A recent study found that 96% of workers will be looking for a new job in the coming year. With labor market conditions, they’re feeling confident they can find a job that offers better pay, better work-life balance or more opportunities for growth.
So how do you make sure your top talent sticks around?
A high employee retention rate is often a sign of a healthy business. It saves money, improves efficiency, boosts employee morale and gives you a competitive edge. Here we’ll review what employee retention means, how it works and what you can be doing to keep your best employees.
What Is Employee Retention?
Employee retention is the science of reducing employee turnover. In other words, it’s keeping your productive employees from leaving your organization and reducing the loss of talent.
A positive work environment is a big factor in maintaining high employee engagement and retention rates. This could include providing a good work-life balance, competitive benefits and pay, or opportunities for career growth and advancement.
Your company culture also plays a big part — and it starts at the top down. Good leadership inspires good management which inspires good associate-level employees. One report found that 57% of employees leave because of their bosses.
What Are the Benefits of Employee Retention?
Employee retention can offer your business many benefits — some are measurable and others are less tangible. Here are some of the best benefits business owners get from keeping their top talent.
It saves money. Hiring, training and onboarding good employees costs money. You have to pay for job postings, plus spend time doing interviews and training new employees. It can take more than six months to see a positive return on investment when hiring a new employee and getting them up to full productivity.
It increases business and employee efficiency. Workers who have been with the company long term know how the company runs. They know the processes they need to complete inside and out. They can work faster and draw on their knowledge of the company to make better decisions.
It can boost employee satisfaction. People are happier when they feel like they belong somewhere. Having an environment where they feel valued and appreciated can increase their sense of loyalty to a company and ensure they’re happy in their job.
It improves customer experience. Keeping customer or client-facing employees around can improve customer experience. People tend to prefer building relationships with employees instead of constantly seeing a new face and having to build trust all over again.
It can increase your revenue. Your company runs better when you have a low turnover rate. You’re more efficient, your employees are happier and you’ve reduced the cost of always finding and training new hires. All this can translate into higher revenues for your business.
How to Measure Employee Retention
To measure employee retention, you simply need to look at the percentage of employees who have been with your company for a fixed period of time. For a larger business, or one that has a high division of labor, you can break this up into teams to see if there are any areas that need special attention.
A good employee retention rate to aim for is about 90% — though this can vary industry to industry. You may not want to shoot for a 100% retention rate. It can stagnate your workforce. Meaning there’s no room for newer, more engaged employees to join your organization, contribute fresh ideas and improve your team.
HR retention metrics to watch.
- Employee engagement — An engaged employee is less likely to seek other employment. They care about career advancement, learning and growth opportunities and contributing to the company culture.
- Employee satisfaction — Employees who feel they’re fairly compensated and their work is recognized and meaningful are more likely to stay with your company.
- Turnover rate — Employees who leave can also offer you insight. For example, if one manager has a high turnover rate on their team, it could be a sign that you need to look a little closer. You may find you need to invest in some training or support for that team’s leadership.
12 Effective Employee Retention Strategies To Keep Your Top Talent
1. Conduct exit interviews. When team members leave your company, take the time to sit down with them and conduct an exit interview. Ask what they liked about working for your company, and what they didn’t like. Most importantly — ask what led them to make the decision to leave.
Your employees are more likely to be honest with you at this point, because they may feel less pressure to say what you want to hear. You can gain a lot of insight about what your employees value and the reasons employees leave.
2. Review your onboarding process. A Gallup survey found that only 12% of employees felt their companies did a good job of onboarding them. The process of getting a new employee started can set the tone for the whole relationship with your organization. It’s important that they have the right training and tools, but don’t forget to incorporate your company’s culture, values and mission as well.
3. Evaluate your employees’ compensation. A lot of employees leave because they feel they can make more money somewhere else. Evaluate your competitors, your industry and the job market to see how you stack up.
Remember to look at your benefits package and other non-salary compensation and incentives too. This could be things like health insurance, bonuses, PTO, retirement, etc.
4. Provide perks. Perks are a great way to improve your working environment and provide some less traditional employee benefits. This could be as simple as having snacks around the office, monthly team lunches to show appreciation or helping pay commuting costs. You could also set aside a professional development budget to help employees pay for training, conferences or networking groups.
5. Offer mentorship programs. A lot of people aren’t sure what their career path looks like. Especially when they’re just starting out. You can help employees find the right path within your organization by setting them up with an effective mentor.
A mentor is a guide. Someone to help employees navigate the path to their goals. Good mentorship can greatly improve employee experience.
6. Prioritize mental health. During the height of the pandemic, many employees were experiencing severe burnout. Remote work made it difficult for some to separate work time from personal time. Encourage employees to take time off if they need it.
A burned-out employee isn’t happy and they’re likely not doing their best work. By implementing wellness programs and prioritizing your employees well being, you can show them that you care about them and help them stay healthier and happier.
7. Provide a good work-life balance. Work isn’t everything. Employees have lives, families and personal things that need time and attention. A healthy work-life balance can help prevent burnout and improve employees day-to-day life.
Depending on your industry this balance could look different. Remote work may or may not be a viable option. But you can also offer flexible scheduling, summer hours or just ensure that you’re fully staffed so employees aren’t taking on extra work.
8. Give and ask for feedback. Feedback is essential to a healthy work environment, but it goes both ways. Just as good constructive feedback helps your employees grow and develop, feedback from them can help you be a better employer.
You can open up channels directly or send out employee surveys. This can help you and human resources to understand what you’re doing well and where you could put in some work to improve employee job satisfaction.
9. Communicate. Being open and transparent with your employees is always a good policy. If there are big changes or challenges on the horizon, prepare your employees by communicating with them about it. Let them know what the organization’s plan is and what they can expect going forward. It will demonstrate a lot of trust in your team.
10. Create a career development path. If employees feel like they can’t advance their career in your organization, they may start looking for a new job. A career development path can show employees that there is room for growth and promotions. It will also let them know what they need to do and what new skills they need to learn to reach the next level.
11. Recognize achievements. When an employee or team accomplishes a goal, you should recognize it. This shows that you see the work that team members are putting in and that you appreciate their dedication. For smaller achievements, a shout out will suffice, but for the big goals a reward may be in order. This could be something like extra time off or a monetary bonus.
12. Emphasize teamwork. Being a part of a team that’s enjoyable to work with and produces great work can inspire loyalty and create a sense of belonging and identity. It also just makes coming to work more enjoyable. You should be sure to recognize top performers, but make sure the team knows you see the work that everyone put in.