The Great Resignation, spurred by COVID-19, saw more than 47 million Americans quit their jobs in 2021, according to the U.S. Bureau of Labor Statistics, and the trend continues.
According to recent data, 10.5 million jobs remain open, and the voluntary quit rate is 25% higher than pre-pandemic levels. A worker shortage now affects nearly every industry, making employee retention critical.
To help trades business owners learn how to increase retention at their shops and understand why good employees quit, ServiceTitan hosted a recent webinar with Derrek Hofrichter, Business Coach at Service Business Evolution, a ServiceTitan Certified Partner dedicated to helping service businesses grow.
Keep top talent with this advice.
» Want to grow your business? Click here to get a demo.
Why retention matters
Hofrichter starts by listing four items that hinder growth, as described in Verne Harnish’s book, “Scaling Up,” and how they’re all connected.
Not enough people
Not enough leads
People are not productive
Not enough cash
“If you don’t have enough people, you’re turning down work. You’re not able to expand,” Hofrichter says. “Cash is going to be low. When cash is low, there’s no money to spend on marketing or hiring someone to make outbound calls, so you’re not going to have enough leads. And if you don’t have enough leads, your people aren’t going to be productive. It’s a vicious cycle.”
Employing enough people stops the cycle, according to Hofrichter.
“You need to have good employees, because they’re the solution to growing the business,” he says.
Why good employees quit
To know how to improve employee retention, business owners must understand why employees leave in the first place.
According to Leigh Branham’s book, “The Seven Hidden Reasons Employees Leave,” 89% of managers state their employees quit due to compensation, but when you ask employees, that’s only true for 12% of them.
A McKinsey and Company report shows employers list compensation, work-life balance, and burnout as the top three reasons employees leave, while employees report the reasons as not feeling valued by their organization, not feeling valued by their manager, and not feeling a sense of belonging at work.
“This disconnect is exacerbating the problem,” Hofrichter says. “Because if the leaders and owners have a different idea of why employees leave, they're not addressing the problem.”
Strong retention requires addressing the root cause of why employees leave, which can be demonstrated with the Workplace Hierarchy of Needs. Based on psychologist Abraham Maslow’s Hierarchy of Needs, employees won’t move up a level until their needs are met at their current level.
Why Good Employees Quit Slide 1Safety
For safety needs, employees must make enough money for their basic necessities, like a place to live and food to eat.
“Safety needs are basically trust,” Hofrichter says. “Do I trust this company to consistently give me a paycheck? Do I trust this company to give me the number of hours I need to make my rent? If I'm a technician or a plumber, do I trust I'm going to have enough calls?”
Social
Next are social needs, which equate to a sense of belonging and how the person aligns with the company’s culture.
Self-esteem
Once safety needs are met, employees want to feel appreciated and valued.
Self-actualization
Self-actualization lies at the top of the pyramid and refers to putting plans in place for career growth.
“A lot of really high-achieving employees max out at self-actualization because they feel like they are stunted or stuck in their current company,” Hofrichter says.
So what leads to employees’ needs not being met?
Poor communication: Employees feel their managers lack communication skills.
Owners/managers feeling burned out: Employees are far more likely to experience burnout when their managers feel burned out.
Lack of vision from leaders: Employees feel their managers lack confidence.
Employees don’t feel engaged: Managers fail to build engagement through one-on-one meetings with their employees.
Unclear expectations: Employees receive no clarity about how they’re allowed to work and what’s expected of them.
Lack of career development and advancement: Growth opportunities are not discussed, and employees see no way to rise to the next level.
Feeling disrespected/undervalued: Team members fail to be treated as humans first, and employees second.
The #1 newsletter for the trades.
How to address employee needs and bolster retention
Retaining employees requires a proactive approach. Hofrichter offers the following checklist to ensure that your company and leadership meet employees' needs.
1. Inform employees about what constitutes good performance in their role.
Hofrichter coaches his clients to give their employees KPIs and build a self-actualization plan to help them achieve those goals.
2. Provide employees with a clear understanding of their future career path.
“A great strategy is if there's a complete plan for someone to go from a helper to a lead installer to a maintenance tech,” Hofrichter says. “There should be a whole career mapped out for them where they could be at your company for 10-15 years.”
The same goes for office support positions.