The Psychology of Employee Retention

Then what happens? The core product begins to plateau. Executives begin to abandon long-term, ambitious projects, in order to squeeze more juice from the lemon to hit quarterly goals. Finally, perks are cut because it's just way too lavish to have free soda when you're only growing profit 33% year over year instead of 100%. As the OP indicated, the employees are no longer left with any stories. You may still enjoy your day to day work, you may still be well compensated in terms of salary. But without that intrinsic motivation, it's only a matter of time before your enthusiasm flags and you're looking for another job that can offer you what you had before.

For company leaders, products plateau and nobody is successful all the time. But goals and perks are under their complete control, and especially for the latter, it usually requires only as nominal amount of money. It can mean all the difference in retaining your talent during bumpy times, or having everyone abandon ship because they feel abandoned already.

The lack of money and success create anxiety, but an abundance of these in terms of what an employee can hope to achieve do not influence my decision about where I work.

As for perks, I don't care about trivial asides that people think up in order to retain talent. This is an artificial device that will not stop the bleeding. Don't waste your time doing this if it's something you have to think up in order to achieve yet another metric. If you're going to do something fun do it because you want to do it because you yourself would enjoy it and know that at least a few of the others on your team would too. But then you're not doing it for retention, you're doing it because you want to.

Bottom line is if the factors don't add up, an employee will leave, but things like people, technology and product are what candidates should consider before they join, and they're not likely to change much over the duration of an employment, so if someone is leaving, they probably didn't know what they were getting themselves into, something big changed, or they think they are really failing.

Or maybe they just found a new thing that interests them, in which case let them go.

"We've gained 100+ employees in two years and we've never had anyone quit. That won't last forever, but I think it's a good indication of the type of company we've built. There are certain things you can do to retain employees, and by worrying about employee happiness you'll ultimately create a much better product."

[1] http://zachholman.com/talk/how-to-build-a-github

At the end of the day you don't work for the big colorful slide at your office, or Whiskey Fridays, or your favorite 80's arcade video game. Cynically speaking, these are just there to make your long work days a bit sweeter.

So what's left for startups to retain their top employees? It's figuring out what truly motivates them. This takes a lot of hard work, empathy, and will. It's a long term investment. As such it might not pay off in the short term, but it might well give you in return the high retention rate you're looking for.

"First, the most powerful way to enchant employees is to provide a MAP. “M” stands for mastery -- that is, a way to master new skills on the job. “A” stands for autonomy -- so that employees can master new skills while working autonomously and not be micro-managed. Finally, “P” stands for purpose. Employees love to master new skills in autonomous positions while working towards an organization with a high purpose such as making the world a better place."

Could I break the trend and make a simple request instead?

"Make it a gift not a reactive response to bad news".

I've never worked startups or dotcoms so all the perks I've experienced have been in response to low scores on morale surveys and similar situations. Frankly if morale is low due to terminal mismangement the only thing that makes morale worse is "pop corn machine" or "mandatory PR kickoff meeting after hours" or "offsite meeting" or "casino night" or "barbecue lunch day" or "pizza day". Please find out why it sucks and fix it, don't just simply buy a popcorn maker machine and call it good.

"Oh, so the problem is the boss couldn't lead starving wolves to raw meat but he can't be disciplined because he's on his boss's golf team, well I know lets have casual dress monday just this one time, I'm sure that'll make everyone happy and productive"

It gets to the point where if you hear about a team doing a "perk" thing you automatically start wondering how they screwed up or whats wrong.

"That dept is having free pizza day at lunch today" "Oh no, that's terrible, I thought they were doing OK, whats wrong?"

There's an interesting review of the literature about job burnout, for example, that was published in the Annual Review of Psychology in 2001.

http://igitur-archive.library.uu.nl/fss/2006-1104-200110/mas...

I know that psychology isn't held in as high regard around here as the harder sciences, but as much anecdote about the laws of human behavior as there is on HN and in the startup scene in general, I'd think there would be more interest in what science has to say.

Basically, it argues that as an employer, you can help people craft these stories by trying to get people on board with the company's main goal, or else to help people feel unique and interesting to others through a company culture with strong perks or curious features.

This is really about career development too. Not so much in the sense of onward and upward, but in the sense of helping people feel that this aspect of their life has meaning and direction.

