10 Ways to Retain Employees
Is your business experiencing high turnover? If so, consider implementing these tips.
When market conditions are good, with a wealth of available talent to choose from, retention is important. When market conditions are poor, retention is critical. Whatever is trending in the talent pool, retaining employees is imperative to business success. You’ve invested in each hire, with recruitment costs, training and development, and stable team dynamics. Every staff member is integral to maintain productivity and morale. Losing skilled workers affects the production line and the bottom line.
Keeping employees on staff and reducing turnover requires a host of initiatives and core policies. If you want to protect your investment in inventory, tools, and supplies, you develop protocols to keep them safe. The same applies with your investment in talent. A focus on the factors that retain employees can help reduce churn and keep your business running smoothly and productively.
1. Competitive wages and benefits
You likely already know the top way to attract employees is with a competitive salary and benefits package; the right perks may contribute to employee satisfaction as well. Most employers look at market conditions in their area and industry, and their own resources, when setting a starting wage and benefit plans for new hires. The challenge for business that wants to retain employees is assuring you continue to be competitive in your market.
For many businesses, salary increases are tied to performance evaluations — typically on the employee’s yearly anniversary. While this is a generally accepted practice, too often annual performance reviews are put off — sometimes indefinitely — because of manager discomfort. This means any applicable wage increase is also delayed. The surest way to set an employee’s “time to look for another job” wheels in motion is to delay any potential increase(s). Assuring that reviews are done on time, and any wage increase is provided (retroactively if the evaluation was delayed) is critical to employee engagement and retention.
Another factor to consider is whether you’re still competitive in the market: are wage increases you offer in line with the competition? Compensation reviews are a necessary HR function that is often low on priority lists. If employees learn their counterparts in similar jobs at other companies are earning more, they’re likely to move on.
Compensation analysis — a review of what’s being paid to similar employees in your market — used to be a complex process. It involved wading through the Department of Labor and market data to compare your wage scale to others. Today’s HR professional can easily search for similar jobs and experience levels on major websites. If your customer service professional with 2 years on the job isn’t earning what the market will pay, you may want to review your compensation structure. Take time periodically to review what your current employees are earning, and what similar jobs in your area are paying to make sure you continue to be competitive.
More than half of employees polled by SHRM — 56% — said they’re most likely to stay with their employer based on healthcare benefits: 46% said they’re more likely to accept a job offer from a company that provides healthcare coverage.
More than half of employees polled by SHRM — 56% — said they’re most likely to stay with their employer based on healthcare benefits: 46% said they’re more likely to accept a job offer from a company that provides healthcare coverage. Almost half of American workers get their healthcare benefits through their employer, and companies that provide coverage see lower rates of churn.
For many employers, the idea of providing medical benefits seems cost-prohibitive. The reality may be that not providing the benefit is costing more in the long term. The Center for American Progress estimates the cost of turnover for recruitment, training, and lost productivity depending on wages. For jobs paying:
- Less than $30,000 per year, about 16% of annual salary (over $3,000 per employee)
- $30,000 to $75,000 per year, about 20% of annual salary (over $3,000 per employee ($6,000 to $15,000 per employee)
- Over $100,000 per year — up to 213% of annual salary
Some industries, like retail and hospitality, see turnover rates as high as 76% annually. At these rates, the cost of turnover may significantly outweigh the cost of benefits, which could significantly reduce churn. For businesses that experience high turnover, investing in healthcare benefits could turn the tide to retention.
The culture of an organization matters greatly to employees. Studies find an environment that is fair, balanced and socially responsible increases retention.
Diversity, equity, and inclusion
A diverse workplace attracts and retains talent. A study by Glassdoor showed 67% of job seekers look for a diverse company when considering a job offer: half of current employees want their organization to do more to increase diversity. More than increasing headcount, DEI programs create an inclusive environment that prioritizes welcoming, equity, and fairness. This culture can significantly help businesses reduce turnover.
Corporate social responsibility
A “purpose-driven organization,” according to Deloitte, experiences 40% higher levels of employee retention than their competitors.
Corporate social responsibility (CSR) rates high for job seekers and employees. A “purpose-driven organization,” according to Deloitte, experiences 40% higher levels of employee retention than their competitors.
Their findings show “people want to work for and support a company whose purpose is focused on the greater good of society.”
Volunteerism may be another key factor to retention. An engagement study found turnover dropped about 57% in employee groups most deeply connected to their companies’ giving and volunteering efforts. Whether the organization sponsors a particular charity or supports employee’s own charitable efforts, these initiatives spark loyalty and retention.
3. Hiring right and onboarding effectively
Keeping employees on the payroll often requires choosing the right person and the right training for the job.
One of the most common factors in employee churn is not hiring the right candidate for the role. Some experts suggest up to 80% of employee turnover is due to bad hiring decisions. Early attrition — employees who leave within the first few months of employment — is often tied to miscommunication, at best, of what the job will entail: at worst, the problem can be outright misrepresentation of the work. A study by Jobvite found 43% of workers who quit within the first 90 days did so because the work wasn’t what they expected it to be.
Honest communication with candidates is key to making the right hire for the company as well as the job seeker. Sugarcoating the challenges a position poses may make it easier to hire, but it can make it impossible to retain.
Once hired, a new employee can be onboarded to flourish or left alone to flounder. The impact of onboarding — welcoming, training, and mentoring a new hire — directly affects retention metrics. A Glassdoor study found new hires who were provided strong onboarding were 82% more likely to remain at the company for up to 3 years than those who were not. Clear Company reports onboarding programs can increase retention by 25%. The message to business is clear: new hires are an investment. Onboarding and providing resources and assistance as they assimilate to their new role (yes you should onboard when they switch departments, too) is a smart business practice that reduces employee turnover.
