Addressing emotional needs a key driver in employee retention

Employees are now prioritising emotional needs over traditional factors like pay and benefits for job satisfaction and retention, a study has found.
By: | December 26, 2023
Topics: Compensation and Benefits | Employee Experience | Leadership | News | Talent Management

A competitive battle for talent is unfolding where conventional tools such as generous compensation packages and benefits are losing their edge. According to a new Boston Consulting Group (BCG) survey, 28% of employees actively or passively seeking new opportunities foresee parting ways with their current employers within a year, even in a tight labour market.

The survey delved into over 20 different factors affecting employee satisfaction. Half of these factors are functional, including pay, hours, and benefits, while the remaining half pertains to emotional needs such as feeling valued, supported, and engaged in meaningful work.

While traditional drivers like pay, benefits and work-life balance remain prominent when employees directly express their considerations for a job change, a simulated purchase decision reveals a shift. Emotional needs, including feeling fairly treated and respected, job security, and enjoying work, emerge among the top choices.

Specifically, when linking factors to employees’ intent to stay or leave, emotional factors surpass functional benefits. Job security, being treated fairly and respected, enjoyable work, feeling valued and appreciated, and feeling supported emerge as the top five most crucial factors influencing retention.

BCG’s analysis also underscored the manager’s role, with great managers associated with a 72% reduction in attrition among satisfied employees. This influence holds across surveyed countries, except India where it ranks second. Beyond retention, great managers correlate with a 3.2x increase in motivation and a 13.9x increase in job satisfaction.

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The survey also identified three additional levers—supportive leaders, access to resources, and equal opportunity—significantly correlated with emotional needs. Combining these with great managers reduces attrition risk from 28% to 9%.

Deborah Lovich, Managing Director and Senior Partner at BCG, and co-leader of the team behind the study, concluded, “Most organisations think they are already investing in building their frontline leader capabilities, but what is required is a step change in thinking—fundamentally rethinking what great managers do and how they do it and investing in true enablement to sustainably build manager skills.”