Replacing an employee costs a company roughly 33% of the employee's annual salary. That’s only the direct cost. High turnover also costs in terms of productivity and company morale. That’s why employee retention of productive employees is a metric that reflects well on everyone, not just human resources.
We’re also understanding more clearly the connection between a strong cultural fit and employee retention. A meta-analysis published in Personnel Psychology (Summer 2005) on the issue of an individual’s fit at work found that an their level of organizational commitment correlated most strongly with the employee’s organization fit. In terms of organizational commitment, organization fit was even more important than an employee’s sense of fit in their job, with their team, or with their supervisor.
Many factors influence employee retention. The starting point for success is making a good hire, which means that assessing a candidate’s cultural fit within your organization should be as important a part of your recruiting process as matching job skills.
Culture fit does not mean lack of diversity
Work culture isn’t personal culture. It’s a mistake to think a company can shortcut the process of finding an organizational cultural fit by only hiring people with a shared personal culture. People are more complex than that. In any case, that hiring approach could easily create liability for unlawful hiring practices.
Nor does cultural fit mean that everyone you hire thinks the same or even in the same way. There’s no room for innovation if everyone thinks the same. Companies have long appreciated the different skills and characteristics introverts and extroverts each bring. Companies are also starting to appreciate the competitive advantage of neurodiversity hiring.
Follow this three-point plan if you want to hire using a meaningful cultural fit assessment.
Define your organizational culture
Organizational culture is more than your mission or values statement. Obviously, you want hires to buy into your company mission. You need to identify the operational norms and attitudes. The culture of how employees work and communicate, not the why, is the culture in question when it comes to employee retention.
To uncover company culture, you can take an employee survey, talk directly with employees, attend meetings, and walk through the offices to notice how people interact. Here are some of the traits you want to uncover:
- How do people communicate? Face to face or via chat apps and email? Is lively debate encouraged or are most people quiet during team meetings?
- What’s the level and nature of the camaraderie? Do people proactively assist their teammates or even people in other departments? If there’s a more competitive atmosphere, is it one that fosters a positive competition or destructive one? How are the personal connections among employees?
- How are expectations set and how is accountability managed? Is your organization very top-down in management, or does it have a flatter org chart? Are people comfortable seeking out and asking questions of senior management, or are there strict boundaries? Is it a high-pressure atmosphere or more relaxed?
You can’t hire for cultural fit if you don’t first have a clear picture of what your culture is.
Ask candidates questions that reveal their work cultural assumptions
When you ask candidates why they left their last position, include questions about the culture of that company:
- How would you describe your company’s culture?
- What did you like about that culture?
- What role, if any, did that culture play in your decision to leave?
- What would you change about that company’s culture?
You should also ask about their impressions of your company’s culture. Don’t share with them what you’re looking for, so you don’t influence their answers.
- What are your impressions of our company culture so far? How would you describe it?
- How do you see yourself fitting into such an environment? What parts would be easy and what would require some getting used to?
You can also ask questions that touch directly on your culture, without sharing what your organizational culture is.
- Do you prefer getting feedback in person or via written report?
- How do you let your supervisor know that something isn’t going according to plan?
This type of question can ferret out a candidate’s genuine work cultural style without pushing them towards a specific answer.
Talk to the people who’ve worked with them
Candidates may not always have an accurate picture of who they are in the workplace. Talking to references and former employers is vital to getting a reliable sense of how a candidate works.
Use the list of questions above, but adjust it. For example, ask them to describe their culture and how well (or not) the candidate fit into it. What role did cultural mismatch have in the decision to separate from the candidate? Regardless of whether the company shares your culture, this is valuable information.
Good cultural fits reinforce your culture
Hiring candidates who are good cultural fits isn’t just about improving employee retention. It’s also about reinforcing and encouraging the organizational culture you want. As the saying goes, “Culture eats strategy for breakfast.” Having a cohesive workforce that shares a common work culture makes executing business goals easier, which in turn fosters a positive work environment for everyone.