How Do Managers Influence Retention Rates?

December 6, 2022・9 mins read
How Do Managers Influence Retention Rates?

Over the last 2 years, millions of employees have participated in a mass exodus from the workplace. This so-called "Great Resignation" has made employment a workers' market. Phrases like "quiet quitting" and "act your wage" have gained traction as employees find community with others who do not feel valued and respected in their workplace. Several explanations for the exodus have been tabled, from inadequate salaries and limited career growth to poor work-life balance and a lack of fulfillment. However, all these factors can be linked to managers, who are responsible for shaping the conditions of day-to-day work. The manager's role has changed over the years as businesses have embraced technology and automation. But one thing will always stay true — managers are the gatekeepers of employee performance and job satisfaction.

Studies showing managers' influence on employee retention

Consider the studies and statistics below to better understand managers' influence on employee retention.

  • A McKinsey & Company study ranks relationships with management as the 2nd most important determinant of employee well-being after mental health. The same study reveals that daily interaction with bosses is the most stressful aspect of the workplace for 75% of employees.
  • A Development Dimensions International (DDI) study found that 57% of employees have left a company because of their manager, and another 32% have seriously considered leaving.
  • TINYpulse research reveals that 61% of employees consider trust between themselves and senior management critical to job satisfaction.

According to Adecco Group's recently published "Global Workforce Of The Future" whitepaper, a new "Great Resignation" wave is looming in 2023, fueled by inflation and a skill shortage in many sectors. Therefore, now more than ever, managers must create an environment where employees feel valued, respected, and motivated. Let's dive deeper into the critical role managers play in keeping their top employees on board long-term.

1. Managers can hire the right people for the job

As companies push to recover after the COVID-19 slowdown, HR departments are feeling the pressure to meet hiring goals and deadlines while ensuring they identify and attract suitable talent. While the competition for experienced candidates is fierce, employers still want to ensure they target, attract, and hire suitable candidates. A manager's ability to attract and retain talent can be the difference between a high retention rate and a crippling employee exodus. Good managers understand the company's needs and hire candidates that fit in skills, ambition, and culture. Hiring the right fit for a position increases the chances of hanging on to them for the long haul. Below are 5 strategies that managers can employ to ensure they make the right hires.

5 strategies for hiring the right people:

  • Local matchmaking: A company's existing online or physical network is already filled with people who know the organization and resonate with its culture. Looking for candidates from these networks can be more beneficial than advertising positions to the masses.
  • Employee referrals: According to a Society for Human Resource Management study, nearly half of all hires come from employee referrals. Employee referral programs can be beneficial in hiring the right candidate who is both a culture and skills fit.
  • Background checks: Background screening gives managers the confidence that a candidate is suitable for the job, trustworthy, and reliable. It builds trust from the beginning, leading to better retention.
  • Transparency: From the start, managers must be open and honest with any potential hire about the job title, responsibilities, team dynamics, pay structure, and career progression opportunities. This helps the employee better understand what's expected of them and whether their expectations are met.
  • Effective onboarding: A good manager will ensure that the onboarding process is smooth and comprehensive and that employees quickly integrate into their team. Onboarding new hires with the right knowledge, resources, contacts, and support is the first step to building a trusting relationship.

2. Effective communication with employees is essential

A manager's ability to communicate with employees is essential for employee retention. Research suggests that effective communication between managers and team members can lead to higher job satisfaction levels, increased motivation, and improved productivity. Proper communication makes staff members feel like they are part of the team rather than isolated individuals. As a result, they are more likely to be committed to the company's long-term success. For managers, communicating effectively with employees enables them to get valuable insights regarding employee satisfaction and morale. This feedback can help address issues proactively and create a better working environment. Managers can use the 3 ways below to encourage open communication with their employees:

  • Regular one-on-one meetings: Scheduling regular one-on-ones can help managers to stay connected with their team, monitor progress, and address concerns before they become more significant problems.
  • Open forums: Inviting all staff members to voice their opinions in an informal setting helps them feel like they are part of the decision-making process. Allowing employees to speak openly can lead to better problem-solving skills, efficient communication, and improved morale.
  • Timely feedback: Providing timely feedback to employees helps them understand their performance and know the areas in which they need to improve. That way, they become more productive and invested in their work.

3. Managers promote a flexible work environment

The COVID-19 pandemic gave employees the unique experience of working from home and being more in control of their schedules. As a result, flexible working arrangements became the norm, not only in terms of location but also in hours worked and tasks completed.

