Replacing hires due to poor employee retention is increasingly expensive--both in time and money. Hiring requires dedicated talent acquisition teams, hiring managers to allocate time to the process, and an often significant ramp period for the new hire to reach max performance. Instead of working toward larger team goals, companies must spend time sourcing, reviewing resumes, interviewing, and training new hires due to preventable turnover.
Employee retention refers to a company’s ability to avoid high turnover and keep long-term employees. Retaining high-performing employees helps avoid unnecessary costs, maintains productivity, and reduces challenges faced by Human Resources. While HR may typically handle the fallout, everyone is responsible for high turnover, including team members, managers, and leadership. Retention costs every business unit from hard costs like rehiring to more abstract costs such as loss in productivity. Bottom line: retention costs more than you think.
Prioritizing a strong employee retention initiative and strategies is instrumental in an organization's ability to acquire new employees and retain top talent. There is a host of problems that can arise as a result of high turnover rates and low retention; accordingly, businesses must focus on employee retention strategies to more successfully reach their organizational goals. Here are some reasons why employee retention techniques are imperative for success:
Having a solid employee retention plan in place can help organizations retain top talent and increase overall productivity. A study found that it can typically take eight months for new hires to reach total productivity. Now, imagine spending that time training a new employee just for them to quit shortly after and having to repeat the process all over again. Training a replacement and giving them time to reach total productivity could waste valuable time and inhibit organizational growth. If an organization has lower turnover rates, more employees remain in their roles and thus working at full productivity.
Think of all the costs associated with hiring a new employee: recruiting, interviewing, onboarding, and training--just to name a few. Forbes estimates that employee turnover costs, on average, 150% of the lost employee’s annual salary, depending on their pay and position. Not all employees are created equal, and losing high performers or employees in more senior high-paying roles will cost your company more. Entry-level employees are generally at higher risk of turnover, meaning you need to balance retention across all seniority levels at your company. The more lower-level employees you have, the higher your overall turnover rate will be. Conversely, the more higher-level employees you have, the higher your overall turnover expense will be. A company struggling with high turnover can expect to fund these expensive processes repeatedly, which can add up. If an organization has effective staff retention strategies in place, costs associated with recruiting can be significantly decreased because acquiring new talent isn't a frequent need.
It should come as no surprise that when employees stay with an organization, they can build connections and stronger working relationships with their colleagues. A new employee needs to form bonds with and understand how to communicate with other team members to collaborate effectively and feel comfortable in the workplace. If team members are constantly coming and going, it can be challenging to create those working relationships. Additionally, the remaining employees may end up with added responsibilities and obligations, leading to burnout or dissatisfaction.
When employees remain in their roles, rather than constantly moving in and out, organizations can more easily develop and maintain efficient recruiting and hiring practices. High turnover means high amounts of time lost finding, interviewing, and hiring qualified candidates. Prioritizing effective employee retention strategies can reduce time spent on new hire-related efforts, leaving more time available to focus on other essential tasks.
A positive customer experience is dependent on their perception of a business and their interactions with employees. The way that employees interact with customers is heavily influenced by their own experiences and abilities. Companies struggling with high turnover are at a higher risk of negative customer experiences because of the increased likelihood of inexperienced employees making mistakes or falling short when handling a complicated interaction. Employees who are confident, experienced, and happy in their roles will inevitably perform better when customer-facing.
Utilizing robust employee retention models to help lower turnover and focusing on actionable ideas is vital for success. To remedy high turnover, we have compiled a list of our favorite employee retention best practices examples and actionable insights to put them into motion.
Hiring the right people for the right roles is perhaps one of the most straightforward (and necessary!) employee retention practices. While background, experience, and education are critical factors when considering an applicant, soft skills and cultural fit should not be neglected. These factors are often seen as a lower priority, yet they play a significant role in employees' ability to acclimate successfully and efficiently into their roles and teams. Taking advantage of tools like DISC, a personality framework that can predict someone's communication and working styles can be invaluable when assessing a candidate's alignment with the role. DISC assessments can also help you ensure that employees’ roles best fit their personalities. By understanding how they like to work, you can adapt their role to serve both them and the company better. By hiring sensibly in this way, you are more likely to place people in positions where they thrive and are executing tasks that are energizing rather than draining for them.
Give employees the opportunity to grow within your organization by offering ongoing training incentives and promoting from within. Employee training should provide employees with the opportunity to expand their knowledge and skills within their roles. Employee development should go beyond the training, providing them with the tools to grow and develop as professionals and team members. A study done by Gallup found that organizations that have made a strategic investment in employee development report 11% greater profitability and are twice as likely to retain employees than their peers. In a competitive market, where it is challenging to hire and retain top talent, it is vital to invest upfront in your employees and put the time and effort into developing them past their initial onboarding.
When communicating with others, respect and empathy are instrumental in leading effective conversations. Similarly, these qualities make major differences in fostering a healthy company culture and employee engagement in the workplace. Going beyond simply treating others as you'd like to be treated; and instead, interacting with them how they need (rather than how you want) can lead to more productive interactions and positive collaboration. When employees feel valued and respected in their roles, they are much more likely to be loyal to the company and cooperative in their positions. In a study measuring 20,000 employees worldwide, respondents ranked respect as the most important leadership behavior yet continue to report more disrespectful and uncivil behavior each year. To combat this, it is essential to clearly define respect in the workplace and encourage management to stay vigilant in maintaining such an environment.
