Looking for ways to cut costs this year? Employee retention is a great place to start. Here's why it's crucial for small business to retain talent.
Employee retention (or a lack thereof) is a massive cost for small business owners. Retaining top talent should be a priority as it cuts spending, creates a tight-knit company culture, and builds high performing teams. Before getting to the why, it’s important to understand the how.
How do you retain employees?
Retaining employees comes down to one simple question: Are their needs being met? In the simplest terms, meeting the needs of your employees will keep them around for the long haul. How can you meet their needs? Here are a few tips:
Offer competitive benefits. These perks include things like health insurance, life insurance, and retirement. Employees expect stellar coverage that can help them provide for their families. Nearly 60 percent of employees say benefits are “very important” to job satisfaction.
Support employee development and encourage career advancement. Growth is a priority for most employees. They want to learn new skills and excel professionally. If a staff member feels stuck and that they have no room to grow, they’ll likely start looking for opportunities elsewhere. Glassdoor and the Harvard Business Review found that employees in a role for more than 10 months without a promotion are likely to leave.
Build a great culture so that employees enjoy their work. Considering we spend a third of our life at work, it’s important to like our managers and coworkers. Create a culture that people are excited about and they won’t have a reason to leave.
Implement an HR software solution to help manage training and development, compensation, rewards, and engagement. Data show that HR technology can improve retention. As an HR leader, it’s nearly impossible to manage all components that contribute to employee satisfaction on your own. An HR management platform helps teams improve their processes for managing employee satisfaction.
These are only a few of the important components that contribute to employee retention. Talk to your team members to find out more about what they value from their employer.
What is a retention strategy?
Once you understand how to retain employees, you can develop an employee retention strategy. Retention strategies combat turnover by analyzing employee data and implementing processes to improve workplace satisfaction.
To develop a retention strategy, track your current turnover rates. What is this data telling you? Establish baseline metrics to strategically implement new initiatives. Structure your benefits, policies, and procedures based on current data and employee feedback. Once you’ve established a starting point, track retention over time and make pivots based on the data.
Organizations that put forth a continuous effort to improve their culture and employee satisfaction experience higher rates of employee retention.
Why is employee retention so important?
Employee retention matters because high turnover rates equate to high costs for the business. Studies show it costs between 30 percent and 50 percent of an entry-level employee’s salary to replace them. High-level employees can cost upwards of 150 percent of their annual salary to replace.
For example, it will cost an organization $16,000 on average to replace an employee earning $40,000 per year. And that’s only one employee. If you have multiple staff members leaving each year, it can add up quickly.
Aside from cost, high turnover is stressful for the rest of your team. Coworkers who feel like their company is a revolving door experience greater signs of stress, which ultimately affects company culture and teamwork. Cut costs and keep your organization running like a well-oiled machine by developing an employee retention strategy.