The Psychology of Employee Satisfaction and Retention
by Allen Jones

Employees are switching jobs fast than ever. Pyschology offers some crucial insight into what it may take to make them want to stay.

"Yesterday at work my boss really pissed me off. Out of frustration, I pulled out my old resume and within 20 minutes I had updated it to reflect my current accomplishments. I then went online. Within another hour, I had posted my newly revised resume on a dozen or so employment sites and set up search agents on each one that will now send me a new list of job openings tailored to my skills and career goals every day of the week from now until the end of time."

Job mobility is here to stay. Changing from one employer to another is easier than ever. The days of an employee staying with his or her employer for the next 20 years are fading fast. As of December 2003, the average length of stay at any one job in the professional sector is 3.8 years.

Employers have traditionally viewed employee retention as a set of strategies to keep their valued employees from leaving. In the new economy, it's critical to take that a step further and consider what it will take to make them want to stay.

First attempts at employee retention tend to focus on hygiene factors—compensation, benefits, and the physical aspect of the work environment. These are necessary to prevent dissatisfaction, and if not addressed will assuredly lead to employees considering their other options. These factors do not in themselves, however, motivate employees to want to stay.

The term "hygiene factors" comes from Frederick Herzberg, one of the most influential management teachers and consultants of the 1950s and 1960s. He found that certain factors cause employees to feel unsatisfied with their job. Addressing those factors led to a lessening in the employees' dissatisfaction, but it does not motivate them. That research led Herzberg to develop his "hygiene theory." Among the hygiene factors (also known as satisfiers) he identified were physical work environment, company policies, and salary.

What came into play next was Maslow's hierarchy of needs—a well accepted concept that began in psychology and eventually made a profound impact on working life. Abraham Maslow was a psychologist who focused on human potential, believing that we all strive to reach the highest levels of our capabilities. In his book Motivation and Personality (1954), he introduced psychological concepts that are now standard, such as "needs hierarchy, "self-actualization," and "peak experience."

Maslow created a model of human needs that's often depicted in the form of a pyramid. The foundation level consists of basic biological needs, oxygen, water, food, and so forth: these needs are the strongest because we need to satisfy them to remain alive. Our needs in the next level up are for safety and security. One level higher are social needs—a sense of belonging, acceptance, friendship and love. Above that level are ego needs; the need for respect, esteem, recognition, and status. Finally we have the peak—self actualization, fulfillment, self-development. Maslow showed that we must satisfy our needs one level at a time, going from basic to self-actualization.

The implications of this model for employee satisfaction and retention were enormous and wide ranging. Just looking at the terms in the paragraph above provides a shopping list of ways in which organizations have been trying to achieve satisfaction and retention.

  1. Acceptance: Assimilation programs, orientation programs, company retreats
  2. Respect: Suggestion programs, diversity programs, 360 degree evaluations, corporate vision and values
  3. Status: Job titles, business cards, executive perks, cars, corner offices, delegated authority
  4. Recognition: Promotion, fast track programs, employee of the month programs, award programs
  5. Fulfillment and self-development: Lifelong learning programs, funded education opportunities, tuition reimbursement, sabbaticals

A company's employee retention program often starts as a simplistic "compensation and benefits" response to a rise in voluntary employee turnover. A wider, more holistic approach needs to develop that addresses the deeper needs crucial to employee satisfaction.

Employees today are taking control of their careers like never before. They are taking on more and more of a free agent mentality. If their needs are not met with their current employer, they will look elsewhere. Employers today must remain competitive in their employment offerings if they hope to persuade their top employees to want to stay.

But, to use the words of John Mellencamp, "Ain't that America?"

Allen Jones
640 Glen Iris Drive #301
Atlanta, GA 30308

404.881.6120
Email: ajones@mindspring.com