Create a space for open, honest dialogue with team members by encouraging two-way feedback. One-on-one’s are the right time for you to offer feedback that helps drive an individual's performance and gives individuals a forum to provide feedback about your management, role, and overall thoughts on team goals. Holding regular one-on-one meetings can help resolve real problems, clarify expectations for employees, and let them know that their voices matter. Not allowing employees to express their concerns to management can be worse than ignoring complaints altogether. When employees are given a voice and feel heard, they know that their needs matter and their concerns are valid. Without opportunities to express their opinions, management cannot understand the needs of employees and make adjustments to improve job satisfaction, efficiency, and well-being.
A diverse workforce includes employees from various backgrounds, whereas inclusion measures the culture that empowers this workforce to be successful. When working towards a more varied environment, reducing biases related to characteristics that do not affect job performance, such as race, gender, religion, and sexual orientation, must be approached with sensitivity and open-mindedness. When teams fail to be genuinely inclusive, employee retention suffers--especially among diverse groups. When employees face discrimination, microaggressions, and a lack of inclusion within their team, engagement drops and retention of employees suffers. These situations are unfortunately all too common, and the fallout extends beyond low retention. If you make an effort to hire a diverse group of people with unique backgrounds and talents but neglect to adapt your team’s culture to be one of awareness and equality, your retention will reflect this.
Being transparent with employees will help them feel included in the organization and valued as a team member. Transparency also fosters trust amongst employees while supporting honest and healthy company culture. Without transparency or trust, an organization may also lack abilities to clearly communicate and maintain a genuinely inclusive environment. Cultivating transparency goes beyond clarifying business objectives, obstacles, and decisions; employers should also be transparent regarding compensation and opportunities for growth. Beqom's 2021 Compensation and Culture Report found that when employees perceive a pay gap, regardless of whether it actually exists, it results in a 16% decrease in intent to stay. Appropriately, transparent communication around compensation should be a priority for employers.
Challenging your employees will benefit both themselves and the organization; however, it is a practice that must be executed with care. While it is essential to challenge your team to reach their potential, you must be careful to do so in a way that motivates rather than discourages them. Similarly, if you push employees too hard, they may end up leaving as a result. Be careful when challenging employees to also offer support, explain to them the potential you see that warrants those challenges, and acknowledge their efforts regardless of the outcome. Successfully growing employees reflects well on leadership and helps individuals reach their potential and flourish in their careers. When employees feel motivated and inspired to grow with a company, they are likely to remain in their roles.
Job seekers are not only looking for the best compensation packages but positions that offer them quality incentives like a healthy work-life balance. When employees feel overworked and overwhelmed, they experience burnout. A Gallup study of 7,500 working professionals found that 44% feel burnt out and a staggering 23% feel burnt out perpetually. Consequently, lack of work-life balance accounts for the second most cited reason for employees leaving the organization. Benefits like personal time off help here, in addition to clear role expectations and goal setting. These benefits contribute to their overall well-being, impacting how they show up and perform at work. Employees that show up with a more positive outlook, refreshed and recharged, will be more productive and engaged in their roles and less likely to look elsewhere for a new one.
An employees' level of engagement usually influences how they act in their role and the amount of effort they may put into work-related duties. Employees who are engaged perform better, are happier, and are more confident and productive in their roles. Employee satisfaction and engagement are instrumental in retaining top talent, as more satisfied employees are more likely to remain loyal and committed to a company. If a company wants to improve its employee retention or reduce employee turnover, it should first examine the employee experience within the workplace. Because of a lack of connection and attachment, disengaged employees are far more likely to leave their current roles.
Throughout the years 2020 and 2021, we’ve seen the COVID-19 pandemic present challenging situations for teams of all types to navigate effectively. We’ve seen businesses shut down, employees laid off and furloughed, teams freeze hiring and promotions, and millions of people sick. Understandably, returning to the office may be scary for many professionals. Now more than ever, it is crucial to facilitate a safe and clean environment for employees. The Occupational Safety and Health Administration (OSHA) recommends several principles to guide you when making decisions for your team’s health relating to COVID-19. A few notable recommendations include appropriate hygiene, social distancing, and treatment of sick employees. Because employees spend a majority of their workday in the office, it is essential to foster a safe work environment that is comfortable for everyone.
Although candidates consider other factors when accepting a job, a competitive salary ensures that they are paid according to their abilities and experience. Top performers may leave if you aren't offering competitive pay, and low performers are more likely to replace them.
When an organization interviews an employee as they leave the team, they can gain honest, valuable insights into what improvements may be needed for better retention. Gaining perspective straight from the source will allow employers to understand their employees’ needs better, making them better equipped to retain top talent in the future.
The onboarding process for new hires should provide them with the resources and tools they need to succeed in their new job. Onboarding and training should be thorough, going beyond just the job itself and familiarizing new employees with company culture and their contributing role in it.
Offering perks can help an organization stand out in a competitive market, drawing attention from more qualified candidates and also retaining current talent. Perks can range from health benefits and bonus pay to incentives like gym memberships or unlimited PTO.
Encouraging collaboration and communication in the workplace and giving employees opportunities to share their ideas can foster a more inclusive and cooperative environment--all while better retaining employees. A healthy work environment is a driving factor of an employee's decision to stay or leave an organization.
Creating and maintaining a successful employee retention strategy takes significant effort and consistency, but when organizations implement such procedures and practices, they can expect to experience excellent results. Employee retention directly affects organizational growth and success, and therefore should be prioritized by employers. If organizations fail to do so, they may suffer countless losses, including financial costs, loss of productivity, toxic company culture, and negative employee and customer experiences. Implementing solid practices and utilizing helpful employee retention tools will pay off for employers to retain top performers and acquire more qualified candidates.