n the age of the Great Resignation, employee retention has jumped to the top of the list of concerns for many businesses. According to the U.S. Bureau of Labor Statistics, 242,000 Americans quit their jobs in August 2021.
What does this mean for you as a business owner? How can you make your employees stay and lower your turnover rate? More importantly, what employee retention tactics can you implement to keep your best employees?
Employee retention importanceWhy do employees leave their jobs?Employee retention strategiesHow to track resultsWhat is an employee retention credit?What is an employee retention program?Why Is Employee Retention Important?Employee retention is important for not only the well-being of employees but also for productivity and output. The lesson stands, satisfied employees get more done and remain at the companies they feel valued at.
The culture of your company, the reputation of your company, and the output produced all depend significantly on employee retention. If you can’t keep good people, it’s likely going to hinder your business’s ability to grow. Not to mention the cost can be upward of $40,000 to hire and train a new employee. Add this to the loss of productivity during the time of training, and poor employee retention begins to take a major chunk out of your profits.
Why Do Employees Leave Their Jobs?Graphic: Ways to Keep Top Talent: Common reasons employees quit
As surprising as it may be, money is not the sole driver of employees exiting their work environment. In fact, a 2019 study conducted by QuickBooks found that 34% of employees are dissatisfied with their benefits. Other causes included:
Dissatisfaction with payDissatisfaction with the organizationLack of flexibility and remote workLack of promotionsMisaligned valuesLack of full-time employmentStress in the workplaceLack of career growthUnsuitable corporate cultureLack of appreciationHigher PayNot surprisingly, higher pay is still at the top of the list for employees’ reasons to leave their current job for a new one. Being overworked and underpaid is a recipe for quitting and can lead to other issues such as burnout or stress in the workplace.
Potential Causes:More work responsibilities without a pay increaseLifestyle changes such as marriage or childrenCost of living increasesDissatisfaction With the OrganizationSixteen percent of people said unhappiness at their organization was their reason for quitting.
Potential Causes:Managerial discordCulture fitPay and benefitsWork-life balanceScheduling and Location FlexibilityIn a Payscale study, 2% of people surveyed said they would take another job for a better schedule. Also in a QuickBooks study, it was found that 24% of people surveyed were not satisfied with their work schedule. In positions where working from home is possible, options to do so are also increasingly popular among employees and job candidates.
Potential Causes:Desiring more work-life balanceEmployees preferring to work from home full-timeOptions to have a hybrid work schedule, allowing for part-time in the office and part-time at homeSummarization of Other ReasonsWhile the factors listed above were the top three reasons employees say they’ve quit their job, plenty of other reasons were found to be contributors:
Lack of promotion opportunities: 7% of employees surveyed said they wanted a promotion.Mismatched values: 14% said they wanted a company that shared their values.Desiring full-time employment: 10% of employees said they wanted a full-time position.Job-related stress: A high-stress work environment may drive some employees to look for a less-stressful role.Lack of career growth: Without the opportunity for career growth, some employees may look for a new job.Corporate culture: Workers want their company culture to be positive and encouraging.Lack of appreciation: Recognizing employees for good performance and contributions to the business can go a long way to building a sense of belonging and appreciation.15 Employee Retention StrategiesGraphic: Ways to Keep Top Talent: Employee retention strategies
What can you do to keep your employees? And not just hold onto them but keep them satisfied and engaged? Let’s take a deep dive into 15 of the best employee retention strategies.
1. Proper Hiring TechniquesEmployee retention can be harder to achieve if you’re not hiring correctly, and employers can make plenty of mistakes during the hiring process. Work to be open and honest about position needs and responsibilities during the hiring and onboarding process.
Make it happen: In your job interviews, look for soft skills such as emotional intelligence and communication. Hire holistically and not based on just experience or just personality.2. Onboarding That Focuses on Process and CultureCreate a consistent onboarding process for new hires that focuses on ways of working and culture, including a detailed layout of what to expect in the first 30-90 days from hire. Pair new employees with a mentor for consistent communication and feedback when needed.
