Amidst their country’s tech talent shortage, HP Indonesia is doing its best to focus on its employee retention instead of acquisition efforts, according to Human Resources Online. The World Bank has projected a 9 million skilled and semi-skilled ICT workers shortage to affect Indonesia between 2015-2030. While it can feel like a localized issue, such market changes are just as possible in U.S. industries and it emphasizes the importance of the retention process in HR. Rather than over-expending resources on attracting talent, employers should take a serious look at ways to retain employees already at the company.
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Why Is Employee Retention Important?
There are many reasons why employers and their HR professionals should prioritize employee retention. According to Gallup, replacing an employee can cost between one-half to two times their annual salary. Essentially, a 100-person organization with a $50,000 average salary could see replacement costs of over $660,000 to $2.6 million per year. That is a lot of money to lose year or year, with no likely decline unless employee retention is prioritized.
Whether it’s a fresher role or one that requires experience, Qualee reports that it takes a new hire approximately eight months to reach their full productivity. And yet Apollo Technical states that after six months, one-third of new employees quit. Without hitting full productivity, employees often move on to the next opportunity, leaving companies to restart the hiring and onboarding process. Setting the numbers aside, employers also expend a lot of time and energy in onboarding and training a new hire. Instead of focusing on firing and rehiring, a company’s resources can be better invested in establishing new ways to retain employees and boost worker retention.
Ways to Retain Employees: An HR Responsibility
The retention process in HR is a complex one. While the HR team is mainly responsible for employee retention, it takes an entire organizational effort to make it a success. From the leadership’s attitude to the overall company culture, every element has to be designed to appeal to an employee’s desire to stay right where they are. But the task is quite possible with planning and frequent assessments.
Establish Effective Recruitment Strategies and Onboarding
A big reason for high attrition rates is the hiring of candidates who are not suited for the organization. Oracle NetSuite posits that 66 percent of workers realize their job is a bad fit after joining a company and half of them quit within 6 months. If companies get better at hiring candidates who correctly match the work ethic, job description, and company culture of the organization, they immediately reduce the likelihood of these candidates leaving.
- Exit interviews are a key way to identify why an employee wasn’t able to settle into an organization so it can be addressed in the next round of hiring
- Ensuring a job description accurately represents a role can help ensure candidates know what they are signing up for
- Explain company policies, probation criteria, salaries, etc. clearly to a candidate before sending the offer letter to reduce future dissatisfaction with the role
- Communicate key performance indicators (KPIs) and ensure they understand what is expected
- Review the hiring team to ensure they making unbiased hiring decisions
- Restructure onboarding practices to ensure all the relevant information is conveyed to candidates in an orderly manner
- Provide timely and personalized communication to keep candidates informed about the hiring process
- Assign a buddy or mentor to help new employees navigate the organization
- Use feedback to continually improve and refine the onboarding experience as well as employee retention policies
Competitive Compensation and Benefits
Often, competitive packages are reserved for new hires and top talent rather than well-performing individuals within the company. Especially with the new pay transparency laws that are becoming the standard, employees need only to take a look at their organization’s hiring posts to know what they are willing to offer to new employees. This can leave existing workers feeling snubbed and also alert them to better opportunities at other organizations as new hires. To improve the retention process in HR, ensure employees are fairly compensated.
- Clearly communicate the overall value of the compensation package to candidates and employees during recruitment
- Perform regular reviews and consider promotions on a performance basis
- Conduct surveys to assess what benefits employees might be looking for—this is not always a monetary benefit
- Check the market standard and compensate employees appropriately
- Consider flexible compensation structures that allow employees to choose benefits that suit their individual needs
- Look into alternate ways of acknowledging good performance, from newsletter mentions to social media shoutouts and other rewards
- Offer Employee Assistance Programs (EAPs), counseling services, financial advice, resources for managing stress, wellness assistance, etc. to help employees care for their wellbeing
- Ensure competitive retirement benefits, such as 401(k) plans with employer contributions and matching
- Look into unique perks that might make the business stand out from its competitors
Employee Engagement Initiatives
Employee retention is infinitely easier with actively engaged employees. Look into your current engagement levels and what you can do to improve those numbers. Gallup’s State of the Global Workplace Report emphasizes that only 15 percent of workers are actively engaged with their company. Disengaged employees can find themselves straying away from work at a company that they do not relate with. By providing reasons for employees to value their organization, their coworkers, or even the work that they do, HR officials may find new ways to retain employees.
- Invest in surveys and feedback programs to assess the mood and experience of your workforce
- Plan different ways to facilitate communication across teams, hierarchies, and departments
- Encourage peer-to-peer recognition and feedback programs
- Provide training on how to provide feedback constructively and promptly
- Host regular discussions and forums to interact with employees and arrive at ways to retain employees
- Invest in innovative team-building activities
- Assess skill gaps and provide training and opportunities to develop them
- Update employees on the progress and success as well as set-backs the company experiences, and allow them to actively experience the journey
- Facilitate employee retention by encouraging employees to initiate and lead projects aligned with their interests
Professional Development Opportunities
Oracle NetSuite reports that companies with good training programs have 53 percent lower attrition rates. Employees stay with organizations that care about them and help them grow.
- Assess the industry standards and help employees with training to keep up with them
- Providing regular refresher courses on software, equipment, and other technological tools used by the organization
- Allow employees to represent the organization at various levels and present their ideas regularly
- Offer financial support and any other assistance necessary for employees to upskill and complete certifications for employee retention
- Sponsor memberships to professional associations or industry groups
- Track conventions, conferences, expos, business opportunities, etc. and assist employees in participating in them
- Job rotation programs can help employees experience different roles
- Facilitate interdepartmental resource and knowledge sharing
- Provide access to webinars and virtual events hosted by industry experts
- Get guest speakers and external insight into industry trends
- Celebrate employees who demonstrate a commitment to continuous improvement
Research Into Market Status
A robust organization cannot be built by passive intentions. It takes an active HR department and research team to keep their eyes on shifting trends in order to find innovative ways to retain employees.
- Analyze hiring practices by competitors and see what benefits they offer
- Keep an eye on research reports that are put out by organizations like Deloitte, McKinsey, SHRM, etc. to understand the various components at play
- Keep developing new strategies according to shifting trends rather than stagnating but maintain the core values of the organization
- Build a brand identity and reputation as a desirable place to work
- Invest in social media and up-to-date websites and public listings to hold a prominent place in the job market—measure your brand reputation
- Consider environmental and social trends that may influence consumer choices
- Adapt strategies according to what suits your organization. Even if a three-day workweek begins to trend, be realistic about your company’s capabilities
- Stay compliant with data privacy regulations to build trust with customers
- Monitor and assist employees but do not become over-involved in watching their every move as employees do not like constant surveillance
- Conduct a risk assessment to identify potential threats to your business
Employee retention is a continuous activity and requires HR teams to dedicate themselves to the various initiatives to retain employees. It requires a constant back-and-forth between the employer and employee with HR as a mediator, but the effort is worth the benefits. With the job market and economy constantly shifting, companies need to start valuing the work that goes into the retention process in HR. These employee retention strategies are a good place to start.