HR's Innovative Strategies for Employee Retention
An overview of what employee retention is and tips on how employers can increase company loyalty and reduce turnover.
Employee behavior in the workplace has shifted—particularly when it comes to company loyalty. According to the most recent Gallup State of the American Workplace Report, “51% of employees are looking for a new job or watching for openings.”
Unfortunately for employers, employees aren’t just watching for job openings, they’re taking them. In fact, 91% of those surveyed indicated, “the last time they switched jobs, they left their employer to do so.”
What is Employee Retention?
Employee retention is an organization’s ability to keep its employees. It’s usually represented as a percentage.
Ex: An annual retention rate of 80% indicates an organization kept 80% of its employees that year and lost 20%.
Overall, it’s natural for an organization to experience some turnover. Additionally, some industries are prone to higher turnover than others due to wages, the difficulty of the work, and a lack of benefits traditionally offered to employees.
Keeping track of employee retention is important because disengaged employees and turnover costs are becoming increasingly expensive. Studies show that replacing an employee can cost as much as 1.5-2x that individual’s salary.
It’s important for organizations to track retention and evaluate room for improvement, especially since improving retention strategies is the only way to decrease the cost of turnover.
Some of the most common factors that lead to employee disengagement include:
- Low employee morale
- Absence of a defined career path
- Financial insecurity
- Lack of commitment to the organization
Low employee morale
In a study conducted by TINYpulse, employees who give their work culture low marks are nearly 15% more likely to think about a new job than their co-workers.
Absence of a defined career path
A Harvard Business Review study found that internal candidates who apply for new opportunities in the organization and get rejected are twice as likely to quit as those who were hired or did not apply at all.
When employees are unable to meet their financial obligations, it’s natural for them to question their job.
According to a survey conducted by PwC, out of 1,600 full-time employees, 63% claimed to be stressed about finances, and 72% of millennials said they were stressed about their finances, a problem exacerbated by the COVID pandemic.
Lack of commitment to the organization
According to a poll conducted by Gallup, only 36% of employees considered themselves engaged in their workplace.
How to Recognize Employee Disengagement
When an employee leaves your organization, more often than not, there have been subtle red flags leading up to the event. According to Harvard Business Review, here are 5 signs to keep an eye out for:
If you’re an HR professional, you’re responsible for ensuring that everyone contributes to shared company success, and your staff relies on you to be paying attention. Transforming a disengaged workforce should be one of your top priorities.
Employee Retention Techniques
In a recent BerniePortal roundup of expert advice, HR professionals feel a direct responsibility in ensuring sufficient staffing to achieve business growth. With that being said, finding and retaining quality workers was voted the primary goal and challenge in 2020.
Here are 5 common factors that impact employee retention and how to improve them:
Ability to do what they do best
The majority of U.S. employees report that it is “very important” to have a position that takes advantage of an individual’s unique skills and talents. Employees want to feel like their abilities are utilized and valued.
Placing employees in talent-fulfilling positions benefits both the employee and the bottom line. Employees who feel valued at work achieve greater productivity than those who feel like their talent is being wasted.
Furthermore, these happy employees become brand ambassadors for your company, promoting your product or service as well as your reputation as an employer.
Work-life balance and personal well-being
More than any other generation, millennials express concern for “flextime,” the ability to self-manage time rather than being required to operate within the constraints of standard business hours.
Flextime is why employees are so attracted to the opportunity to work remotely. Bottom line: workers want more control over when and where their work gets done. If you incorporate flexible work schedules and telecommuting, you may find that your employees are more productive, satisfied, and experience less conflict between work and personal obligations.
Though some employers are cautious to shift control to their employees, studies prove that flexible work schedules can lead to positive results.
Greater stability and job security
Employees want to know that they will succeed if they commit to working with your organization. Structural elements such as brand reputation, market positioning, company purpose, and growth strategy strongly influence an employee’s decision to stay with a company.
Communicate—and demonstrate—the long-term value your company offers so that employees can envision your company as part of their career trajectory.
Increase in income
As one might expect, employees react positively to companies that reward quality work and company loyalty with salary increases. Introduce a standardized pay structure to your employees during the interview process alongside measurable steps that can be taken to reach certain goals.
A clearly defined growth track and reward system both illustrate the opportunity that exists within your organization.
Great company brand recognition
There are two sides to a good brand reputation: industry reputation and employer reputation. The industry reputation describes how well a company is positioned within its market and the quality of its value proposition. Employer reputation measures the quality of a given company as an employer.
In order to hire and retain talent, employers must invest in both. Establish credibility within your industry to attract candidates and cultivate company culture to promote a positive employer reputation.
Implementing an Onboarding Retention Plan
According to SHRM, employee turnover can be as high as 50 percent in the first 18 months of employment. A Gallup poll found that an employee’s perception of an organization begins with the individual’s very first interactions with the company, including the sourcing, recruiting, and onboarding processes. Unfortunately, Gallup also found just 12 percent of employees feel their organization does a great job onboarding new employees.
For a growing business, onboarding new hires is a big responsibility. How well you onboard employees plays a key role in your retention efforts. Put another way, the most effective onboarding processes are built with retention as an explicit end goal. But what exactly does that look like in practice?
Onboarding for Retention
No manager wants to face the nightmare of their best employee resigning out of the blue. To avoid this headache, HR should place a large emphasis on onboarding and orientation.
Every new hire should be set up for success from the very start! Your onboarding process should teach new employees not only about the job but also about the company culture and how they can contribute and thrive. Don’t shortcut this step!
Improving employee retention rates will result in a better performing organization. In the long run, lower turnover rates mean less money spent on hiring, training, and development. Additionally, it will also mean retaining high-quality employees who’ve already proven to be great performers within your organization.