Make it happen: Give new team members an experience that embodies positive company culture, like one-on-one interviews and a presentation that breaks down the meaning of your organizational culture.3. Clear and (Truly) Open CommunicationEmployee retention can be difficult without strong communication. Give your employees plenty of opportunities to be heard and, most importantly, listened to.
Make it happen: Implement a true open-door policy that allows for communication to be a foundational part of employee engagement.4. Training and Professional DevelopmentEmployees want to feel like they’re progressing in their position and that there’s always room for growth. Investing in development opportunities not only shows employees that you value them but can also benefit your business by helping your team build new skills.
Make it happen: Implementing training days and opportunities for employees to develop their new skills is imperative to employee retention and morale.5. Work-Life BalanceIt’s more important than ever to make employees feel like they have a fair work-life balance. According to a recent study, 72% of employees consider work-life balance important when looking for a job.
Make it happen: Whether you’re offering flexible hours, hybrid schedules, or no-meeting Fridays, be intentional in communicating to your employees the importance of work-life balance in your company.6. Employee BenefitsMost employees want a career, not just a job—especially top performers. With this, they want a complete benefits package as opposed to just a decent salary. Cater your compensation package to your employees’ needs for a worthwhile employment experience. Services like QuickBooks can help you offer in-demand employee benefits that work for your budget, including 401k plans and affordable health insurance.
Make it happen: Lend out work-from-home equipment, implement tuition reimbursement, or a child care stipend to start. But also cover your basics with insurance benefits, 401K matching, and acceptable PTO.7. Implement Scheduled RaisesNo one likes to guess when they’ll receive a higher wage, and it’s slowly becoming evident that larger pay increases must be made. In fact, Willis Towers Watson states that in 2022 employers project a pay increase of 3%, up from the 2.7% that was implemented in 2021.
Make it happen: Communicate early on during the hiring process about when to expect performance reviews and wage increases. It’s easier to run a race when you know where the finish line sits.8. Provide Clear Career PathwaysCareer pathways give employees a well-planned road map for growth. All employees should benefit from knowing what their next step will be, including the additional responsibilities they’ll have. However, during the HR Tech Conference in 2018, it was found that while 60% of HR leaders think they are providing clear career pathways for their employees, the reality is that only 36% of employees feel the same.
Make it happen: Make sure you’re setting clear expectations for growth and next steps in your employees’ career paths.9. Appoint Mentorship PartnersMentorship is not just for onboarding—it’s for ongoing team-building. Having an assigned mentor for your employees gives them an outlet to ask questions, ask for help, or just someone to talk to during difficult projects and tasks. It’s a commonly overlooked perk but is imperative to effective employee retention strategies. According to Harvard Business Review, over 90% of employees found that having a mentor helped them become better leaders and managers at work.
Make it happen: Collaborate, be consistent, and provide a structure through mentoring. This is best done in a one-on-one setting versus in a group.10. Get Employee FeedbackForget having interviews just for hiring, and exit interviews for those leaving. Instead, think about having retention interviews, or “stay” interviews. You can also incentivize your team to provide their feedback through anonymous employee satisfaction surveys. Whether it’s yearly or quarterly, schedule routine communication to ensure your employees feel heard and acknowledged at all times during their employment.
Make it happen: Allow for a time where your employees can communicate their concerns. It will help build trust and increase job satisfaction when your employees feel heard and valued.11. Help Employees Find PurposeAccording to a 2019 study by Harvard Business Review, 9 out of 10 employees said they would take a pay cut if their job provided purpose and meaning. While it’s true that money can motivate, it doesn’t always fit the bill for all workers. Helping good employees find purpose in their work builds relationships and fosters an environment that results in long-term employees.
Make it happen: Encouraging employees to craft a meaningful mission statement that links personal and professional goals can be a great start to helping your team find their purpose in the workplace. This only adds to the employee experience and job satisfaction.12. Prioritize HealthPeople want to feel like their health and well-being are a top priority. Especially in the aftermath of a global pandemic, mental health benefits, in particular, should always be encouraged
Make it happen: As an employer, prioritize mental health days, ergonomic office features, and affordable health care/health insurance for your staff.13. Foster Praise and RecognitionNo one likes to go unnoticed, and recognition every now and then can go a long way. When an employee feels valued in the workplace, it impacts whether or not they choose to stay with their employer.
