Work Wonders
Back in late 2021, we decided that instead of chatting to each other about the challenges and triumphs of people management in small businesses, we should invite you to join the conversation. And the Work Wonders podcast was born! Managing people is serious business. We bring you all the latest, practical advice without the pain. The podcast is brought to you by Aster HR https://www.asterhr.com.au/ and your hosts are Angela Gauci and Susan Rochester
Work Wonders
Leadership’s Role in Retention - how it can either foster or hinder employee retention
In this episode we explore how leadership influences employee retention. We discuss why retaining talent is so important, the role leaders play, and how different leadership styles can either keep your employees happy or push them away.
We'll be breaking this down into three main sections:
- why retention matters
- how leadership affects retention, and how each leadership style is different
- share strategies to help you keep your top talent engaged and committed
You can find the show notes for this episode here
Would you like to submit a question to the show? Let us know on our website or via LinkedIn.
Brought to you by Aster HR, the Work Wonders Podcast is hosted by Angela Gauci & Susan Rochester and is recorded at Launch Pad at Western Sydney University.
All information or advice included in this podcast is general, has been developed as a starting point for your business, and should be tailored to your specific requirements. It should not be considered legal advice. We have made every attempt to ensure the accuracy and currency of this information at the time of recording. However, references to things like employment laws are subject to change. For specific advice relating to your business, please get in touch with us.
Welcome to the Work Wonders podcast brought to you by Asta HR, where we simplify the human side of business. I'm Angela.
Speaker 2:And I'm Susan. Let's dive into today's episode and find out what you've been wondering about.
Speaker 1:In today's episode, we're going to look more at retention. We'll explore why retaining talent is so important for you and the role that leaders play, and how different leadership styles can either keep your employees happy or push them away.
Speaker 2:That's right, Angela. This episode is going to be full of insights to help you understand the connection between leadership and retention and share strategies with you that will help to keep your top talent engaged and committed.
Speaker 1:So let's get started. This is the Work Wonders podcast. Hi Susan, hi Angela, okay. So retention is the aim of the game. We want to keep people employees in our business for longer. It's certainly the cheaper way to do it. So when we say retention, what we mean is the ability to keep employees in their job for a long time. High retention rates are going to be really crucial for a business owner because it means that you're holding onto people in their role. There's less need to recruit someone different, there's less training involved, potentially, and all that sort of thing. On the flip side of that, high turnover or low retention can be costly, because think of recruitment expenses, lost productivity while you've got that downtime of someone leaving and someone coming, and the time it takes to get a new employee up to speed.
Speaker 2:That's exactly right, Angela. In fact, there's been a study done by the Society of Human Resource Management in the States that found that replacing an employee can cost anywhere between 50% to 200% of their annual salary.
Speaker 1:I'd agree with that, depending on the role.
Speaker 2:But there's more. So it goes beyond the financial costs, doesn't it? Yeah, because it also impacts the overall morale and culture of the organisation.
Speaker 1:Yeah.
Speaker 2:And when people stay longer, you've got that continuity and that institutional knowledge that can really drive a company forward. When you've got everyone knows what's what and what's going on.
Speaker 1:Yeah, yeah, the more invested they are. Yeah, okay. So then we think about what's leadership's role and how does that come into play? Well, leaders are really the architects, if you like, of the work environment and the culture of a workplace. They set the tone for, or at least maintain the tone, you know, for, the organisation and how employees feel about their job. A good leader will inspire trust, provide really clear direction, like you say, so people know where they're going, are engaged in that, and have or create that really supportive atmosphere that everybody's happy to be in.
Speaker 2:Yeah, and they want to stick around. So it's not just Angela and I saying this because it sounds nice. There's actually quite a lot of research to back us up. In fact, there's a really strong correlation between effective leadership and high retention rates. One study by Gallup found that the managers account for at least 70% of the variance in employee engagement scores across business units. Wow, so that means that the quality of leadership directly affects whether employees choose to stay with the company or look for opportunities elsewhere.
Speaker 1:That makes sense, because I've heard it said that you leave a boss, you don't leave a job, exactly yeah.
