Employee Embeddedness – The Key To Keeping Your Top Talent

by Daniel Hannig

“Everyone talks about building a relationship with your customer. I think you build one with your employees first” –Angela Ahrendts

When talking about employee engagement, the retention of employees is always a big topic and there are many ways and means which can help you improve your retention strategy. But what if we go one step further? What if we don’t just want our employees to be engaged, but embedded into the framework of the company? How would this affect retention?

Every company suffers from employee turnover. Especially when losing a particularly talented employee, managers are often faced with the question on how to prevent this in the future. Apart from the many well-known measures of employee retention, there are also other factors you can take into account when trying to keep your talent from leaving. A relevant, effective, yet rather unknown factor is employee embeddedness. While employee embeddedness is not the same for every company, there are certain elements that constitute the main framework of this concept. These are the ones we discussed in our webinar “Rules of Engagement – Why do People Leave Their Jobs?” and also the ones we want to talk about today. However, before we do that, let’s take a look at the main reasons why people leave their jobs.

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Understanding Turnover

Common reasons for people changing their jobs include unfair pay, lack of appreciation or, quite simply, better options in the labor market. In addition, there are often other reasons that cannot be eliminated by a pay raise or by the adjustment of the job title.

These are the reasons that can be addressed effectively by employee embeddedness.

As the name suggests, employee embeddedness is about making the employees feel more than just integrated into the company, it’s about making them feel entrenched or even deeply rooted into the company’s framework. This means that the employer has to think not only about the basic needs of the employees (salary, well-being, empowerment), but needs to go a step further and consider how to create an environment that employees no longer want to leave, mainly because it would require them to give up too much. This environment would naturally include a strong social network inside and outside of work, a strong personal and organizational fit, as well as a strong interdependence between the company and its employees. A closer look at these points will hopefully reveal all the more clearly the added value of investing in employee embeddedness.

Valuable Social Ties Through Employee Embeddedness

Employees will consider leaving their job if the social ties outside and inside the company lose value for them or did not have any value for them from the outset. But what exactly makes social ties valuable? Valuable social ties go beyond the well-known “I get along with my colleagues at work”. They involve mutual appreciation, honest feedback and the promotion of mutual growth. Especially as a manager you have to set a good example in this respect and take the first step to foster these ties. Only managers who show their employees appreciation and are willing to form valuable social ties with their team, can expect the same appreciation and willingness in return. As mentioned above, valuable social bonds can be developed both inside and outside the company. The company and the managers can have a big influence on both.

To sum up: The more valuable and numerous the social ties of your employees are, the lower the chance of turnover.

Person-Organisation Fit

Whether a person is a good fit for your company also depends on the person and their attitude towards the company. For example, a person fits well into the company if they feel needed at work, if they do not have to pretend to be someone else and can fully identify with the company’s goals and vision.

Conversely, this means that some employees will decide to change jobs once they notice that their goals are no longer in line with those of the company. For example, a pacifist factory worker who finds out that the screws he produces are used exclusively to build military machinery will not think twice about quitting his job. Likewise, the arch-conservative, republican software developer should think twice before taking the job in the liberal and leftist Silicon Valley, even if all other job conditions would be excellent.

In summary: The better an employee’s skills and self-concept fit the organization and the job’s requirements, the more likely they are to stay.

Sacrifices Needed to Make The Change

The bigger the sacrifices a person has to make in order to change jobs, the smaller the chances of them leaving the company. These sacrifices can come in many different forms, for example in the loss of certain employee benefits that mean a lot to the person due their interests (company car, yoga courses, or, our personal favorite, the bailout benefit). The loss of community may also be too big of a sacrifice to make for some people, be it a recreational club outside or inside the organisation, or even simply the own, perfectly coordinated, team with which one has formed a close relationship. The same is true for opportunities to learn something, or to advance one’s career. Especially talented employees are constantly thinking about how their professional life will look in the long run. Integrating them into important projects and ensuring that they are constantly challenged with new and interesting tasks will make them feel needed and embed them more into the company, thereby reducing their will to leave, even if other options are available.

To summarize: The bigger the sacrifices leaving requires, the more likely an employee is to stay!

Colleague’s Embeddedness

Never underestimate the power of group dynamics. The embeddedness of the whole group will influence the rate at which an individual embeds himself/herself into the company as well. Let’s say, for example, if a new employee notices that very few people hang out at the optional company barbecues, this immediately signals a lack of social connections among the employees and also a lack of embeddedness. Extremely disencouraging is also if employees notice that their colleagues are looking for new jobs themselves. Naturally, they will ask themselves why this is the case. Regardless of how happy the employees are at the moment, the colleagues’ negative emotional state of mind will have an indirect effect on their own well-being. Thus, warning signals like the ones just mentioned are bound to reduce the chances of becoming embedded within the company on an emotional level.

As a counter example, it is of course very beneficial for the company if new employees notice that many of their colleagues have been with the company for several years and continue to be happy and satisfied. It is also good sign for the company if many colleagues are brand ambassadors themselves, or if it is immediately noticeable that the management puts a lot of thought into the well-being of the employees, be it through open communication or by offering interesting benefits.

As a rule of thumb: Every embedded employee increases or reduces the overall embeddedness of the group!

The design of Pixar’s headquarters in California is a good example of a workplace that is, among other things, designed to embed employees. When designing the headquarters, Steve Jobs insisted that all social areas, i.e. canteens, lounges, bathrooms, be moved to the centre of the headquarters. The idea behind this was to bring the employees closer together, by giving them no option but to run into each other when they go to lunch.

As a manager, there is a lot that you can do to promote the embeddedness of your employees. Taking the abovementioned points into account is just the first step. You can find out what concrete measures you can take in our webinar Rules of Engagement – Why Do People Leave Their Jobs?

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