Everything You’ve Wanted to Know About Employee Retention and How to Improve It
A company without talent is like a pie without filling. It leaves a bad taste in everyone’s mouth. Poor employee retention and turnover cost employers money and make companies less attractive while causing employees endless stress. Luckily, changing your approach to the workplace makes a big difference. We’ll discuss what drives turnover and retention, how investing in employees pays off, and provide steps to keep your best talent.
Employee Retention and Why It’s Important
Employee retention refers to the amount of time your employees stay with your organization. If you don’t know this vital statistic, now is the time to calculate it.
According to the HR experts as SHRM, “turnover rate is calculated by taking the number of separations during a month divided by the average number of employees, multiplied by 100.”
Keep track of these results to create a chronological view that can tell you more about your company. On average, 50% of employees leave an organization within 2 years.
Why is employee retention so important?
For every employee who quits, you need to spend time and money to hire and train a new person to do their job. Employee turnover results in a loss of nearly $11 billion each year, according to the Bureau of National Affairs. The process of retraining a new employee takes weeks or months, but achieving the same level of productivity, comfort, and synergy with other team members can take years. That’s why it’s essential that your organization remains focused on employee retention strategies. Employee turnover results in a loss of nearly $11 billion each year.
Common Reasons Employees Go
There are many diverse reasons why individual employees leave an organization. Sometimes they know it’s coming, while other times life throws a curveball and forces unexpected changes. But many reasons are more common and empirically confirmed, affecting workplaces around the globe.
Common reasons for turnover include:
- Better external opportunities
- Negative experiences at the workplace
- Planned changes such as pregnancy or college
Studies show that these problems are not at all rare, but there is a silver lining. Most of the common reasons for departure can be prevented with the right steps such as training opportunities, better benefits, and a sharp eye on negative workplace dynamics that could drive turnover.
Common Reasons Employees Stay
What people value greatly are connection and appreciation, and these elements are equally important on the job. As with drivers of turnover, each individual motivation to stay is unique, but some trends still become apparent when viewing workplace data.
High retention is driven by:
- Well-networked and socially connected employees.
- Appreciation of the employee and recognition of their efforts.
- Benefit packages comparable to competitors, which help remove the first temptation to leave.
- New challenges and continuous learning for staff of all levels.
Employees that are engaged and rooted in their workplace as appreciated members of the team and community have more positive reasons to stay and more they’d have to give up if they changed employers.
Establishing the Scale of the Problem
Seeing how many employees are leaving is a great start, but no piece of data is of any value in isolation. It needs a reference point to provide insight. Before you panic about a high turnover rate, it may be wise to check with other companies in your field and with your own company history, a practice that is called benchmarking.
There are two different kinds of benchmarking, internal and external.
External benchmarking is when you compare your companies data to others in your field. Different business sectors have different norms and no two are exactly the same. Check out how everyone else stacks up to your rates to make a fair assessment of your company’s turnover issues.
Internal benchmarking involves taking a look in your company history. By tracking comings and goings over time, you can see if things are getting better or are approaching a breaking point. This knowledge can help you better understand any turnover issues in the context of your company’s normal operations.
Putting Data to Good Use With Effective Retention Strategies
If you’ve run the numbers and you’re still hemorrhaging too much talent, then it’s time to develop a plan. To minimize the cost of turnover and build a productive workplace, every leader strives to bolster the things that make employees want to stay while eliminating those that make them go. This process is however multifaceted, complex, and touches almost every element of the Employee Experience from the beginning of employment onward.
Make recruiting count.
Choose new team members wisely with an eye not only on their skills, but how they fit or what they add to the team. Clearly, communicate their new role from the beginning to avoid any disappointment once the job begins.
Onboard and socialize.
Starting at a new company, and a new task, with new faces all around is not easy. Optimize your onboarding program to let the new hire know exactly what is expected of them and to incorporate assistance from other team members to encourage camaraderie. But an onboarding program alone isn’t enough, team leads need to be active, sympathetic, and supportive of employees to encourage quick cohesion and integration in the office.
Provide opportunities for growth and development.
Once a team member is no longer a “new” team member, they will want to be challenged. To help them grow and avoid monotony and job dissatisfaction, provide new tasks, training programs, or workshops to help them always achieve something new and better.
Appreciate and compensate.
Although many companies still like incentives, money is not the largest driver of engagement or retention. But connecting compensation to recognition and personal achievement can still be productive. You can encourage retention by showing appreciation through feedback and personal thanks, and also by providing external benefits (such as ball game tickets or vacation time, etc.) linked to personal accomplishment or even tenure.