Speaker 1:All right. So we've told you what we mean by retention and why we think it's important or certainly the stats are backing us up there, susan but let's now focus on, like we said, the impact of a leader on retention. So let's think about the positive impacts. Let's start there. Positive is always a better way to start. Start there. Positive is always a better way to start. So supportive and communicative leaders. They will foster loyalty by making employees feel valued and heard.
Speaker 1:That's always important. When a leader provides clear goals and meaningful feedback, it helps a person stay engaged and on the right track, not just with their performance but with their link to the purpose of the organisation. When an employee understands their role and the bigger picture of what's trying to be done with the team and the whole organisation, they're much more invested in seeing the whole team and the organisation as a whole achieve that and be part of it. They're much more motivated, would you say. Oh, yes, I'd agree with that.
Speaker 2:But I'd also say it goes further than that, because people like to be seen. We want to be acknowledged. I don't know if you've ever worked in an office where there was that one person who wouldn't say good morning to anyone in the morning. But aside from that, it's the leaders who recognise and appreciate their employees' efforts are going to create that positive work environment. And that doesn't have to be anything fancy. It can be as simple as saying good job, or a shout out in a team meeting, yep, or it can be structured like an Employee of the Month program. But it's the acknowledgement that makes the employees feel appreciated so they're more likely to stick around.
Speaker 1:Yeah. So on the flip side, then I'll be the negative, nancy. Poor leadership, I guess it's obviously going to significantly harm retention. So things like micromanagement, the lack of trust among staff and leaders and everyone, inadequate communication, not clear on expectations they're all really negative things that are going to be a problem. When leaders are overly controlling rather than trusting their employees to do their work, or they fail to provide support, an employee is going to become pretty disengaged and, like, as you said, will go looking somewhere else for something better.
Speaker 2:And there's something else that we've spoken about elsewhere as well, which is the need for that clear communication, clear instructions, so that people aren't left thinking where do I stand, what am I doing? Or should I find somewhere else where I know what's going on?
Speaker 1:Yeah, exactly, I'm always not surprised, but I'm always reminded of how communication can be thought of something so simple. But it's all about how a person understands what you're giving them. That's right, and it can be easily reminded to you or slap you in the face sometimes. That not always is your message received as the way you intended it, Exactly you know what you said. Yeah, but do they know what you said?
Speaker 2:So there's also another negative aspect can be if there's inconsistent or unfair treatment by leaders, that can really be a huge driver in people leaving. If they feel that feeling that the promotions and the rewards or even feedback are being inconsistently applied, then you know how are they going to trust the leadership and, and more than that. We've talked about the effective communication, but that's also about constructive feedback as well.
Speaker 1:Yeah.
Speaker 2:So that employees know, as we said, what's going on and don't feel that sort of lost. Or you know, I'm just drifting along, I come in, I do my job, but what's it relate to?
Speaker 1:Okay, so let's think of that in a practical example. Let's consider a business where the leader is always changing or decisions are made without kind of input from anybody.
Speaker 2:Yeah.
Speaker 1:So that instability can create a really uncertain workplace. People don't know what's coming, stressful and, yeah, definitely prompting people to go. This doesn't feel good. Uncertain workplace people don't know what's coming, um, stressful and um, yeah, definitely prompting people to go that this doesn't feel good.
Speaker 2:I'm gonna look for a place that is actually better and you know, one of the worst um situations to be in is where you think you're doing what was required and you've headed off down one path yes and then suddenly get told oh no, we're not doing that, we're doing this now.
Speaker 1:Yeah.
Speaker 2:This has become another priority, without any proper explanation of why things have changed or any querying of why you've headed in one direction.
Speaker 1:Yes.
Speaker 2:Which you thought was the correct direction. Yeah, so as a summary of all that, then, it's really essential for leaders to maintain that consistency and fairness and open lines of communication if they're going to keep their teams engaged and committed.
Speaker 1:Yeah, I've had some managers say that there's a little bit of fear in allowing too much information to employees or what's seen as too much information, especially around decisions or strategy, or even, dare I say it, asking their opinion about those things. But I don't know. I see it as a way that people can really start to feel invested in what's happening.
