Today’s reality shows us that people continuously make choices, consciously or not, about how committed they are to their job and the employer. The workforce levels of engagement and motivation are subject to constant fluctuation in response to signs of whether the company is committed to their growth and their belief in serving a higher purpose.
Additionally, what kinds of behavior managers reward, how experience and loyalty is perceived counts for employee commitment over the long run.
Employee engagement and retention means understanding an empowered workforce’s desire for flexibility, creativity, and purpose. The demands and expectations of today’s diverse, multi-generational, mobile workforce require a more flexible, employee-centric work environment, one which companies are just beginning to learn to develop.
Despite high unemployment rates, managers have trouble filling job vacancies, with shortages often occurring in critical areas, where they most need to attract and retain highly skilled talent. In other words, a high unemployment rate does not mean that the talent you need is few clicks away, waiting for you.
This talent paradox is raising the stakes on the labor market in the competition for critical talent. Businesses are constantly trying to outbid each other on the race for a select group of skilled employees.
Targeted employee retention strategies can help companies navigate through an increasingly sophisticated view of what employees are looking for, their values, and why they are leaving. Suppose a company can better understand why a top performer resigns out of the blue. In that case, it can take the right actions to get them to stay - in effect, creating a retention firewall to keep employees in and competitors out.
Employee retention refers to practices, policies, and the overall strategy to keep the best employees on board, thus reducing turnover.
The goal of employee retention is best summarized as the concerted efforts to retain existing staff.Employee retention formula
Employee retention is often expressed as a statistic; the percentage of employees remaining in a company for a fixed period (e.g., a quarter). To measure it, use the following employee retention rate formula:
Employee retention rate = [(Total number of employees - Total number of employees that left) / Total number of employees] x 100.
How to calculate employee retention rates?
The mathematical formulas are best described not by words, but, obviously, numbers. So, here is an example of how to calculate the employee retention rate:
If a company has 200 employees at the start of the year and then 10 are dismissed, 10 more resign and there are no more new hires.
We can say that in this period there has been a 10% attrition rate. Note that the attrition rate is the percentage of employees you lost during the interval and did not replace.
Make no mistake: employee retention is hugely important. You likely know this firsthand from the heartache, headache, and logistical nightmares you’ve suffered after a key employee parts ways with your business. Losing highly performing employees can also impact team productivity and employee morale. It requires adjustments to the daily functioning and workflows of a department or team – mainly if the departing employee is a manager or higher.
A. Reduced Costs
Retaining skilled and reliable employees is financially beneficial for an organization. The key factors that contribute to the costs of losing an employee include:
B. Sustained Productivity Flow
Professionals who work for long periods in an organization add significant value to the company. They understand the company’s vision at a deep level and know well how to fulfill their role’s expectations. Plus, they have acquired all the essential skills needed to complete tasks daily effectively.
C. Reduced Training Time
Long-term employees are highly trained and feel confident to carry out their daily responsibilities. They have built effective communication channels with their manager and colleagues and know how to deliver their projects on time. New employees require training and time to adapt to the new environment and its requirements, which can strain team productivity temporarily.
High-skilled employees are your main resource for evolution towards the company’s goal. They are like diamonds: precious, hard to find, and the thought of losing them is unthinkable. To keep your employees working for you, consider trying these employee retention strategies:
1. Retention starts with recruiting and onboarding
Every new hire should be geared for success from the start. Your onboarding process should teach new staff about the job and the company culture and how they can contribute to and thrive in it. Don’t waste this critical first step: the training and support you provide from Day One can set the tone for the employee’s entire tenure at your firm.
If you hire a quitter, don’t be surprised if they quit. If you hire someone who’s a bad fit for your business, don’t be surprised if they (or employees they’ve annoyed) quit.
According to the survey conducted by Glassdoor, 35% of the HR managers say that new hires would stick around longer if they were better informed during the hiring process.
A poor onboarding experience for a new hire builds a foundation of negativity in the new job. Make sure you’re honest about what you expect of the new hire. Don’t hide or sugar-coat aspects of the job just to get a person to bite. Transparency is key in finding the right employees.
2. Salary and compensation must be competitive
Based on the same Glassdoor survey, almost half (48 percent) of people in recruitment, HR, and hiring managers note salary and compensation as the most influential factor for a candidate’s decision on where to work.
Companies need to pay their employees competitive wages, meaning they need to evaluate and adjust salaries regularly. Even if your business goes through harsh times and cannot increase pay now, consider whether you could provide other forms of compensation, like bonuses and paid time off, compensations that can help raise employees’ job satisfaction.
3. Offer the right perks and benefits
Benefits and perks play a prominent role in keeping employees happy, motivated, and healthy. But benefits can go far beyond healthcare coverage and paid sick leave.
Flexible work schedules, the opportunity to work remotely, retirement saving plans, life insurance, wellness offerings, and generous paid leave policies also go a long way toward helping employees feel they are valued well beyond what they contribute at the workplace.