For example, I work for a medium-sized software company where employees tend to be fairly athletic. We have groups of runners, surfers, soccer players, tennis players and softball players. We have a licensed yoga instructor come in twice a week for yoga lessons (paid for by the company). We even have a group of people who participate in sailing races every week on the CEO's sail-boat. This aspect of our culture makes it very easy for new hires to quickly make friends and feel like they have become a part of the company. Also, all of these sports are fully sponsored - all sport-related expenses can be reimbursed.

Last year, management approved building showers on the first floor of the building for the sole purpose of making it easier for lunch-time runners to clean up before going back to work. The effect was immediate: many more people started running at lunch time, as they no longer had to worry about being sweaty and stinky after lunch. The showers themselves are a very small perk, but they reinforce the perception that management cares about and supports the active lifestyles of employees.

I somehow doubt having a "Whiskey Fridays" would have the same effect, as we don't have many heavy-drinkers at our company. But one of my friends works for Zappos (based in Las Vegas) and I'm told that everyone there drinks at work. Makes sense, since it's Vegas.

Point 3, "These make for a unique story. A unique cult to want to be a part of and more importantly tell people about." is also really interesting. The companies with the best recruiting and team-dynamics are those that harness these inclusive, cult-like cultures. You can see it everywhere, in little things like team t-shirts, quirky events, or big things, like cult-leader CEOs.

For me, that would be opposite of a good retention strategy.

"I am making a lot of money."

I think that this quote hits on what most people want out of their careers. It's not about million-dollar salaries or being the boss or "changing the world". It's about validation. People are only happy in their careers when they feel that what they've accomplished, relative to their level of ability, is socially acceptable. Ambitious people, almost by definition, want to Get Out of middle-class mediocrity, but that doesn't mean everyone has to get rich. Being respected and famous or well-connected is enough for most people, but most people don't even get that. The present-time proxy is prestige and visible progress toward getting there. If you have a job at Google or Goldman or DE Shaw-- any job-- that's being on the putting green as most people see it, but if you're not a brand-name company you have to keep reaffirming to your people that you're capable of providing a ticket out of Blahville.

Startups give a reprieve from the traditional metrics. You don't have a lot of money right now, but that's OK, because it's part of the process and the story. No one has heard of your company, but that's OK, because people will. They're very good at making people feel OK about what they're doing based on the promise of future wealth and prestige. And because we're in a bubble, startups are prestigious even among a crowd that (a) has no business being involved (e.g. MBA-culture carpetbaggers who become founders on account of VC contacts rather than ability) and (b) would usually find them risky and a bit undignified. So right now it's fairly easy for a company to just say, "We're a funded startup" and become prestigious overnight.

The ivory tower is phenomenally good at creating this validation: the money isn't there, but "prestige" is. If you're successful in academia, you will legitimately feel like you're living the best possible life-- a "life of the mind". Finance can do the same thing: sure, there are people making $200,000 per year from lifestyle businesses in Madison rather than working 90 hours per week and living in a Manhattan shoebox, but you, the IBD analyst, are just 4 short years away from getting face-time with Fortune-500 CEOs. When a work culture develops the attitude that people outside of it are failures (cf. academia, high finance, "biglaw") that's usually for the purpose of keeping people captive. VC-istan is playing the same game, exaggerating the difference between the life of a "corporate drone" and what it offers. (Note: if you're not VP or higher in the startup, your work experience will NOT be higher quality than the corporate-drone life, the differences will be shitty health benefits, no name on the resume, a lower salary, and no severance if you get fired or the startup tanks.)

People tend to leave their jobs when they feel they can do better, because the stakes of the career game (even up to what kinds of opportunities your kids have and whether they'll be taken seriously by the world rather than being another generation of middle-class meat for society to process) are so high that it's just not acceptable to have an outcome below one's ability. You don't have to take the highest-paying opportunity at each juncture, but if you aren't re-evaluating every year or so whether you're at the best opportunity possible for your age, experience, and economic environment, you're at risk of falling behind, being labelled a B-player, and never catching up.

Most of these perks that seem like bullshit are actually about this validation effect. No one ambitious would tolerate, after 5 years at a job, having to ask permission to call a work-relevant conference a business trip (and be reimbursed) or being turned down on an attempt to start one's own project, but no one is going to expect to have that kind of support from the first day. People want autonomy and resources, in the long term, and the perks are a proxy: if they have nice pens, Macs, and free dinner on Day 1, they feel more confident that the company will provide the resources to really accomplish something and to live well by Day 1001.