What matters most when it comes to driving employee retention?

Many of us have heard time and time again that, "People don't leave companies, they leave managers."

But is there truth to this statement?

At Culture Amp, we used our newest benchmark data to challenge this myth. Our research suggests that manager-related survey questions were amongst the least predictive of people’s intentions to stay with or leave their company

We’ve also seen other People Analytics teams (like those at Facebook) crunching numbers that show managers might not be the key to retention. However, the ‘myth of managers’ persists in the face of such research.

Here we’ll show you how we came to our conclusion on what really affects employees’ commitment to stay - development opportunities and leadership.

What affects an employee’s commitment to stay?

We looked at data from over 300,000 employees (from a range of industries and geographies) who completed employee feedback surveys that included manager ratings in 2017. Commitment was measured using two of our key employee engagement questions that ask:

  1. Whether a person is currently committed to staying with their company
  2. Whether they believe they are likely to still be with their company in two years time

Unsurprisingly, our research shows these questions are the best predictors of whether someone will actually stay or leave.

The data set allowed us to examine the relative impact of different employee experiences, feelings, and attitudes on levels of personal commitment to stay with their company.

First we looked at each of the thirteen main areas we collect feedback on in our core employee engagement surveys and how well we could predict personal commitment scores with each of these. The chart below shows the percent of variation each factor predicted independently. We can see that Alignment, Leadership and Learning and Development were the highest three predictors and that Manager Experiences were at the bottom of the list.

 

Is it more about the few bad managers?

It may be argued that good managers don't convince people to stay so much as particularly bad managers prompt people to leave. Perhaps most managers do a fairly good job and it’s the very worst who cause people to feel less committed and leave.

To test this we looked at just the people with the poorest ratings for the top three factors (alignment, leadership, and learning and development) and their managers and compared the percentages indicating a commitment to staying with the company.

The data again supports the stronger effect of alignment, leadership and learning and development. Fewer people who rated these areas poorly indicated an intention to stay versus those who rated their manager poorly.

If bad managers were truly driving people out more than any other factor, we wouldn’t expect to see 32% of people who rated their manager poorest to still be indicating an intention to stay.

Our results suggest that other factors play a dominant role over and above immediate manager ratings in how committed we would expect people to be. One of the most interesting interactions we thought worthy of further exploration was the relative and combined impact of leadership and managers.

Our questions differentiate immediate managers by asking about them specifically, and broader company leadership by asking about the broader leadership teams or levels in their companies. And although managers have a role in leadership, our data suggests that people have separate experiences with each of these groups.

In line with this, the data here showed divergent effects and an interesting interactive effect between managers and broader leadership.

As you can see in the chart below, having a poor manager and poor leaders is the worst situation with only 22% of people feeling committed to staying with the company.

If we add a great manager to this mix we still only have 38% of people committed to staying (only an extra 16% of people). However, if we added great leaders to a poor manager we quickly rise to having 60% of people committed to staying (an improvement of 38%). Clearly leaders have a much stronger effect on employee commitment levels.

Intent to stay: The combined effect of Manager and Leadership

Manager effectiveness survey culture amp


However, what we found incredibly interesting is that adding a great manager to great leaders provides a huge amplification effect with the level of commitment rising to 89% (a further 29% improvement).

Do people leave managers, not companies?

No, people are more likely to leave companies that don't provide them with good development opportunities and leadership. Even good managers are likely to struggle to retain key employees and manage team retention rates if these factors are not looked after.

Companies like Yelp, Pixar, and Airbnb have created excellent development programs for their people. You can view their programs (and seven more great examples) in our article on 10 companies with great learning and development programs. If you’re looking for a more in-depth guide, hear from HR leaders at The Motley Fool, Automattic, and Online Education Services on how they’re approaching employee development in 2018.

Do managers matter?

Yes, managers do matter, but leadership and other factors come first (development opportunities and alignment). The employee experience encompasses more than a person’s relationship with their manager. It’s influenced by everything people encounter, observe or feel over the course of their employee journey at an organization.

Having a good manager added an additional 29% of commitment for people who also had great experiences with broader leadership. Managers can help employees connect even further with their organization when good things are in place. Great managers show they care about their team, and they know how to coach their people.

About Culture Amp

Culture Amp helps you make your company a better place to work. By making it easy to collect, understand and act on employee feedback, we enable HR leaders to make better decisions, demonstrate impact, and turn company culture into a competitive edge.

Learn more