For hourly employees, wages matter. Offering a higher pay in comparison to your other businesses can give you a competitive edge in the saturated job market. It can help you attract your future manager, head waiter or head chef! But higher wages alone are not enough to increase employee retention. In fact, unless paired by other changes, high wages don’t turn bad jobs into good ones and the cost will likely reduce company profits.

Why? Because, with the growth of the millennial workforce, there are things employees value more than money: culture, benefits, and growth.

A good company culture

70% of professionals in the U.S. today would not work at a leading company if it meant they had to tolerate a bad workplace culture. And “good culture” is more than ping pong tables in the break room and free snacks while working. Millennial employees define good culture as flexible, diverse, and inclusive.

To ensure you’re building a work environment that checks these three boxes, put yourself in the minds of your employees: make work as easy for them as it is for you. Put schedules out in advance. It makes it easier for people with less flexible personal lives to find someone to cover for them if needed. Remember to check in with employees. Ask them their opinions on processes, their ideas for change. In hiring and recruitment, make an effort to build a diverse team.

Managers should be accessible, empathetic, and fair. Too often, managers do not listen to their employees, or do not explain why policies exist, why the less attractive parts of the job—doing dishes, waiting on rude customers, etc.—are necessary for the successful business. Poor leadership can cause people to leave. In a study of 7,272 U.S. adults, Gallup found that 50% of employees left their job “to get away from their manager.” Every person on your team builds the culture, but change starts from the top and trickles down.

Better benefits, not more perks

91% of millennials say they are most attracted to a new job by salary and benefits. Benefits—health coverage, paid-time-off, parental leave—matter more than perks. Offering your employees a discount on food while they’re working is great in the moment, but it’s not a long term benefit to their life outside of work. That’s the difference: people want jobs that support a healthy work-life balance. Your policies need to extend beyond their work window.

Investing in long-term benefits can help increase employee retention and boost your culture in a actionable way. Investigate different benefits and create a package to offer full-time employees. You’ll see an increase in applications, a decrease in employee turnover, and, in return, build a more profitable business model.

Growth & leadership opportunities

One of the leading factors when people are choosing a new job is “sufficient training.” In today’s world, workers—specifically, millennial workers—want to grow as a leader. They want to continuously evolve and grow because more and more industries are evolving and growing themselves. In fact, here’s some stats:

  • 71% of millennials who are likely to leave an organization in two years are dissatisfied with how their leadership skills are being developed
  • 69% of millennials aspire to be leaders in the next five years
  • 60% of millennials want training to develop their leadership skills

So when considering where to invest your budget—in higher wages or in more training—think hard. Investing in individual growth means investing in your employee retention. Although wages are important, 67% of millennial workers said they would take a pay cut if it meant more mentorship opportunities. Job shadowing, cross-training, and manager one-on-ones is a great way to instill a growth focus in your culture.