As professionals more frequently look beyond salary as the primary measure of who they want to work for, a robust benefits and perks package is crucial for keeping the best people around and recruiting more top talent to join your team. Stay on top of the most common employment perks and benefits to reduce your risk of losing your best people.
4. Have leader, not bosses
Do you want to keep your employees? Remember: employees tend to follow leaders and abandon bosses. Few people manage to be authentic leaders, while everyone wants to be the boss.
5. Be transparent and open
The pandemic has emphasized the importance of good workplace communication. Creating open communication between employees and management can help foster a sense of community and a shared purpose. Regular meetings in which employees can offer ideas and ask questions and “open-door policies” that encourage employees to speak frankly with their managers help employees feel they have a voice that counts. As a leader, you need to make sure you’re doing your part to help promote timely, constructive, and positive communication across the entire team, including onsite and remote employees. Ensure you proactively connect with each staff member regularly, too, to get a sense of their workload and job satisfaction.
6. Train your managers to be flexible
Ever ask people about the jobs they hate and why they left? The chances are that one of the first reasons you will hear is complaining about a manager.
The more flexible the managers are, the more likely employees will stick longer. Maybe an employee needs to change their working hours, or perhaps they want to resume or continue school. If the manager is willing to listen and have them as part-time employees, they could bring what they learn back to business in the meantime.
So, while you’re taking the time to train your manager to deal with the technical aspects of their positions, it is in your best interest to include some “soft skills” as well. Flexibility means teaching your managers how to encourage and motivate different types of people, personality traits, conflict management, stress management, crisis management, and so on.
7. Recognize hard work
Behavior theory has shown that the more frequently people receive recognition, the more they will work hard to try and win it.
If you want to improve your employee retention rate, start recognizing your employees’ hard work publicly - and if you already do, start doing it more often. Everybody wants to feel appreciated for the work they do. Be sure to thank your direct reports, which go the extra mile, and explain how their hard work helps the organization. Though the concrete ways of recognizing hard work, like raises and promotions, are most important, simple words of encouragement will cost your company nothing and can help achieve similar ends.
8. Continuous feedback on performance (or lack of it)
Many employers are abandoning the annual performance review in favor of one-on-one meetings, talking with your employees about their short- and long-term professional goals and helping them visualize their future with the company. Most employees want to work towards something at any given moment. Whether it’s a project, a meeting, or a training session, whatever they’re working on should easily tie into a career map that they’ve developed with their managers. Have managers take the time to sit down with their direct reports and fashion career maps, complete with micro-goals and skills to learn for their development.
It’s not enough for you to give vague (if well-intentioned) feedback. Your employees want to see the results of their work. They want to have that concrete object that they can rest their pride on. They need to see the results with their own two eyes.
9. Provide ongoing education and clear paths to advancement
As part of providing continuous feedback on performance, you can help employees identify areas for professional growth, such as the need to learn new skills. Upskilling is especially important nowadays as technology continues to change how we work. Promoting from within provides a clear path to greater compensation and responsibility and helps employees feel they are valued and a crucial part of the company's success. Promotions go hand-in-hand with employee development and education, and this should be another tool in the employee retention arsenal. Whether by corporate training to help foster the acquisition of new skills, new technologies, or new processes or through tuition reimbursement from outside courses, furthering your employees' education can help them feel valued and invested in the company.
A focus on education is also key to higher retention rates. Putting someone on a career path with no room to develop is not only a career-limiting move for the employee and an open door for the competition but a business-limiting move for the company. Good employees (the ones who are dedicated to your company - the ones you want to keep) want the opportunity to advance, not just maintain momentum.
10. Work-life balance
The connection between work-life balance and employee retention exists and is getting stronger. People need to know their managers understand they have lives outside of work - and recognize that maintaining balance can be even more challenging when working from home.
If you are still struggling to understand why this is such a big deal, here are four reasons employees’ control over their work-life is crucial for employee retention:
So think sooner than later about what you can offer staff if remote work permanently isn’t an option. A compressed workweek? Flextime? Or maybe a partial telecommuting option? All of the above can help relieve stress for your staff - and boost employee retention.
Now that you’re familiar with these ten solid strategies towards improving your employee retention, it is time to start thinking about the next steps.
Be sure to re-evaluate your efforts regularly. That includes staying current on market standards for salary, benefits, and best practices for developing attractive workplace culture and strong manager-employee relations.
Wherever you start with your employee retention game plan, just remember to be patient but proactive. Because employee retention improvements are majorly culture-based and gradual, pulling multiple strategic levers at once will help you see more concrete results.
And be prepared for turnover, especially if they have the opportunity to move into their dream job. But you can at least make their decision a little tougher. And if those employees leave your firm knowing they were valued and supported, they will likely say good things about your business and, perhaps, even come back to work for you one day.
If you have a great employee retention plan in place, even the departure of a star talent can turn into a positive thing.
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