Employee retention is defined as the capability and efforts taken by an organization to retain or keep its employees. Attrition is a severe concern for many organizations. Organizations lose more money when they need to hire replacements rather than retaining old ones.
Employee retention is a buzzword for businesses big or small. A number of studies have been carried out and a number of articles have been published to emphasize the importance of retaining employees. Specialists in this field have released guides on how to improve the retention rate percentage for multiple business types.
It is natural for organizations to experience turnover. However, some industries experience higher employee churn than others. They are:
Employee retention and employee turnover are the two sides of the same coin, you can, however, choose which side you’d like to flip!
Organizations today believe in retaining their top-performing employees, but it’s not only about the top-performers it should be the same from mailroom staff to the CEO.
Many small businesses are prone to higher employee turnover. These businesses struggle to cope with the perks bigger businesses readily provide their employees. Health insurance, good quality education for the kids, transportation, flexible working hours, just to name a few.
Here are 3 reasons why employee retention should be on top of every business owner’s mind:
- Increased efficiency: When employees stay put for a long time in an organization, they get well accustomed to the culture, policies, regulation, and understand their roles and responsibilities better. They become more efficient. For such employees, they tend to run projects smoothly, work efficiently on deadlines, and show higher levels of employee satisfaction. On the other hand, when an experienced employee quits the organization, the replacement takes time to come at pace with that employee. This hampers productivity and has a generally negative effect on the organization’s functioning. To avoid such scenarios, organizations need to take efforts and enhance the training and development programs, helping employees achieve their personal and professional goals.
- A penny saved is a penny earned: While most organizations aim to have a comprehensive employee onboarding process, many fail to realize the importance of a robust exit process.
An outgoing employee usually speaks the truth because they have nothing to lose. Thinking that an employee is no longer going to be associated with the organization and therefore it is not worth worrying about him//her is disrespectful. Regardless of the tenure served by an employee, an exit interview is a must.
With such whopping costs, it’s pretty straightforward to understand why employees are more than eager to retain their employees.
- Improve your employee exit process: According to the Deloitte 2019 Global Human Capital Trends, the average cost to replace an employee in the US is $4129. This is the cost to replace an entry-level employee. The cost differs from highly skilled employees. According to the Center for American Progress, it roughly takes 20% of the employee's salary to replace him/her. Interestingly their report also says employees with higher skills and education levels have a higher cost to replace them, which is roughly calculated to 214%. Many talent acquisition experts believe in the power of employee retention. Retaining the top employees is what separates an average organization to a truly successful one. However, it is impossible to control attrition or not increase your talent pool. You need to keep building your talent pool, at the same time, retain your best.
Employee retention initiatives don’t necessarily have to have a big budget. Most of these can be done with no money and reasonably quickly. It’s the little things that make a massive impact. Here are some that you can put into action as early as tomorrow.
- Casual dress code: Let them have the freedom to wear comfy and casual clothes to work. You don’t have to remove the dress code entirely, but you can certainly have some days where they can wear what they want. We have ‘White Only Wednesday’ every now and then.
- Shower room: This is great for employees who cycle to work or who work out in the morning. They can come to the office, take a shower, and get to work. There could be space constraints for companies, but, if not, this is a great option.
- Recreation room: This is an important one. Put board games, have an Xbox, buy a foosball table or any other games. This should be a zone where employees get to relax and rejuvenate.
- Family day: It does not have to be a big day or a grand party. Let the family members come to the office, interact with colleagues, meet team members, get a feel of the nature of work. This makes both happy, employees and their family members.
- Employee discounts: Have tie-ups with restaurants, gyms, etc. to get some discounts for your employees. This does not require any money, and such corporate tie-ups are easy to make.
- Birthday/anniversary leave: On anniversaries, employees can make plans with their partners if they get the day off. Working on birthdays can get boring too, having a day off is just perfect. We say, try this!
- Telecommuting choices: This is especially beneficial to employees who travel great distances to come to work. Having work from homes (WFH) sometimes is a big perk.
- Decorate your workspace: Workspace is an employee’s private space, let them decorate it, add some colors to make it an extension of themselves. If you can, you may even extend some budget for that.
Retaining employees costs less than hiring replacements. Here are some strategies that you can implement to improve employee retention in your organization.
- Give frequent (constructive) feedback: It’s an employee’s right to get feedback about their performance. Timely feedback ensures your employees understand their efforts are noticed, and they get to improve their performance wherever necessary. Not all feedback can be positive, but you can recognize all positive achievements.
- Growth plan: Only recognizing employee efforts is not enough; you need to have a proper career plan. They need to know what’s next for them. You can also help in goals management; this should give them an idea about their career progression.
- Present new and exciting challenges: Sometimes, tasks or big assignments may get slightly tedious or tiring, bringing the employee excitement and morale down. Spice up their activities with some short and exciting challenges. These can be a great refresher.
- Boost workforce creativity: You can organize some competitions such as bay decoration and let the creativity flow. Normal work assignments may not give all employees a chance to be creative, but such initiatives can surely change that. Have a contest or two, give the most creative ones an award, encourage them to be more creative.
- Trust employees and earn their trust: Employees that feel their organizations trust them tend to stay for longer durations. Let your employees try new things, let them present new ideas, this will undoubtedly play a key role in retaining employees.
- Listen to your employees: Create a channel that your employees can use to voice their ideas, opinions, and concerns. Their suggestions are vital in improving employee experience, employee engagement, and productivity. They may have innovative solutions to bottlenecks, project hurdles, and listening to them can certainly solve your issues soon.
- Help them gain a healthy work-life balance: This is crucial to all employees, even more so for employees who are parents. Conduct sessions, invite speakers to help employees find the right work-life balance.
- Apprise them of changes: Many organizations make big and important decisions and the employees don’t even know about it till it’s all done. This sometimes happens with Management team changes too. Let your workforce know what’s happening, what changes they will see in the future.
- Empower your employees: Basic infrastructure and tools are needed by all employees to efficiently do their jobs. This can be about the tools they need or the power to make decisions. Speak to them, see what they need, provide them with what they need. Empowered employees are more invested in the organization and stay for longer durations.
In this section, we will discuss the factors that lead to dissatisfaction in employees.
- Low employee morale: One of the most critical attributes that lead to higher rates of attrition is low employee morale. This can be quite infectious and usually a substantial influencing factor. Employees who are not satisfied at work (owing to various reasons) tend to think of a switch 15% more than their counterparts.
- Undefined career path: According to a study conducted by Glassdoor and Harward Business Review found that employees who stay in the same title for long are likely to leave the job if offered a better role and title. As an organization, you need to make sure that you provide a clear career goal to your employees; failing to do so leads to dissatisfaction amongst employees.
- Lack of proper policies and procedures: Human Resources play an essential role in drafting policies and procedures per the executive team. These policies are for the betterment of the employees. If they indicate anything, otherwise, employees tend to seek a better offer immediately.
- Compensation: Compensation accounts as a significant factor why employees quit or are not satisfied. Employees, when they cannot meet their financial goals, look for better-paying opportunities. Millennials are taking over the workplace, and studies show younger the worker the more likely they are worried about their finances, according to a study conducted by Gallup, 64% of millennials said they feel tensed about their finances.
While employee retention is still a concern for many organizations, you can still improve your retention numbers by the use of various strategies and techniques. Some of these methods are old and time-tested, while some are fairly new. It’s important you try them out and figure which works best for your organization. Employee attrition can never be stopped but can certainly be contained in many ways.