Managers must understand how to best incorporate flexibility in the workplace and promote a work environment where employees feel supported and valued.

Now, as organizations gradually return to the office, the positive impact of flexibility on employee well-being and productivity remains. Therefore, managers must understand how to best incorporate flexibility in the workplace and promote a work environment where employees feel supported and valued. By promoting flexible working models, managers can help reduce stress levels, improve productivity, and create a sense of loyalty towards the organization.

Tips to foster a flexible work environment

Workplace flexibility can take several forms, from flexible hours and remote working arrangements to part-time positions and job sharing. Below are 4 practical tips managers can adopt to foster a flexible work environment:

  • Encouraging communication: Open dialogue can help managers identify areas for improvement and ensure that all expectations are met.
  • Ensuring access to resources: Providing employees with the right tools and resources can help them remain productive while working remotely or on flexible hours.
  • Adapting performance reviews: Flexible arrangements often necessitate changes in the performance review process. Reviews must focus on results and outcomes instead of hours worked.
  • Encouraging work breaks: Flexible work can potentially lead to burnout. Managers need to promote the importance of taking regular breaks.

4. Managers offer career development opportunities

Inadequate career development is one of the most prevalent reasons professionals leave companies. According to Pew Research Center's 2022 American Trends report, a lack of advancement opportunities was the number 2 reason employees quit their jobs in 2021, 2nd only to low pay. Employee development is a mutually beneficial process. When managers help employees get the skills they need to progress in their careers, those employees are more likely to stay with the company. As a result, businesses get a pipeline of internal candidates with skills that fit well into the company culture. Investing in employee development may be the best way to compete against a shortage of skilled workers. At the same time, it helps reduce turnover rates in today's tight job market. Below are some practical ways managers can contribute to employee career development.

  • Providing mentorship: Having senior team members act as mentors for younger staff can help employees gain the knowledge and experience needed to advance in their careers.
  • Encouraging independent learning: With resources like MOOCs, podcasts, and e-books, employees can access various self-directed learning materials. Managers must encourage employees to take advantage of these opportunities and develop new skills independently.
  • Offering tuition reimbursement: Many companies offer financial incentives to motivate employees to pursue higher education or professional certifications. Managers should communicate this benefit to attract top talent and retain existing staff.
  • Creating career paths: Investing time into designing precise career trajectories for each role can help illustrate potential opportunities for growth and development.

5. Effective leaders prioritize recognition and reward good work

Companies with consistent incentive programs usually enjoy high employee engagement and increased job satisfaction. These are essential factors for retaining top employees. According to a Momentive study, 63% of employees who are "always" or "usually" recognized consider themselves "very unlikely" to quit their job in 3-6 months. Comparatively, only 11% of staff who are "rarely" or "never" recognized feel the same way. Recognizing and rewarding employees does not have to be costly or time-consuming. The following are some simple ways managers can recognize good work:

  • Providing verbal praise: Acknowledging employees in person can be a powerful motivator.
  • Sharing successes publicly: Sharing employee achievements with the rest of the team motivates staff and sets up expectations for future performance.
  • Giving out small rewards: Non-monetary rewards such as movie tickets or gift cards can show appreciation without breaking the budget.
  • Encouraging peer recognition: Peer recognition is one of the most effective forms of motivation. Encouraging employees to recognize each other's accomplishments will help create an atmosphere of collaborative support.

Employee retention is key to business success

A business is only as successful as its employees. When employee attrition is high, keeping a dependable level of service and quality becomes troublesome. Besides the time and resources companies expend on recruiting and onboarding, new hires need time to settle in and become productive. Moreover, high turnover rates can create a negative reputation for the company. That makes it even more challenging to draw in top talent. To ensure consistent standards, businesses need a well-oiled strategy that keeps their existing staff happy and motivated. Part of this strategy is equipping managers with the skills to foster employee retention. By utilizing the methods discussed above, managers can create an environment of growth and development that will help keep employee attrition at a minimum.

This communication is for informational purposes only; it is not legal, tax or accounting advice; and is not an offer to sell, buy or procure insurance.

This post may contain hyperlinks to websites operated by parties other than TriNet. Such hyperlinks are provided for reference only. TriNet does not control such web sites and is not responsible for their content. Inclusion of such hyperlinks on does not necessarily imply any endorsement of the material on such websites or association with their operators.

ESAC Accreditation
We comply with all ESAC standards and maintain ESAC accreditation since 1995.
Certified PEO
A TriNet subsidiary is classified as a Certified Professional Employer Organization by the IRS.