Speaker 1:And look, you can take and leave an opinion of somebody if you're the leader, but allowing them the chance to speak is a really positive thing to do and simply sharing, like you said, that example of when things change. You know, if you were just letting them know, yeah, things have shifted, we're going this way, we're going that way is respectful.
Speaker 2:Yeah, that's true, it's respectful and it builds that trust and, as you said, you can say you know. Thanks for your opinion, but we're going to do this. And that's a way of communicating your reasons for doing what you're doing as a leader. Whether or not they come on board, that's a matter of them. But again, communicate, communicate, communicate.
Speaker 1:You can never over-communicate and, as we've talked about before, getting a little off topic here. But recruitment, it starts way back then when you think about someone that's connected into your vision and your values and your purpose. If you're starting it way back, then with the right people in your team, these sorts of hiccups are not going to be a problem.
Speaker 2:Yeah, that's true.
Speaker 2:Okay, I'm going that way with you, and the same with getting people's input. You know, if you've hired for values, alignment as well as skills, then presumably the input that you get from those people is going to be input that you might like. Very true, you might not like it, but input you might need Two different things, I suppose. Yeah, how did you get into your business? Sometimes it's because you're great at a particular thing or you've got a passion for something and you know that you can do it a little better than what other people are already doing.
Speaker 2:Now that you're in business, you've discovered there's a lot more to it than just having the right skills, especially when you've hired a team. You might have learnt the financial skills that you need because you had to, basically, but where do you go to develop the HR and the leadership skills that you need? If you're feeling overwhelmed in managing people and all the other things that come with running a business, we can help you. We'll guide you through the skills you need to feel more confident in leadership. Go and check out the coaching page on our website or schedule a call with us at astorhrcomau. Now it's back to the episode Now it's back to the episode.
Speaker 1:Okay, susan, so we've talked about how leadership can impact it, but we said we'd talk about leadership styles, so let's unpack that a little bit more. So different leadership styles are going to either foster or hinder retention. Let's start with transformational leadership, so transformational leaders inspire and motivate their teams by creating that vision and encouraging professional and personal growth.
Speaker 2:Exactly so. Transformational leaders, you will know, by their ability to connect with employees on an emotional level. Now we don't mean the place is in emotional chaos all the time, or anything like that. I just mean that you're connecting with the heart as well as the head, so it's really fostering a sense of purpose and commitment which is naturally going to lead to higher retention. This is what we've been talking about all along, I suppose. So an example of that might be that a transformational leader will encourage their employees to pursue their career goals and provide them with the resources they need to achieve those career goals.
Speaker 1:Whereas, on the other hand, a transactional leadership focuses more on the tasks, the rewards, the penalties. And while that style can maintain stability and achieve goals and targets and things like that, and it can certainly ensure that employees are doing the right thing, it might not inspire long-term loyalty. So employees might stay perhaps for the short term, but just stay for the rewards commission, whatever it may be, but they don't necessarily feel that deep sense of connection to the organisational purpose.
Speaker 2:So that transactional leadership could be effective in certain situations. So where it's a highly structured environment's needed, where there needs to be clear instructions and rewards, can you think of any examples where transactional leadership might be appropriate, where it's all about giving instruction and being very clear?
Speaker 1:Perhaps something that is urgent in nature like a medical position or something.
Speaker 2:Or a bushfire.
Speaker 1:Yeah, emergency yep yep, yeah.
Speaker 2:So you know, in that situation yeah, there's times for it.
Speaker 2:It's totally appropriate, but over the long term, if you don't have those elements of inspiration and personal growth that we talked about earlier, it's going to be hard to keep employees engaged over the longer term. I made a note, though, that I was thinking about the generational differences. Okay, so this is something that we've talked about in the past, and we look at younger generations in the workforce. They're, I think, possibly more wanting to be inspired, wanting to have a purpose around their work. I think that's fair to say, yeah, especially since COVID and all that, and everyone's gone through a bit of a well, why am I really doing this?
Speaker 2:Yeah, especially if I'm going to get out of my slippers and go somewhere, make it worthwhile, whereas, you know, the more mature of us, who probably started work under a command and control structure, are probably more tolerant of that sort of transactional leadership. That's a good point.
