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Updated Oct 20, 2023

High Employee Morale Decreases Turnover

A study finds that employees who feel "heard and valued" have better morale and performance.

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Kaylyn McKenna, Business Operations Insider and Senior Analyst
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Where we work and with whom we work are vital aspects of life. Employees spend a significant chunk of their time at work, and their overall feelings about their jobs have a crucial impact on productivity and office morale. Amid the pandemic-induced Great Resignation, employers must take employee morale even more seriously to avoid losing their best talent.

The 2022 Engagement and Retention Report from Achievers Workforce Institute shows that the Great Resignation (also called the Big Quit and Great Reshuffle) is far from over: 66% of employees surveyed reported that they plan to job hunt in 2022. This is bad news for employers, many of which struggle to fill open roles.

However, the report found some critical insights into what employers can do to keep their teams happy and reduce employee turnover. It should come as no surprise that one of the most significant factors impacting retention is employee morale.

What is employee morale?

Employee morale encompasses an employee’s overall outlook, attitudes and satisfaction levels regarding their workplace. An employee with higher morale tends to be more productive, engaged and likely to remain with their current organization.

How does employee morale impact turnover?

Employees with low morale often feel their current employers aren’t meeting their needs. Thus, these employees will seek employment elsewhere to find what they’re missing. They may want higher compensation, a stronger company culture, better advancement opportunities or more supportive supervisors.

Workplace recognition is closely correlated with morale. As turnover rates soar, research shows that employees planning to remain in their current roles feel valued and supported by their employers. If employees are comfortable in their roles and have a positive outlook on their companies, they are likely to stay rather than jump ship to another employer.

Calculate your company's turnover rate with this formula: (Number of employee departures during the period ÷ average number of employees during the period) x 100 = employee turnover.

What’s the true cost of turnover for businesses?

When an employee quits, it can be quite costly to replace them. The average cost to hire a new employee is around $4,000, but that doesn’t reflect the full cost of employee turnover. Other costs are harder to measure quantitatively.

  • Productivity: One of the highest costs of turnover is productivity. When an employee leaves a company, their role typically sits open for a while as the company recruits and onboards a new staff member. During this time, their work may remain undone or get shuffled to another team member who has to divert attention from their own tasks. Even after you fill a role, it can take months for a new hire to become fully trained and rise to their predecessor’s productivity level.
  • Lower morale: While employee morale directly impacts turnover, turnover also impacts employee morale, creating a vicious cycle. If employees see their co-workers or supervisors leaving the company, their morale can plunge, inspiring them to leave as well.
  • Burnout: If a company or department is short-staffed, remaining employees often find themselves overworked and at risk of workplace burnout. In fact, 41% of employees surveyed by Achievers said labor shortages impacted them. Of the impacted employees, 70% reported taking on more responsibilities without extra pay or promotions, and 69% reported working longer hours. Employees experiencing burnout are likely to have less positive feelings toward their employers, resulting in low morale.
Did You Know?Did you know
Workplace incentives that may boost morale and motivation include discretionary bonus plans, profit-sharing plans, and retention bonuses.

What are companies getting wrong about employee morale?

For years, companies have tried to entice workers to stick around by offering job perks and changing the onboarding experience. However, perks aren’t necessarily enough to instill a sense of belonging in employees. Employee morale is not all about perks; it’s also about communication and culture.

These are some of the most significant factors affecting employee morale:

  • The company culture is weak. Notably, 48% of employees Achievers surveyed reported that company culture has deteriorated since the start of the pandemic. Because many employees and organizations plan to continue working remotely, organizations must rethink culture. Catered lunches and nap pods don’t work in a remote environment, but employers can instill a sense of culture and connection in their remote employees.
  • Employers aren’t asking for feedback. Many business owners don’t exactly know what employees want from their company’s culture – or what they want in general. Only 52% of the companies included in this study had surveyed employees about what they wanted to see improved. And, according to the study, many employees don’t feel heard when they do provide feedback to managers. To boost morale and improve culture, employers must seek and act on specific employee feedback.
  • Employees aren’t getting enough feedback. The inverse is also true, as many employees feel their managers fail to provide adequate feedback about their performance.
  • Employees’ career goals are ignored. The Achievers study also found that career progression was the top factor for employees who had decided to start hunting for a new job. However, only 59% of employees surveyed said they feel supported at work in achieving their personal and professional development goals. To keep top talent, employers should have regular conversations and check-ins with employees on their career goals and progression.
  • There’s a disconnect about compensation. Researchers noted that compensation was the area with the broadest employer-employee disconnect. While 72% of respondents said being paid market value or rewarded frequently would strengthen their workplace morale, only 52% said their company prioritized fair compensation and financial rewards. One way to address concerns over whether employees are being paid competitive market rates is to conduct salary benchmarking annually.
If you're looking for a system to help you track employee performance and development, check out our review of BambooHR, our top pick for the best employee monitoring system for performance management.

What steps can employers take to boost morale?

The Achievers Engagement and Retention Report doesn’t just highlight problems; it also offers some solutions. Here are the top suggestions for improving employee morale in order to reduce turnover.

1. Create a culture that retains talent.

The researchers offered advice on building a culture that attracts and retains excellent employees: “[The] key to retention is having a strong culture of belonging, built on a foundation of communication, employee input, and connection.”

Take the time to reevaluate your company culture. As the workplace shifts toward remote and hybrid working arrangements, consider changing how the people in your organization work together. Implement ways to engage remote workers, such as scheduling virtual hangouts and finding ways to gamify your workforce. Solicit employee input to understand how you can take your team’s needs and desires into account while reshaping your organization’s culture.

2. Prioritize employee recognition.

Providing more recognition to employees is an excellent way to improve morale and encourage retention. The researchers at Achievers advise employers to make recognition timely, specific, public and aligned with the company’s values.

Be especially diligent in providing recognition to employees taking on extra tasks due to staffing shortages. Many employees have had to adapt to changes in work styles, responsibilities and more, and it’s essential for employers to show appreciation. Recognizing their extra effort through increased support and compensation can also reduce turnover risk during internal labor shortages.

3. Act on employee feedback.

Employees want to feel heard. However, immediately making changes based on employee feedback can challenge business owners. The researchers have an excellent solution: Start small.

“Wherever possible, identify team-level micro-actions that will have an immediate impact on your employee base,” the report said. “Other feedback may require larger scale, slower actions at an organizational level, but when you can take action at the frontline, your employees will see and feel that effect directly.”

Show employees that you are listening and taking steps to integrate their feedback into your processes and decisions.

4. Promote peer connections.

Colleagues and team members contribute significantly to employee morale. Employees who feel connected with their peers are more likely to view their organizations and jobs favorably. Achievers advises business owners to encourage teams to hold social gatherings, whether in person or remote, once a month to build relationships outside of task collaboration.

author image
Kaylyn McKenna, Business Operations Insider and Senior Analyst
For more than 10 years, Kaylyn McKenna has studied the ins and outs of the workplace experience. With guidance designed to help both employers and employees, she advises on workplace matters affecting small businesses. This has ranged from providing recommendations on HRO and PEO services to sharing pointers on job interviews and managing increasing workloads. Her expertise has been trusted by JobGet, Business Management Daily and others. McKenna holds a bachelor's degree in business administration. While pursuing her master's in industrial and organizational psychology, she focused on relevant topics like organizational change, high-performance teamwork and customer relations. McKennna has also led webinars on workplace happiness and unconscious bias in the workplace. With her additional interest in e-commerce and finance, McKenna's work has appeared in Forbes, CBS News and
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