Have great managers.
A bad manager can be a large driver of turnover, as 8 of 10 employees connect their feelings about work to the influence of their leaders. Investing in manager training programs can alleviate this by teaching open communication and empathetic leadership, while bottom-up feedback programs can help managers get a new perspective on themselves and the effects of their leadership style.
Address the future of work
Technology is set to displace 30% of job tasks. This means that your staff will need to learn new skills, work styles, and always be ready to adapt. Luckily, they are ready if companies give them the means. Investing in collaborative structures and educational opportunities prepares your workplace for future needs and motivates your staff to handle the challenges.
>> Learn more about the future with our complete guide to New Work here. <<
Research your competition.
For any company, it’s good to know where you stand against competitors. Compare key data, such as turnover, benefits, and pay, to other companies in your sector and see how you are doing in relation to your field and how appealing they are to your employees. Conducting exit or stay interviews can also provide insights into what is driving employees away and where they are going.
How to Avoid Implementation Pitfalls
The best-laid plans can still falter if there is no support or follow through. To be effective, retention plans need convinced proponents and to be adapted with time. To ensure a successful program…
- …enlist the support of management.
A common challenge to retention programs is that executives are not fully on board, or don’t have the full picture of what poor retention can cause. Make sure turnover data and information is clear and detailed for everyone, so the problem and benefits can be addressed and understood.
- …shape positive perceptions about retention programs.
Sometimes they get a bad rap as ineffective busy work, which is not the case. Here as well, having supporting data and measurable results can help keep everyone convinced and make the program successful.
- …follow up and evaluate.
The data needed to show the effectiveness of retention plans can be gained by tracking your results. Continue monitoring data internally and externally, such as turnover rates and stay interviews, and adapt plans to fit.
5 Steps to Improve Employee Retention
Every organization should outline a strategy to address employee retention. Consider these tips:
- Gather information about employee satisfaction. Would you develop and begin selling a new product without doing basic market research first? Of course not. Treat the employment market the same way. Conduct a climate survey, solicit opinions from current employees, and take exit interviews seriously as an opportunity to learn more about what you’re doing right and wrong. Once you know what your employees love and what they wish was different, you can develop specific targets for change.
- Develop clear expectations. A recent Gallup poll found that nearly half of U.S. workers don’t know what their employers expect of them. Beginning with an employee’s first day, set clear and realistic expectations for performance. Consider this a two-way conversation in which you collaboratively set goals with your employees and spur their motivation to succeed.
- Provide professional development opportunities. After hiring a new employee, the focus is often on the first 3-6 months in which the person will get “up to speed.” That’s a huge mistake. Clarify a long-term strategy for that employee’s professional growth, and he or she is significantly more likely to stay with the company. This might include mentorship opportunities, continuing education, leadership workshops, or opportunities to attend professional conferences.
- Promote a vibrant company culture. Company culture is essential, particularly among younger workers. Over 80% of Millennials expect companies to commit to social responsibility. If you don’t have a clear mission or guiding values, now is the time to craft a narrative that gets employees enthusiastic about the work they do for your organization. Creating a feeling of community and mission generates greater employee satisfaction.
- Offer great benefits. Employers often mistakenly focus on salary as the leading contributor to employee satisfaction. While many workers wish they were paid more, other aspects of the benefits package may be even more compelling. Consider flexible work schedules, telecommuting opportunities, more generous paid family leave, and boosting vacation time.
Dos and Don’ts of Retaining Top Talent
Do: Pay attention to online review sites. These sites provide a mirror for you to examine your successes and failures as an employer. Read reviews with an open mind to identify ways to improve your company culture.
Don’t: Overburden employees. Employees are increasingly concerned about long working hours and work-life balance. If you relentlessly focus on the bottom line, employees will quickly burn out and move on.
Do: Become more flexible. More than 50% of employees say that flexibility is the biggest driver of their decision to stay with an organization.
Don’t: Be stingy with feedback. Most employees genuinely want to do good work, but sometimes they may need a little more guidance and input. Institute a frequent review policy whereby workers can receive feedback about their strengths and areas for growth.
Do: Invest in your company’s leadership pipeline. Bad managers are a frequent point of criticism among employees who quit to find other work. Investing in your leadership pipeline will pay dividends both in improving supervisees’ satisfaction as well as identifying lower-level employees with great management potential.