Speaker 1:Okay. So if we flip it now and think about servant leadership, servant leaders will prioritise their employees. They focus on wellbeing and development. That sort of style of leadership creates a really supportive obviously work environment. Everyone feels looked after. It's obviously going to enhance retention in that way. But it's interesting to sort of compare it to what you just said there. You know it's very, very different.
Speaker 2:It is because you're building these strong relationships. They're based on trust and respect. You're basically saying well, you know, I trust you to get the job done. You're putting the employee at the centre, putting them first and helping them to feel like they belong. So obviously that's going to help people feel like they should stick around.
Speaker 1:Yeah. So in contrast, let's think about autocratic and democratic leadership styles. So autocratic is those leaders where you know they make decisions unilaterally, often without input of anybody else. That can sort of lead to your employees obviously not feeling empowered to speak up, not feeling part of what's been going on. Obviously it's going to lead to things like turnover and that sort of thing like we're talking about. So employees just generally don't feel valued, probably less likely to make a contribution because they don't think much is going to come of it, just kind of come there and do their job and go home and not really give their opinion.
Speaker 2:So democratic leaders are quite different. They're the ones who actually want the opinions. They're going to involve the team in the decision-making processes and that obviously is going to feel more engaged, because they're going to feel that their voices are heard and that their ideas matter. So they're more likely to stay committed to the organisation. Now I was wondering if we could have a bit of a chat about how that might look in practice. Yeah, okay.
Speaker 1:So a democratic leader might hold a regular team meeting, let's say, and gather inputs on projects that are coming up or encourage brainstorming and that sort of collaboration. This will not only improve the decisions that might come out from that and the quality of what's being done you know, more minds are better than just one but it also strengthens team cohesion and loyalty as well. So that's cool.
Speaker 2:Yeah, exactly. So a key takeaway, then, on leadership styles is that they do play a crucial role in shaping employee experiences and their decision to stay with the company or go.
Speaker 1:Yeah, look, they do. And I think we've talked about this before in a previous episode Susan I think it was last season, episode 11, season five where we talked about the difference between a boss and a leader, and we've opened up a lot of different leadership styles here, the difference between a boss and a leader, and you know, we've opened up a lot of different leadership styles here. And yes, there are times when you might be more autocratic or more democratic or whatever it may be, and that's okay. But I guess it's about having an awareness of that and not just being only one way. I think.
Speaker 1:Exactly.
Speaker 2:Are you feeling overwhelmed by all the things that you need to do to manage people in your business? We've got changes to legislation, different generations in the workplace, managing the expectations of the people that you employ. Why not hand all that over to the experts and get on with what you do best? The experienced team at Astra HR can quickly give you the advice that you need and get you headed in the right direction. Without HR support and coaching for you with managing people, it all becomes so much simpler. Schedule your free call today at astrohrcomau. Now let's get back to the episode.
Speaker 1:So now we're on to thinking a bit more deeply, then. Okay, we know why retention is important, what it is and how a leader and their style of leadership can influence that. But now let's talk about strategies to help enhance retention. So one effective strategy is to encourage open communication, as we've talked about, and active listening, things like that regularly checking in with employees and genuinely listening to their ideas, their concerns, any suggestions they have and their opinions, and they can address things that might come up before it's actually a big problem or before somebody decides to leave.
Speaker 2:Exactly. One thing that we haven't mentioned is getting input via surveys.
Speaker 1:Oh yeah.
Speaker 2:So it can be very easy to do a quick regular survey where you just get a bit of a feel for how everyone's feeling and get feedback on what's going on.
Speaker 1:Yeah, or if you're in that sort of workplace where people check in you know, I've seen it done where there's like a laptop or like a sort of thing where you clock in for your day. And that sort of thing can also just have some smiley faces on it Exactly.
Speaker 2:You know how are you feeling today or at the end of the day.
Speaker 1:How are you feeling? You know little things like that, just to, yeah, check in.
