programs, a company first needs to build a data-gathering program specifically suited to measuring the productivity of individual employees within its unique business model. Unfortunately, there's no one-size-fits-all performance monitoring solution; however, upper-level management can look to front-line supervisors to form recommendations for designing such a system. One of the most effective workplace morale-generating programs is direct-cash incentives based on performance. The direct-cash incentive program is a tiered approach that makes cash performance incentives well within reach --- at least in the lower reward levels --- to give the employees a sense of an attainable and directly self-benefiting goal. Going the extra mile and offering employees health benefits also instills a sense of loyalty, as employees know the company is directly looking out for their well-being, thus building a sense of community pride.
Other Turnover-Combating Measures
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Even in companies with exceedingly high morale levels, turnover is an inevitable part of doing business, if only because an aging workforce eventually needs to retire. Having a plan in place on the corporate level for replacing employees lost due to retirement is of critical importance to maintaining profitability. The earning potential of a business deteriorates as key employees are lost to retirement if there are no candidates to replace them. To a certain extent, self-direction and post-secondary education in the broader community can help to alleviate this problem; however, when skilled laborers retire in vast numbers, such as the quickly retiring baby boomer demographic, companies need to take additional steps to ensure that there are enough capable staff members to keep production on target. Typically, businesses look to the post-college and -university group to fill staffing requirements; attracting new employees directly out of high school by offering company-subsidized training is also effective. The same retirees causing the labor shortage may be able to alleviate the problem when offered positions as part-time or training staff.
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