Why purpose and values come before salary and perks when it comes to hiring and retaining top talent
Catherine F. Simon, Head of Global HR and Culture.
Today, top tech companies are bending over backwards to attract talent. Massive salaries, unlimited holidays, handsome referral programs, work-from-anywhere policies, cool offices, flexible work contracts – anything to get the best people.
Well, almost anything.
People are still leaving.
It's generally not because of the compensation – uncaring leaders, lack of meaningful work, and lack of career development were among the top reasons why people quit their jobs last year, according to McKinsey. While most companies preach about diversity, social responsibility, and commitment to professional growth, record-high employee turnover rates suggest that few actually walk the walk.
Now more than ever, to attract and retain top talent, you need values and a strong culture people can identify with, so they feel their work with you has true purpose.
This shouldn't come as a surprise
We're seeing Herzberg's Two-Factor Theory in action. Half a century ago, Herzberg made a key distinction between job satisfaction and dissatisfaction, after noticing that each is determined by a different set of factors:
Job dissatisfaction is decreased through improving “Hygiene” factors, such as salary, perks, job security, and vacations
Job satisfaction is increased through improving “Motivation” factors, such as challenging work, recognition, responsibility, and accomplishing missions with meaning, among other things
Accordingly, in a modern environment where job Hygiene is at an all-time high, Motivation matters most for talent recruitment and retention.
That's why Netflix goes to great lengths to detail its core principles in its famous Netflix Culture document. That's why Google shares real stories and examples of how it upholds the values it promotes. That's why Scaleway backs up its social and environmental commitments with action and progress reports.
On the flip side, tech companies, particularly startups, that have previously relied only on above-average salaries to attract candidates now find themselves short on talent, as their Hygiene-oriented strategy has peaked and they don't have much else to offer.
The trouble for such companies is that you cannot quickly throw together a company culture where there isn't one. Nor can you manifest purpose out of thin air, or have people believe in values you've just come up with.
Improving Motivation factors is a long and intentional process that demands significant emotional and financial investment – that is, if you want to get it right and reap the rewards. Moreover, it's crucial to communicate your progress and achievements in a transparent manner for them to benefit your recruiting efforts.
Today's candidates see through boilerplate values, so you absolutely must back up your claims to ensure maximal transparency:
- Diversity and Inclusion? Prove it. Hire for it. Make it a core value and relevant in all decision-making in the company. Put your money where your mouth is
- Sustainability-minded? Is there an owner? A budget, a plan? Show exactly what you’re doing, and the results you’re achieving, to reduce your environmental impact
- Flexible environment? What policies have you put in place to ensure this? What rules are there behind this statement? How often do you revisit them to ensure you are still relevant?
- Culture of trust? How do you create this culture? What actions have you taken and how are you investing internally to ensure trust is always there? Trust takes time to build and sustain
- Socially responsible? Show how society has benefited from your activities.
The most successful tech companies, including the aforementioned examples, do all of these things, thus repeatedly demonstrating their commitment to what they stand for and keeping themselves accountable, not only in the eyes of their employees, but the public at large.
So much so that not upholding those values can invite international scrutiny. For instance, Salesforce earned some criticism following a public, high-level resignation citing terrible racial equality efforts, even though the company postures (and has earned recognition) as a leader on these issues.
Despite being bad press, such scandals signal that efforts to embody proclaimed values are ongoing — and a very real component of life at the company — bringing to light the company’s successes, as much as its shortcomings.
There's no mystery to talent sourcing
What really attracts and retains people is a challenging and meaningful work environment that offers purpose and personal growth.
Here are four tips for companies looking to make this a reality:
1. Invest in organizational health over employer branding and job advertising
A quarter to half of your recruitments can and should come from referrals, as talent recommended by colleagues stays on average 70% longer than direct hires. So at least 50% of your recruitment budget should be directed toward giving employees reasons to recommend your company to acquaintances. When people have a place where they can thrive, be challenged, and be proud of their accomplishments – they won't keep it a secret.
2. Give them reasons to stay, and part amicably when they leave
Invest in your people, their work environment, and the things they care about, too. Map out a career journey for every role and people will stay for the ride.
But don't fret if they don't. Turnover is healthy and around 3 years is a sweet spot for getting the most out of a professional relationship. New people bring new energy and experience to the pool, further enriching the culture for future growth.
3. The talent pool is finite, so work with it
Hire for dedication, motivation, wits, and transferable skills over experience on a third of your workforce. Continuously review your requirements to ensure you don't pass on exceptional talent due to trivialities and technicalities. Intelligent people with a growth mindset have no limit to what they can learn.
4. Never stop striving for the best environment
Organizational health is like your physical health – it takes checkups, monitoring of diet, regular exercise, and so on. Crash dieting just leads to further weight gain; it's the same with organizational health. You have to commit to the right principles and constantly work on them to make them stick.
If you build this, they will come. All people want is challenge, purpose, and recognition to be motivated and give you the best of themselves.
Money matters… but not on its own
None of the above means salaries don't matter. They do. The most highly motivated people on your team are prone to leaving if they're dissatisfied with pay and/or perks. Rather, as compensation packages become increasingly uniform across the tech industry, talents will opt for companies that offer more than just money.
Whether these companies will be able to retain these talents is a different question. If they lured them in under false pretense – then no. If, however, they exhibit and practice a genuine alignment with the talent's values – then absolutely.