Make it happen: Small steps like creating a gratitude email thread, the basic initiatives like a face-to-face saying “good job”, or a Slack channel can be the difference between an employee feeling unnoticed and one that feels acknowledged and appreciated.14. Encourage PTOTime is precious in your business, but paid time off is important to fostering employee wellbeing. Consider offering a PTO policy that gives your workers peace of mind that they won’t have to dip into their vacation time if they need to take a sick day or mental health day.
Make it happen: Depending on your line of work, additional PTO can be the difference between retaining top talent or losing them to a new job with a more lucrative compensation packet. If you have the means, consider a trial period to see how it affects morale and retention within your company.15. Proper Pay Scale AttributionProper pay aligns with benefits and hiring tactics. As an employer, you need to align employees’ positions with the proper pay scale and adjust accordingly. When employees are compensated fairly and competitively, it can stave off the temptation some employees may feel to seek outside employment. If you’re experiencing high turnover, you may benefit from reviewing how your compensation policies compare to other employers in your job market.
Make it happen: Using annual or quarterly reviews to review your team’s compensation, taking into account employee responsibilities, you can better monitor when raises are needed to help your business stay competitive and retain top performers.How to Track Employee Retention RateCalculating annual employee retention is a simple formula:
Retention rate = (Number of employees now ÷ Number of employees at the end of the year) x 100
However, there are other metrics you should be analyzing to track results on employee retention:
Retention per managerNew hire satisfactionTalent retention turnoverVoluntary vs. involuntary turnoverEmployee satisfactionTracking results is important to the overall success of employee retention because it gives you a baseline to grow from. Having a solid starting point and tracking how retention strategies impact your turnover rate will give you actionable data to implement change within your organization.
What Is an Employee Retention Program?An employee retention program is a plan of action on how to retain your talent. Completing an employee retention program requires some time but, if done correctly, can pay you back for years to come.
Start by measuring your employee turnover.Analyze the data to find out what team member is leaving and why.Have an open discussion with your management team.Prioritize which retention strategies are important to your company.Implement those retention strategies.Have periodic check-ins to reevaluate the data.Make adjustments when needed.Financial ViabilityEmployee retention strategies may seem like they will cost you money, but it’s a good idea to approach retention as an investment. It’s often more affordable to retain employees than it is to onboard a new hire. Let’s take a look at the stats behind the cost of hiring, according to a 2017 study:
Losing a millennial employee can cost the company $15,000 to $25,000.An employee salaried at $60,000 will cost the company anywhere from $30,000 to $45,000 to hire and train a replacement.The cost of losing an employee can be anywhere from 16% of their pay for hourly, unsalaried employees, to 213% of the salary for a highly trained position.It’s evident that not retaining your current talent can wind up costing you more in advertising, training, and productivity to hire new employees.
What Is an Employee Retention Credit?The employee retention credit (ERC) is the government response to the COVID-19 pandemic. It’s basically a payback on 70% of qualified wages with a $10,000 cap. That’s a max of $7,000 per employee per quarter. To qualify, you must be considered one of the following:
An essential business that supplies critical goods and servicesBusinesses able to conduct work through teleworkA business that was suspended or had to reduce hours due to government ordersA business that saw an extreme decline in gross incomePrioritizing Employee Retention Makes Business SenseAs you can see, poor employee retention is costly. It can cost your company more time and money to replace an already trained employee than it would invest in strategies to retain your top performers. Retention strategies can help you build a loyal, engaged team, which can be key to business growth and success.
Tools like QuickBooks Payroll can help you offer in-demand benefits that employees value. And while benefits, competitive compensation, and growth opportunities are all critical elements of retention, even seemingly small things like showing employee appreciation can go a long way.
Employee retention should be built into your business plan and culture, rather than something you do when it’s convenient or turnover is already rising. Create and follow a strategic retention plan to see how it shapes the turnover within your company.
To learn more about how you can offer benefits to your employees, click here.
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