In 2022, the U.S. Bureau of Labor Statistics reported that 50.6 million U.S. employees quit their jobs in a year, indicating an average of 4.2 million each month. With numbers as big as these and burnout at an all-time high, it becomes increasingly important to take employee retention strategies seriously and explore what they can do to connect with their employees. A Gallup report stated that the cost of replacing an employee could range from one-half to two times the employee’s annual salary. In her book Keeping the People Who Keep You in Business, Leigh Branham recommends companies actively work to retain key employees, at least the top 80 percent. Repeated changes in a business can be harmful, especially due to the damage it can cause to employee morale for those who see colleagues quit or get laid off all too frequently. This is why employee retention strategies are important.
Review popular employee retention strategies and why they work to retain key employees. (Image courtesy – Shutterstock)
Employees leave for many reasons, and while some include personal conditions like health and relocation of the family, there are many that pertain to the organization. Consumer Affairs reported the top 5 reasons for quitting to be in search of better pay and better benefits, insufficient pay raises, unmet needs by their former employers, and pay inequality. In addition, Flexjobs found a toxic work culture to be the top reason why employees quit. Objectively, all these reasons can be resolved by a company but many fail to do so for varying reasons, from a lack of HR practices to a too-tight grip on company funds. But it does not take too much to understand how to improve employee retention.
How to Improve Employee Retention? Assessing Employee Retention Strategies
Organizations need to seriously commit to understanding how to improve employee retention and then actively retain key employees to maintain the stability and productivity of their organization.
Compensation and Benefits
Appropriate compensation for the work done is a key component of many employee retention strategies. Being willing to provide competitive pay for a role is the most straightforward approach a company can adopt, that is, providing a higher salary than other companies in the industry are offering. An SHRM study found that 56 percent of employees viewed competitive pay as very important to them. Leading companies like Microsoft and Google are known for providing exceptional compensation to their employees, but not every business can afford top dollar to fill every role. Here, other forms of monetary compensation are useful as well.
Bonuses for top performers and performance reviews with the chance of a hike are also good motivators. Other employee retention examples include comprehensive benefits packages that are tailor-made to suit the employees’ welfare. This could include health benefits, time off, retirement assistance, etc. The SHRM study also found that 62 percent of employees reported health care/medical benefits as important job satisfaction components, and 41 percent valued defined contribution plans like 401(k). Additionally, the Edward Lowe Foundation reports that offering stock options as a bonus qualifies it as a profit-sharing plan, which is a system where companies share a specific portion of the net profit of the company, with its employees.
Career Development and Advancement
Careerbuilder and Silkroad Technology found 1 in 10 respondents had previously left a company because of a poor onboarding experience. Right from the moment an employee joins the company, the kind of training provided becomes important to their retention. Then, over time, with increasing developments in every industry, helping employees stay at the top of their game benefits them and the company’s market performance. A LinkedIn Workplace Learning Report from 2018 stated that 94 percent of employees would remain at a company that invested in their career development. Mentoring provides the same benefits as well, where employees are allowed to feel valued by the company with the appropriate feedback to guide them in their roles.
Another employee retention example is paying attention to an employee’s career projections. Harvard Business Review determined that workers who went long periods without a title change were more likely to move to a different company where they could step into the next phase of their careers. Providing an employee with a clear understanding of their career trajectory can make them more optimistic about growing in their roles within the company.
Work-Life Balance
Next for those wondering how to improve employee retention, assisting workers in maintaining a healthy work-life balance can be crucial. Especially since the post-pandemic era that left many companies with online and hybrid models of work, many employees have struggled to separate their work from their personal lives. Preventing work and calls from spilling into personal hours, providing access to gyms and other personal care and mental health facilities, and regulating working hours in a week are all useful ways of maintaining a work-life balance and avoiding burnout. These can also take the form of defined wellness programs that an employee can avail of.
An additional step to retain key employees can be negotiating flexible hours for those who might require a different work timing or might have other commitments forcing them to quit. FlexJobs submits that about 79 percent of workers hold that a flexible job could help them increase their work-life balance. Basic contributors like paid time off also contribute to employee retention strategies. Employees who have the option of disconnecting from work to do something they enjoy, whether that is spending time with family or traveling, can come back to work with a more relaxed and optimistic mindset.
Recognition and Rewards
A common presence in the list of employee retention examples is the mention of employee appreciation. Providing recognition for good work, whether through bonuses or non-monetary rewards like awards and titles, is a useful way to retain key employees. Online platforms like Mo, Nectar, and Bonusly are very useful for planning out employee rewards and engagement.
However, it is often more helpful if the recognition comes from employee recognition programs that actually indicate their work is appreciated rather than a mechanical process of certificate distribution. Providing additional equipment and gadgets for personal use, personalized rewards, and wellness initiatives are examples of rewards that are better appreciated. Globoforce found that employees who received small but frequent rewards such as money, points, or thanks, were eight times more engaged than those who received bonuses once a year.
Employee Engagement
A company’s culture doesn’t just revolve around its public image but also the principles it inculcates internally within its team. With many employees spending over 8 hours at work every day, it is essential that the workplace remains a place where they want to spend that time. TeamStage’s resources indicate that having employees who are highly engaged can lead to a 202 percent increase in their performance. This engagement arises as a result of how connected the employees are, not just with their work and coworkers but with the senior leadership as well, with 79 percent of EY Consulting’s survey respondents admitting that empathetic leadership contributed to their decisions to stay at a company.
Employees are also better engaged when they hear frequently from their managers, and an effective feedback program within the company can take care of just that. Team building activities are also useful employee retention strategies to emphasize engagement.
Measuring and Monitoring Employee Retention: Key Retention Metrics
Now that we understand the diversity of employee retention strategies and what the possible considerations are to retain key employees, it is also important to be aware of the criteria you should keep an eye on. There are many important metrics to consider in employee retention:
- Overall retention rate: This looks at the number of employees who have stayed with the company from the beginning to the end of a given period. 90 percent is considered a good place for the company.
- Overall turnover rate: This calculates the percentage of separations within a given period, including both voluntarily or involuntarily removals from the company.
- Voluntary turnover rate: This is a calculation of those who have chosen to leave the company within a given period.
- Talent turnover rate: This refers to the number of high-performing employees who resign.
- Employee Satisfaction: This refers to how satisfied employees are with their association with the company. Often this requires more in-depth surveys that explore the aspects contributing to their satisfaction level.
- Average employment length: This is a good metric to understand approximately how long people are willing to work at the company before moving on.
Companies that ask their employees how to improve employee retention will always be better equipped to retain key employees as it provides these workers with an honest understanding of what their employer is willing to do for them. Those who feel their employer considers their well-being will be more likely to reciprocate and show interest in their work as well, rather than do the bare minimum that gets them paid. Keeping the key metrics in mind, understand what you can do better, not just for your clients but your employees as well.