Employee Retention Insights: 10 Factors That Affect Employee Job Satisfaction

Three colleagues in a meeting

Employee satisfaction is directly correlated to employee retention. If your team is happy, engaged, and motivated, they’re more likely to stick around, which benefits both your company and customers. If employee engagement suffers, so does your productivity. The best way to boost your employee retention is to tick a few significant boxes. We’ve put together the top 10 factors you should focus on to take your team’s job satisfaction to the next level.


What is employee retention?

Employee retention is defined by a low turnover, indicating a high percentage of employees who remain for a fixed period. In essence, it’s when employees choose to stay in their current company instead of seeking alternative job prospects.

Employee retention is multidimensional. There will be some factors that are out of your control. For example, if an employee’s spouse is relocated to another country, there’s little you can do to retain them. However, there are some crucial factors to job satisfaction that are within your control. Understand how to focus your efforts on the right retention strategies, and you’ll see a vast improvement.

Before you make any adjustments, it helps to understand where you’re starting from. Use a simple formula to calculate your employee retention rate. It will give you a base to work from as you unpack new strategies. Take the total headcount at the end of a year (let’s use 650 as an example) and divide it by the total headcount at the beginning of the year (1000). (650/1000) x 100 gives you a 65% retention rate.

What is job satisfaction, and why does it matter?

Job satisfaction is that “good feeling” you have when you’re happy with your current work situation. These days we spend 80% of our time at work. Inevitably, it’s becoming more and more critical that we like what we do. According to a report from January 2021, 51% of Americans consider their jobs central to who they are. Individuals who are satisfied with their jobs experience higher psychological well-being and physical health.

On the flip side, reduced job satisfaction hinders productivity and can lead to poor organizational outcomes. With more than 50% of Americans feeling disengaged at work, job satisfaction is something businesses need to prioritize.

10 factors that affect employee job satisfaction

Employee satisfaction is multi-faceted. The list of considerations is endless, and it can be intimidating for businesses to decide where to start. We’ve put together ten factors to focus on from the outset.

1. A sense of respect on all levels within the organization

Whether it’s between teams or direct communication flows with line managers, it’s crucial for employees to feel heard. Creating an environment where respect is practiced and encouraged regardless of where you sit on the org chart is fundamental. Respect also speaks to diversity, equity, inclusion, and belonging (DEIB). The benefits of fostering a diverse workforce are undeniable. Businesses must establish a stance on DEIB and make it a core focus within the company.

2. Flexibility between employees and senior management

2020 saw a monumental shift in workplace trends, with 1 in 4 Americans adopting remote working for the foreseeable future. For businesses and employees to thrive in a remote environment, flexibility has to be a priority. Building a culture of trust allows for increased flexibility in the workplace through customizable schedules and remote collaboration. This also creates a positive environment for employee well-being. Flexibility and trust are significant factors contributing to job fulfillment and satisfaction among employees.

3. Benefits

The benefits offered by businesses play an important role in job satisfaction. For many employees, it comes down to leave policies. Two common types of leaves include paid time off (PTO) leaves like sick leave or vacation, and leaves of absence like parental leaves or caregiver leaves. More companies are providing paid leaves of absence, i.e. fully paid parental leaves, partially paid medical leaves, etc to recruit more talent. Also, ensuring compliance with various state and federal laws, and clearly communicating leave policies and benefits to employees can make them feel valued and supported.

4. Overall compensation

An attractive fixed salary is a pillar of employee satisfaction. While 63% of employees rank engagement as a crucial factor to “happiness,” a steady paycheck and income that affords an employee’s desired standard of living are essential.

5. Job security and protection

Job security and protection contribute to employee satisfaction. It’s about providing a sense of long-term commitment and support during difficult times. In the U.S., the Family and Medical Leave Act (FMLA) provides unpaid, job-protected leaves including caregiver leave, medical leave, and parental leave to eligible employees.

In Canada, the Employment Standards Act (ESA) also provides unpaid, job-protected leaves, including medical leave, parental leave, and family caregiver leaves, to eligible employees allowing them to take the time they need when they need it most.

While it’s exciting to be part of a new company, employees need to feel that their livelihoods are protected. Ensuring your company’s leave policies comply with the various job-protection regulations surrounding leaves can provide a sense of job security to your employees.

6. Opportunities to grow

Career development plays a significant role in employee job satisfaction. Clearly providing opportunities for growth, promotions, and upskilling are great ways to demonstrate an employee’s worth. It boosts morale, making employees feel valued for the long run. New opportunities mean change and progression, something that ensures employees don’t feel stagnant.

7. Company Culture

There’s something special about being a part of something bigger. For many employees, aligning with a company’s values is a critical motivator for their responsibilities. It’s what drives their project delivery, building a sense of passion and excitement around work. It is important for a company to clearly communicate its values to its employees, and ensure the company culture aligns with these values.

8. Recognition

Performance needs to be recognized and championed to boost overall job satisfaction. Employees are a lot more inclined to give it their all if they feel noticed and appreciated. Regular performance reviews, shoutouts, and acknowledgments are a great way to foster performance-orientated execution. Frequent recognition boosts morale and engagement.

9. Interest in daily work

Along with appreciation and recognition, employees need to feel a sense of intrigue and excitement about the projects they’re working on every day. If work starts to feel mundane and repetitive, morale and productivity suffer. Providing employees with the opportunity to work on projects outside of their standard role, and encouraging them to come up with ideas for passion projects or improvements are great ways to generate excitement and interest among employees…

10. A good work-life balance

A consistent trend in improved employee satisfaction is a supportive work environment. Employees want to feel that their company protects boundaries and encourages them to enjoy time outside of work. Whether it’s providing paid leave, ensuring meetings are during work hours or offering remote working solutions, employees want to know their work-life balance is a priority.

Retention strategies to focus on

1. Make retention a priority in recruitment

Employee retention starts with recruitment. Prioritize inclusivity so many different types of people have the opportunity to fit in. Shaping a diverse culture from the get-go is crucial to employee satisfaction and retention.

2. Provide career and educational opportunities

Make career and educational opportunities a priority for employees. Employees need to feel like they can grow professionally and within a company, and not feel stuck in a particular position. One way to do this is by introducing upskilling opportunities like tuition assistance or reimbursement, encouraging employees to gain relevant skills and feel supported in their professional growth.

3. Stay up to date with employee sentiment

Currently, many external factors are contributing to stress and anxiety, and it’s essential to ensure employees feel supported and heard. This can be done by conducting regular surveys and check-ins to gauge employee job satisfaction and understand general morale. This is especially important to do when employees are working remotely since it can be difficult to gauge morale in a remote environment.

4. Provide competitive benefits packages to employees

Providing competitive benefits packages promotes a healthy work-life balance and gives employees a sense of job security during stressful or important times in their lives. A competitive benefits package could include company holidays, paid time off, and paid leaves of absence. Clearly communicating policies and benefits to employees empowers them to take advantage of those benefits when they need them most.

Make Employee Job Satisfaction A Priority

Employee satisfaction directly affects your employee retention rate. Happy employees mean better productivity and company growth. Businesses must embrace retention strategies, incorporating them into overarching values for the benefit of both employer and employee.