New hires are an investment. Onboarding and providing resources and assistance as they assimilate to their new role (yes you should onboard when they switch departments, too) is a smart business practice that reduces employee turnover.
Two-way communication is another key indicator for employee retention. Workers want to be provided constructive, actionable feedback to help them grow and develop on the job and in the company, but they also want to be heard. While the annual performance evaluation has, in many organizations, given way to more frequent check-ins and discussions, the practice of listening to staff members can often be enhanced.
For workers, studies find the ability to communicate upward, and have their ideas, concerns, and suggestions heard and acted upon, is key to keeping employees happy and on the payroll. One study found 16% of workers less likely to stay with an organization that doesn’t make them comfortable providing upward feedback. Another found employees who feel their voice is heard are almost 5 times more likely to feel empowered to perform their best work. Two-way communication could be a determining factor for employee retention.
Employees are looking to stay long term with a company that has the staff member’s long-term growth in mind. Providing training to do the work today is key to productivity: providing training and employee development to step into the next role in the company is key to retention. LinkedIn found 94% of employees surveyed would stay at their organization longer, if the company invested in their professional development.
If you think you’ve offered all the training an employee could use for their role, consider building on their talent outside their team. Stretch projects (working with other departments to get a more complete view of the organization) often provide an opportunity to grow and are becoming more popular. The challenge is to find ways to keep staff members, at all levels, continuously growing and developing to benefit themselves and the organization.
Everyone appreciates being appreciated. For workers, employee recognition, whether in formal programs or a simple “thank you, job well done,” are critical to engagement and retention. One study found 63% of employees who report they are always or usually recognized for their work were “very unlikely” to look for a new job. Compare that to only 11% of those who are rarely or never recognized on the job, and you’ll see appreciation is key to retention. Whether it’s a simple one-on-one thank you, or a company-wide “we’re the greatest” celebration, employee appreciation is critical to retention strategies.
7. Career growth
In addition to training and development, employees expect to move up the corporate ladder. For some workers, there may be a ceiling: there’s only so far you can go within the organization within your education and skill set. These workers may be at the highest risk of flight. Harvard Business Review reports that employees who stay in the same role for an extended period of time are more likely to leave. Their data reveals for every 10 months an employee stays in a position, their chances of quitting increase by 1%.
Alternately, LinkedIn found employees who are promoted after 3 years have a 70% likelihood to remain with the company: only 45% of those who have gone without a promotion in three years are likely to remain. A 25% increase in retention rates can be significant for business.
In some organizations, there are ample opportunities to move up: in others they may have to be created. Companies looking to retain can offer options for maxed-out staff members, including lateral moves or additional responsibility within their category to boost retention.
8. Manage your managers
What’s the old saying — if you’ve never worked for a bad boss, you might be one? We’ve all worked in a job or company we liked but quit because the boss was intolerable. Some research puts half of voluntary employee resignations at the feet of a bad boss. One of the top reasons employees say they quit soon after they’re hired was because the “boss was a jerk.”
One of the reasons upward communication is so important is to learn if employees are subjected to bad management. If staff members are being abused, harassed, or underappreciated, business will see high turnover. Having bad managers isn’t the fault of a business — they’re everywhere: not correcting bad managers is. When staff members report (or resign because of) a bad manager, it’s important to delve into the problem and resolve it. It doesn’t necessarily mean sweeping through your management team with pink slips, though some might be necessary. It might mean providing training to those who supervise others so they can grow and improve their managerial skill set.
If employees aren’t telling you they have a bad manager, but you suspect it’s a problem, anonymous surveys can help. These provide an avenue for employees to discuss issues without fear of retribution. If you want to improve retention, it starts with good managers.
Any employee can hit a professional slump or be broadsided with personal issues. The best organizations are willing to adapt and support their staff members when times are difficult, in hopes they’ll return to full productivity when things turn around. This can include help balancing work/life commitments, time off or a chance to retool. Even the smallest adaptation, like moving start/end schedules to help working parents get their kids to and from school, can go a long way to employee loyalty and retention. We want employees to adapt on the job: it’s important we model that behavior, as well.
Forbes reports 87% of workers expect their company’s support balancing their professional and personal lives. Companies that can adapt to employee needs can see retention rates improve.
A new area to boost employee retention has come to business via the recent pandemic. Safety on the job has become top of mind for workers, reflected in a recent LinkedIn study. Candidates polled revealed they more highly rated safety of the work environment than professional growth when it came time to evaluate a job offer.
Businesses that offer remote work to staff members at high risk, or create protocols to keep the workplace as sanitary as possible may see lower attrition rates. As we return to normal business operations, many of these policies and procedures should stay in place. Safety and health should remain high priorities for business and workers.
How important is employee retention?
The resources necessary to replace workers, whether newly hired or long-term employees, are significant, in recruitment and training costs as well as lost productivity. Workers are likely the most important and most expensive resource a company holds: keeping them is critical to business success. If a supplier consistently provided a good or service that only worked for a few months, then failed, you’d look for another vendor. If attrition rates show your new hires do the same, it’s time to examine what you can do to improve retention.
More than the cost to hire and train, turnover lowers income potential. A study by Northern Illinois University showed offices with low turnover post average profits 4 times higher than businesses with high turnover.
If your business is experiencing high turnover, there’s a good chance you know why. For those who don’t know why their company is an employee revolving door, exit interviews can be critical. Ask employees why they’re leaving, and promise confidentiality if necessary. Delving into the cause of the problem is the first step in correcting it. Making sure you act on the knowledge gained is critical to reduce turnover, save resources and grow your business.