These days many employers are feeling the effects of the historically low unemployment rates along with high turnover rates. For some, the solution is to focus on more aggressive recruitment efforts, which is certainly a partial fix. The other part of the equation, though, is to retain employees who already know the job and the work environment.
It’s likely that your company is already doing things to increase employee engagement and retain employees. If you’re re-examining your employee retention strategy for today’s competitive market, we have a few ideas for employee retention that could become part of your toolbox.
What Is Employee Retention and Why Is It Important?
The employee retention rate is a metric that demonstrates a company’s ability to keep employees from choosing to leave their job. If a company has a turnover rate of 20% per year, that means 20% of employees choose to leave their job, while 80% are retained.
Some of the effects of just one departing employee include:
- reduced morale when other employees wonder why the employee left
- lost productivity while a new employee is hired and brought up to speed
- loss of “institutional knowledge,” that unwritten but important information
- increased recruitment, training, and onboarding process costs
According to a recent report from the Washington Center for Equitable Growth, employee turnover costs represent an average of 39.6 percent of a position’s annual wage. Given the cost of losing just one blue-collar worker, making an effort to reduce employee turnover by implementing a strong employee retention strategy can have a big effect on your bottom line. Any savings that can be achieved by preventing employee turnover could be reinvested in efforts to help maintain employee job satisfaction.
Top Employee Retention Strategies that Reduce Employee Turnover
The most effective employee retention strategies generally fall into the categories of pay and benefits, working conditions, growth, and company culture.
- Provide Competitive Pay
A pay scale that is in line with the rest of the local market is one factor that can boost employee retention, although certainly not the only one. Once new employees are hired, they can be encouraged to stick with the job through regular cost of living increases, incentive bonuses, profit sharing, or team bonuses. Based on employee feedback, you can find out how employees feel about their wages to find out which pay and benefit investments make the most sense. An employee’s salary needs to be in line with the job market, but there’s a lot more to an effective retention strategy than a paycheck.
- Offer Desirable Working Conditions
One recent shift in employee priorities is an increased focus on work-life balance. If possible, consider offering shift flexibility programs like compressed work weeks (four 10-hour days), staggered start times, and/or flextime. These flexible work arrangements help accommodate a wider variety of schedules and allow a healthy work-life balance. Any policy that helps reduce employee stress will set your company apart and make it harder for employees to look elsewhere.
Desirable working conditions can also include a safe environment, which helps employees feel valued. Management should visit work sites to monitor safety and working conditions on a consistent schedule, making sure team members have the safety equipment they need and are working in healthy environments.
- Foster Growth and Offer Professional Development
Mentorship programs for new hires can be an important part of the onboarding process to motivate and encourage employees to build stronger connections. Offering opportunities to develop skills can fill talent gaps, promote a culture of advancement, and demonstrate that the company is willing to invest time and effort to retain employees and help them grow.
Providing professional development opportunities to talented workers and offering to pay for all or part of their training costs can result in highly engaged employees. They “buy-in” to its goals of growing into an even more successful business and may even set their sights on becoming one of its future business leaders. While many workers might not be interested in professional development opportunities, those that are could well become your top talent and you’ll be rewarded for adding it as one of your best employee retention strategies.
- Enhance Company Culture
Enhancing company culture can go a long way toward improving employee satisfaction and encouraging increased employee retention. Develop a workplace culture that promotes transparency and invites participation. That may mean providing regular updates on company policies, priorities, and financial updates.
Find opportunities to provide employee recognition that will motivate employees and result in increased employee engagement. Some companies have an Employee of the Month program where one employee is chosen each month to receive recognition online and on social media. In addition, they might receive a gift card as a reward for their efforts. Employee recognition strategies such as this also help employees feel important and increase employee morale.
On a more individual level, inform workers far in advance if conditions are likely to require overtime or shutdowns. When employees can anticipate upcoming changes, they are better able to adjust their schedules and budgets. Even if they are not happy about the changes, they will feel more respected.
- Give and Solicit Constructive Feedback
Scheduling regular one-on-one employee meetings is a great way to foster communication. Although praise feels great when it is delivered publicly, workers appreciate the respect of being corrected in private rather than in front of a group. One-on-one meetings are also an opportunity to set clear goals. Employees work harder and feel more job satisfaction when they understand expectations.
Individual check-ins can also help employers understand how employees feel and what employees expect or desire. Sometimes just listening to the employee and understanding their needs and desires can help, even if the situation cannot be immediately fixed.
When employees quit, consider a brief exit interview with the departing employee to learn how to better maintain employee engagement in the future.
A successful employee retention strategy might involve hiring an Employee Retention Specialists. Among the tasks they might perform in that role is to communicate with employees about any challenges they might be having on the job. Workers may be hesitant to speak with their on-site boss or human resource management personnel, but might open up to their retention specialist provided they are assured the information will be confidential. The issue is often communication or something else that can be resolved. Finding out the real issue could result in a win-win for everyone concerned.
Solving the Challenge of Employee Retention
Employee retention is an ongoing challenge for any company. Re-examining your employee retention strategies from time to time will position your company to make any changes to policies and company culture that could enhance worker satisfaction and long-term employee retention. The time you put into employee retention strategies will pay off handsomely with employee loyalty improvements across all your employees.
