The employment landscape we’ve witnessed in the past couple of years has been crucial in highlighting the importance of investing in your employees.
With the “The Great Resignation” still impacting hiring efforts nationwide, retaining the talent you already have is more important than ever. The most effective way to prioritize retention is by investing in your team.
Oftentimes resources about investing in your employees don’t specifically cover the importance of investing in your leadership team – ranging from staff managers all the way to C-suite level executives. As the leaders of your organization, they’re responsible for driving initiatives that yield the results you need to be successful. It only makes sense to invest in them.
Some of the most influential entrepreneurs in the world speak on the importance of investing in their executives. Back in May some of the LGC team attended the National Restaurant Association Show in Chicago. The show featured Alexis Ohanian, co-founder of reddit, as keynote speaker which focused on disruption in the restaurant industry. Since leaving Reddit, Ohanian has focused his attentions on investing in new companies. During part of his address, he touched on how he invests – figuratively and literally – in the executives of the companies he works with.
Through his venture capital firm Seven Seven Six, Ohanian embodies this belief. During his keynote he spoke about how Seven Seven Six specifically allocates 2% of their investment for the founder(s) to use however they see fit – if it’s regarding health, wellness, or family. This might go towards childcare, therapy, a dietician, whatever the founder sees fit.
When he spoke about this initiative, he drove home the importance of compensating your executive team well. Not just regarding pay, but in terms of wellness benefits. Which all ties back to the value of investing in your employees. But what are some ways you can invest in your employees? And why exactly is investing in your employees important, and how can it benefit your business?
What Areas You Can Invest In
Investing in your employees doesn’t just mean pouring money into their paychecks, though that certainly doesn’t hurt. It can (and should) involve multiple initiatives that include financial, professional, and emotional aspects. When speaking about management specifically, some of these initiatives may include:
Even at the C-suite level, there’s always room for growth and development. Offering ways to continually grow their network or learn more about a specific department. If you don’t know how to encourage growth, don’t hesitate to ask. Most people will be eager to discuss their goals with you.
Plus, by NOT prioritizing professional development, you may be causing employees to look for a new job. A study by Deloitte reports “63% [of respondents] said their leadership skills were not being fully developed, and 71% of employees likely to leave in the next two years are dissatisfied with how their leadership skills are being developed.”
Actionable next steps:
- Research relevant conferences your executive could attend. Not only does this help grow their network and familiarize them with new subject matter, but it can help expose your business to new revenue streams.
According to a survey by the Harvard Business Review, “…our 2021 [Mental Health at Work] study showed that C-level and executive respondents were now actually more likely than others to report at least one mental health symptom.” Being a leader is hard work as it is. Sprinkling in a global pandemic, social unrest, and an intense political climate is a recipe for stress for even the toughest leader. By prioritizing mental health (whether it be at home or in the workplace) you’ll show that you’re not just invested in their professional life –– but their personal life as well.
Actionable next steps:
- Consider offering free or reasonably priced mental health benefits or implement regular (and mandatory, if possible) mental health days.
In this employment market, most of us understand the importance of offering a competitive salary. Investing in your management team isn’t just figurative, it’s literal. Your leadership team, especially the executives, need to feel like they’re being compensated for the work they do and their loyalty. Money isn’t the only way to show your team that they’re appreciated – but it’s certainly a great start.
Actionable next steps:
- Consider different ways to compensate your leaders that aren’t directly tied to their paycheck. For example, helping set up a college fund or other childcare related efforts.
Devote your time
Though it isn’t free, devoting your time to listening to your leader is one of the least expensive ways to show how invested you are in their success. Use your time to ask about their concerns, their wins, but really take the time to listen. And if there are changes that need to be made, implement them. Or you can use this time to learn about their personal life; their aspirations, their family and friends, how they like to unwind. Investment in them as an individual can be just as impactful.
Actionable next steps:
- Schedule a bi-weekly (that’s twice per month, not once every two months) catch-up with your leader(s). Don’t make this time about mindless chit chat. Use it to really find out what’s going on with them.
Why You Need to Invest in Your Employees
When you actively invest in your employees, you show them that their success is important to you. That they aren’t just a cog in the machine, but an integral part of the organization. Employees typically feel more empowered and engaged when they’re made a priority. There are so many benefits to investing in your employees which include:
Increased productivity. Executive Chef of Piada, Matt Harding, says the company’s growth – 24% sales growth and 8% unit growth in 2021 – is in big part because of investing in his team. Improvements to benefits like PTO, parental leave, and pay were met with positive reactions from his team. Harding says about this initiative:
“If you’ve got somebody who’s working tremendously hard throughout the pandemic and has really toughed it out and made the brand stronger, it’s time to reward them with opportunity. We didn’t necessarily do this to keep up with what was happening in the industry [with the labor shortage],” Harding said. “But we wanted to do things to attract and keep the best people.”
Reduced turnover. Companies across the U.S. spend $160 billion a year on employee turnover, which can cost up to 2x the employee’s annual salary. When you consider that your top performers often contribute more than 400% in productivity compared to the average worker, the cost of replacing them is even higher.
Investing in employees, even if it costs up front, you’ll save money in the long run by reducing turnover. When employees feel engaged and appreciated, they’re less likely to seek out a new job.
Lower hiring costs. As we mentioned above, it’s costly to replace an employee once they’ve left, especially in a management or leadership position. Maintaining an employee’s satisfaction and happiness requires less money and further establishes your organization as one that’s dedicated to the success of its employees.
Positive brand reputation. One of the most effective ways to attract great talent is by having a positive brand reputation. Employees are apt to share their work experience whether it’s good or bad. By investing in your employees, you’ll create a good work experience which will help lead to a positive reputation. From there you’ll see word of mouth referrals increase.
If The Great Resignation taught us anything, it’s that these days workplace perks can’t just be a cool break room. Employees want and need ‘perks’ that benefit their wellness and professional goals. Experts believe we’ll be feeling the effects of the pandemic on the employment landscape into 2024. Actively investing in your employees is the best way to show how important they are to your organization and keep them on your team well into the future.