Dale Carnegie of Orange County | Improving Leadership Effectiveness

Maslow and “The Great Resignation”

American organizations are suffering from “The Great Resignation” which, according to the Bureau of Labor Statistics, is leading record numbers of people to voluntarily walk away from their jobs each month. So, what is causing this trend? If we reflect on Maslow’s hierarchy of needs and overlay it to the problem, we see that people have always looked for the first two factors, their physiological and safety needs to be met (enough pay and benefits to live and feel safe). This is how most organizations focus their recruitment and retention efforts; focusing on wages and medical benefits as the primary reason employees want to work for an organization. Unfortunately, this is where many companies stop. Their logic is flawed meaning that while employees may be attracted to an organization because of compensation and benefit factors, they will not stay at that organization if it is ignoring the rest of their needs.

When looking at the next three levels of Maslow’s hierarchy (which include Belonging, Self-esteem, and Self-Actualization), we can see some major indicators pointing to the true critical factor causing the “Great Resignation” …Organizational Culture. A toxic organizational culture is the disease that causes people to resign from their jobs.
These factors from Maslow’s hierarchy help us to understand what people want from organizational culture today. This includes:

  1. Belonging: People are looking for an organization that gives them work-life balance as well as a sense of connection, pride, belonging, and community.
  2. Self-Esteem: People want to work for an organization that builds their self-esteem through recognition, respect, inclusion, and freedom.
  3. Self-Actualization: People want to know the organization is aiding them through development, growth, and coaching that will help them realize their full potential.

These factors are much more difficult for organizations to understand and address. As a result, executives often put little effort or priority into the culture they are creating and the effect it will have on the retention of their most critical resource… their people. According to the EBN (Employee Benefit News), it is estimated that “it costs around 33% of a worker’s annual salary to replace them”. Companies with high turnover rates typically lose between $16,500 to $120,000 per lost employee. This pales in comparison to the value of the knowledge and productivity that employees bring to the table. If executives had a true understanding of the money and productivity lost due to employee turnover, they would do everything in their power to minimize it.

Organizations that truly want to address retention issues should start with putting together a strategic plan for “Culture Change”. Here are a few elements to consider as you put together a comprehensive plan:

  1. Conduct a Cultural SWOT Analysis. The saying goes that “perception is reality”. Because the overall goal is to attract and retain more people through culture change, it makes sense to find out the perceived Strengths, Weaknesses, Opportunities, and Threats (SWOT) from the people that currently work there. Conduct cross-functional SWOT meetings to get an overall understanding of how the current employees view the culture of the organization.
  2. Conduct an Employee Engagement/Culture Assessment. Some organizations may want to conduct these types of assessments instead of (or in) conjunction with a SWOT analysis. When done anonymously (and with the right questions), an assessment can help shed light on areas that may need to be addressed in order for the organization to develop a healthier culture. Organizations may want to use a third party to conduct the survey, compile the results, and make recommendations for steps to be taken.
  3. Culture Vision/Mission/Values/Ethics. Once you have the data of areas that need to be addressed, the leadership team should come together to define the Cultural Vision/Mission/Values/Ethics they want for the organization. Create a vision to describe the ideal image of the culture the organization wants to achieve. This should also be aligned with the overall vision of the organization. Then craft a mission to clearly define what must happen to achieve the culture vision. Values and ethics govern the operation and conduct of the people within the organization. When your values/ethics are aligned with the culture vision, it creates a higher level of commitment at all levels.
  4. Strategic Intent. This is both a high-level and short-range view of the long-term goal. Strategic intent focuses on how the organization will achieve its cultural vision. It is the responsibility of the leadership team to embody the cultural conduct of the cultural vision. The entire leadership team needs to be bought into the culture vision and create short-term objectives to align themselves and their departments with the overall culture vision of the organization.
  5. Cultural Competencies/Training. The leadership team determines what competencies are fundamental to the success of the cultural initiative. This is an unbiased look at how the leadership team will need to change first before the organizational culture will change. Once determined, use internal or external resources to make sure all leaders within the organization have the necessary training to communicate, coach, and respond in a manner consistent with the cultural vision. Once this is achieved, the people within the organization determine if additional training is needed.

Taking on this type of initiative can be challenging. Organizational culture does not change overnight. It takes hard work and commitment to make lasting change. Organizations that want to proactively make a difference and address all five areas of Maslow’s hierarchy should prioritize creating a healthier culture. By ensuring the organizational culture is developing the Belonging, Self-Esteem, and Self-Actualization levels of Maslow’s hierarchy, the payoff will be increased employee engagement, reduced turnover, higher productivity, and overall growth in bottom-line results.

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