Speaker 2:One word of caution on surveys, though is there's no point in gathering the information if you don't intend doing anything with it. So true. Another thing that we talked about previously in this episode was about providing opportunities for professional growth, so that's about investing in employees' development and their careers. We'll go into that in a later episode in this. But when there's a clear path for growth, then they're more likely to stay. And again, I think that you need to have an eye to the generational and individual requirements there.
Speaker 1:Yeah, it's different for everybody.
Speaker 2:Expectations is a better word.
Speaker 1:So what about recognition and rewards programs? Susan, they're also a really important thing to think about Regularly acknowledging a person's contribution or their achievements. So it could be like you said earlier it could be as simple as a thank you or how you did a great job about that, or it could be something more formal, like an awards or employee of the month sort of thing.
Speaker 1:It will obviously boost morale. If people see other people being valued and their contributions being valued, they'll be looking to do a better job too and see their contributions valued and it obviously reinforces the values of the organisation. And everybody loves to be told they're doing a good job. No one comes to work to do a bad job.
Speaker 2:True. I just put one proviso on that, though, but it goes back to the basics, which is basically that you need to be fair and consistent.
Speaker 1:Yeah, that's true, otherwise it can have the opposite effect. Yes.
Speaker 2:So fostering a positive and inclusive workplace culture is obviously essential. So that means creating an environment where employers and we can't say this too many times but where they feel respected, included and part of the team. There's a lot of practices that you may or may not just think of common sense and do naturally, or you might have to give a bit more thought to that are going to make people feel like they're included.
Speaker 1:Yeah, you're right, culture's a huge one. We'll unpack that more in another future episode as well. I'm thinking about work-life balance and flexibility. That's something that gosh. We've talked about a lot in the last little while, haven't we?
Speaker 1:since COVID? But it really has become something that's a norm, you know, for people. And flexible work practices can be so many things. It doesn't just mean working from home. It could be flexible start and finish times, flexible days, rdos you know there's so many different ways to do it. Flexible days, rdos you know there's so many different ways to do it. It really comes down to allowing a person, an employee, to, you know, come up with what works for them and fit their personal life in with their professional life. You know person needs to manage all these things in their life and they can still be a really constructive employee in doing that, and it can definitely lead to higher retention if people are looked after in that way.
Speaker 2:Yeah, definitely, and I think really. The last point that I'd like to make about leaders is they need to lead by example, so that means demonstrating the behaviours and values that you expect from your team.
Speaker 1:And if you're doing that.
Speaker 2:That's going to build trust and set a standard for the entire organisation. It just reminded me of a news item I saw recently regarding a state government department in New South Wales which is telling people they have to get back to the office.
Speaker 1:Oh yes.
Speaker 2:But the issue is that the managers have to come back to the office and they're not all happy about that. So, yeah, that comes to that. You know, leadership, showing the way and setting the example.
Speaker 1:Good place to finish. I think that wraps it up nicely, susan. So look, we've talked about the crucial role that leadership plays in employee retention. I think we've, you know, explored all those different styles of leadership and how each of them can either foster or hinder retention foster or hinder retention.
Speaker 2:Yeah, and we've also shared some actionable strategies that you can use or at least get you thinking about. You know how you could do a better job of keeping people in your business, if that's an issue for you.
Speaker 1:So I wonder, as you're listening to this today, if you're reflecting on your own leadership style and perhaps the leadership within your organisation, if there's more than just yourself, and consider how you might apply these strategies to improve the leadership within your organisation, if there's more than just yourself, and consider how you might apply these strategies to improve the retention in your team and create a more engaged and committed workforce. But if you enjoyed this episode, as always, please hit the subscribe button, leave us a review and just tell someone you know We'd love to get the word out to more people to help them with their workplaces.
Speaker 2:We sure would, and don't forget to join us next time when we'll be talking about how to build a culture of recognition Nice one to lead on from this. Yeah, until then, keep leading with purpose and fostering a workplace where everyone thrives.
Speaker 1:Thanks for listening to the Work Wonders podcast brought to you by Asta HR. Hit the subscribe button now to never miss an episode, and if you'd like to continue the conversation with us, you can find us over at astahrcomau. See you in the next episode.
