Employee retention is the ability of a company to prevent its employees from leaving. It is perhaps one of the most important factors contributing to the growth and success of a company.
Great companies understand the importance of retaining their employees for long periods. In doing so, they don't have to regularly spend the time and money required to replace employees - which can hurt their bottom lines.
Why employee retention is very important
High turnover has many costs and consequences. Here are a few most significant reasons why employee retention is important to the well-being of your organization.
1. The hiring process isn’t easy. The Society for Human Resource Management (SHRM) found that it takes an average of 42 days to fill the average position.
2. Turnover expenses are higher than you may think. A mid-level employee that leaves a company can cost up to 150% of the worker’s annual salary to be replaced.
3. Losing people means losing knowledge. A seasoned employee is not only well versed with the policies and guidelines that govern the company, but they are also aware of the internal ‘pulse’ of the workforce and management.
4. Teamwork is tougher with high turnover. Employees can have a hard time bonding with one another and working together productively if team members keep leaving. And it is very draining for the remaining employees to continue to train new ones.
5. Your loss may be a competitor's advantage. Employees who leave your company may work for competitors who will benefit from their skills and potential. Simply put, losing high-skilled employees means losing a company's biggest assets.
How to retain your employees & help them grow with your company
Employee retention and job satisfaction should be high on every organizational priority list. Here are some tips for building the right employee retention plans for your company.
1. Connect with new hires throughout their first year
Just because you've brought in a new employee doesn't mean the hiring process is over. Realistically, it can take about six months for an employee to fully adjust to their position and company culture. And this is also a time when some employees will disengage if they are not sufficiently connected to the company or their work.
Make sure that you aren’t just teaching your new hires about their job roles and responsibilities, it is just as important to teach them about the company culture and how they can thrive every single day.
Work on connecting with new employees during the first year. Host new hiring events and schedule quarterly check-ins to talk about transitioning to their new positions. If a new employee has any doubts, these check-ins can provide the perfect opportunity to resolve them.
2. Provide mentorship programs
Providing mentors for new hires is a great component to add to your ongoing onboarding process. Mentors can offer guidance and serve as a soundboard for newcomers, welcoming them into the company.
Your existing employees will act as the best resources of your new hires and vice versa, your new hires can offer new insights and new perspectives on how things are done. However, make sure the mentors don't act like supervisors, instead, they are there for new hires to lean on.
3. Recognize your employees’ work
Everyone likes to be appreciated for the work they do. Recognizing your employees for their work is an important part of helping ensure continued employee engagement. Whether it is big or small, and whether it’s an individual or team success, make sure you acknowledge it.
4. Encourage managers to prioritize employee engagement
Managers play a vital role in improving employee retention. They influence so much of the employee experience, from helping their team stay aligned with goals to having effective conversations about career development and finding opportunities for their team members to grow.
Apart from encouraging managers to engage their team members, you can also ask your employees to review their managers’ performance and work on manager engagement as well, as a key retention measure
5. Create career advancement opportunities
Your top talents are already great at what they do, but they want to keep improving their skills to get even better. Ensure that professional development and growth are the top priority in your company to keep your best talents to stay.
6. Transition your employees to new roles
Your high-performing employees might be getting weary of their current job roles and could be attracted to new, challenging fields. The change in responsibilities should be available within the company, so your top performers don't have to look elsewhere.
A LinkedIn study found that employees who changed jobs internally were more than 70% more likely to survive after two years, compared with 56% of those who didn't see a change.
And it doesn't matter if they get promoted or change laterally - after all, it's easier to retain employees by helping them diversify than to keep them in one role.
7. Offer competitive base salary
Your employees want to feel that the effort is worth their time. When it comes to employee retention, money isn't everything, but offering competitive wages can help your employees feel that their work and time are valued.
Many employees leave because they get better offers from other companies. In the end, you might have to pay a lot more to find other employees than simply give them a raise. Not to mention the depletion of knowledge that results from losing valuable employees.
To ensure you pay your employees competitively, use an HRM system to evaluate your employees’ salaries over time, then compare them against their performance. Don't forget to find out the salaries offered by competitors for the same job roles.
8. Encourage a healthy work-life balance
Do your employees have many long nights? Or are expected to answer calls and emails anytime, even at home? If that's the case, your employees will end up burning out and eventually give up.
Expecting employees to work long hours and be available all the time to help you is not conducive to employee retention. A healthy work-life balance is important for job satisfaction, and your employees need to know that the company understands that they have a life outside of work.
Identify employees who were overworked this week. Give them a little break, or take everyone out of the office for a walk. Evaluate how your work scheduling promotes a healthy work-life balance.
9. Create flexible working arrangements
Demands on employees to be physically present all the time can drain their energy over time. Especially when employees who work from home are just as productive as those who stay in the office. Working remotely also eliminates one of the biggest problems getting into the office: commuting. Many workers decide to quit their jobs because of tiring commuting.
Millennials, perhaps more than any other generation, actively want a flexible work environment. Today, many companies can support remote work and unconventional schedules. If you want to not only attract but also maintain a productive workforce, your company culture needs to offer some opportunities for a flexible work environment.
To ensure your team collaborates successfully while working remotely, project management software can be a great help. It enables your employees to delegate, share, and work on tasks from anywhere. With the system, you can track the progress of each ongoing project and see what everyone is working on.
10. Ask your employees for feedback and make changes
Providing feedback to your employees is one thing, but you should also take feedback from them. When employees feel that their thoughts are not being heard, they perceive the company as not interested in promoting or pursuing valuable ideas.
You can send out a quarterly survey to ask employees about their overall experience with your company. You can also receive real-time feedback by sharing access to the comment portal.
You may also want to monitor your company's social media accounts for unsolicited feedback. If a comment is repeated or an issue that needs to be addressed is shared, take the time to acknowledge it.
When looking at employee retention strategies, you don't have to spend a fortune to make it happen. When you're good at execution, you save on general costs and employee turnover costs - now that sounds like a win-win situation.
Make sure to review your employee retention strategies at least once a year. That includes staying abreast of market standards for pay and benefits and best practices in developing healthy work culture and strong manager-employee relationships.