The Importance of Employee Retention & How to Retain Employment
Managing employee retention is a complex balance of strategies aimed at keeping employees motivated and making them feel valued so they invest in the company vision and continue to produce great work.
But in the midst of the “Great Resignation” and high turnover rates, how can your company adjust to increase your employee retention rate?
A comprehensive and successful employee retention program, supported by effective HR related resolutions, plays a vital role in attracting and retaining employees, as well as aiding a reduction in turnover (and its related costs).
By the end of this article, you’ll understand why it’s more efficient to retain a quality employee than to…
Recruit
Train
Onboard a replacement employee (even if they’re of the same caliber)
Table of Contents
Employee Retention: Why it Is Vital For Your Business
According to the U.S. Bureau of Labor Statistics, 4 million Americans quit their jobs in July 2021, during what experts are calling, “The Great Resignation.”
Employers are losing valuable talent at a staggering rate while also dealing with…
Hiring
Training
Replacing lost employees
Addressing the root causes behind this ballooning statistic starts with gaining a better understanding of why so many workers are leaving positions and why it’s so important for businesses to increase employee retention.
What Is a Good Employee Retention Rate?
One-third of new employees quit after about six months, according to statistics; which is a huge chunk of the workforce.
So, alternately, what retention rate should a company strive for? Generally speaking, employee retention rates of 90% or higher are considered good, but the goal should be a turnover rate of 10% or less.
Is Hiring New Employees Costing Your Business More Money Than Retaining Employees? Absolutely!
According to recent data from the Work Institute’s 2017 Retention Report, if an employee leaves, it costs a business 33% of a worker’s annual salary to replace them.
This means the replacement cost for an employee earning a median salary of $50,000 a year is $16,500.
Top 3 Causes of Low Employee Retention Rates
There are a number of reasons a business might be struggling to retain employees, including:
Lack of training or additional development opportunities for new hires
Poor or nonexistent communication between management and staff members
Unclear job descriptions that do not translate to actual responsibilities
A lack of recognition or appreciation by managers when an employee’s work is done well
Little to no opportunity to provide feedback on performance issues
The need for more flexible working hours
Read on to learn more about the top 3 most common causes of low employee retention rates.
#1: Not Feeling Valued
A survey by Gloat found that one-third of employees feel undervalued at work.
Not feeling like your work, or your effort is being appreciated by colleagues or management can quickly lead to feeling unmotivated to continue to work hard.
If this is the case and an employee’s work repeatedly goes unnoticed and unappreciated, it could lead them to look for a workplace where they feel they would be more valued.
#2: High Workload Stress
Pairing a high workload and/or workplace stress on an employee’s shoulders who already doesn't feel valued is like waving them goodbye.
With the ongoing global pandemic, many employees are feeling a heightened sense of personal stress, so any additional workload stress will likely add fuel to the fire.
If this is the case, an employee may seek alternate work opportunities that provide a more evenly dispersed workload and work/life balance.
#3: Poor Management
An employee may feel right at home and connected with their immediate team, but if the team isn’t backed by a strong manager or management team, it’s only a matter of time before problems arise.
Success and change start at the top — which means senior management needs to set the precedent for managers and supervisors, emphasizing that employees are critical to the company's long-term success.
It may seem obvious, but often without this messaging, supervisory employees are unlikely to focus on “people-related” issues, ie.:
Routine personal appointments
Comfort level coming into the office during the COVID-19 pandemic due to family circumstances; or
Childcare issues
It’s essential that senior management actively participates in the retention process and takes primary responsibility for it within their organization.
How to Retain Employment: Top 6 Tips to Maintaining Low Turnover
#1: Offer Excellent Benefits
Benefits like…
Health insurance
Medical insurance
Life insurance
Paid maternity/paternity leave; and
… will not only help your company stand out to potential employees but will ensure your current ones are able to plan for their futures.
According to recent research, flexible schedules and remote work options are two benefits that today’s professionals value most. About a third said paid parental leave is a major “plus” for companies who offer it. To enhance employee satisfaction and align benefits with employees' holistic well-being needs, it's important to explore steps that will improve financial wellness and ensure that the benefits offered address various aspects of their lives.
#2: Offer Above-Average Wages
When it comes to compensation, there are a few ways for a business to offer a high wage to their employees:
Lead the market in compensation and rewards
Tailor available rewards to the employee’s individual needs
Link rewards or additional benefits to retention
For example:
A PTO structure that ties the number of vacation hours to seniority
Offering retention bonuses or stock options to longer-term employees; or
Linking defined benefit plan payouts to years spent at the company
In order to pay employees competitively, businesses’ should be conducting market research and adjusting salaries regularly. But what if your business can’t afford to increase compensation for your employees? How can you remain competitive and work towards employee retention?
Consider other forms of compensation, like bonuses or unique PTO structures (ie. “Summer Fridays” or floating holidays for employees to take at their leisure).
Adding additional health care benefits or retirement plans can also help raise employees’ job satisfaction.
#3: Encourage Time Off
Paid time off is a great incentive to keep employees in your workplace and one of the best ways how employers can recession-proof their benefits, especially as inflation continues to rise.
Providing ample…
Sick days
Time for family vacations; and/or
Maternity or paternity leave
… for your employees can be highly beneficial to enduring employee relationships.
Encouraging employees to take time off to catch their breath and spend time away recharging along with daily mini-break periods can help with both day-to-day and long-term burnout. Saying that, it's important to consider both the limited paid time off and the pros and cons of unlimited paid time off to ensure which approach aligns with your organization's goals and the needs of your workforce.
If you are looking to improve your retention rate, it is essential that you give your employees good reasons to stay.
#4: Recognize Hard Work
Being rewarded for hard work goes beyond monetary compensation.
Acknowledge your employee’s emotional needs by:
Recognizing their hard work in front of the company
Setting up recurring lunches with the boss
Providing clothing with the company logo to boost workplace pride
Sharing feedback in the form of handwritten notes
These strategies can contribute to overall positive company culture and can also work to build morale between management and employees.
#5: Provide Employees With the Ability to Advance Within the Company
Nothing says, “We believe in you,” more than opportunities for advancement.
Giving your employees responsibilities that will allow them to grow within your company sends the message that they are valued and seen as an asset to the business.
Encourage your employees to gain new skills and give them the time to attend virtual conferences. Consider providing tuition reimbursement or sponsoring continuing education.
This shows trust and your investment in their future with your company.
Make clear your intention to hire from within and give generous promotions where you can — these actions will demonstrate your company’s investment in your employee’s happiness and professional future.
#6: Remain Flexible
To put it plainly, employers who understand that life happens are more likely to keep their employees.
Promoting, and actively supporting a work/life balance employee assistance is hugely important to employees and will aid in assuring them that the company cares for their employees’ well-being.
Remaining flexible and working with employees who …
Can’t (or don’t want to) work a traditional 9-5; or
Need a Wednesday off instead of a Saturday
… can really make an employee feel good about their employer (and may recommend them to those in their professional circle).
3 Benefits of Employee Retention for Employers
#1: Happy Employees = Long-Term Employees
Think about your favorite teacher or coach growing up. When they validated your work and made you feel like part of the team, it made you want to continue to perform, right?
The same goes for employees — when they feel appreciated, they are more likely to stay with your company.
Employees are more motivated to contribute solid work when they know that their work is valued and important to the team and the company.
#2: Better Customer Experiences
Happy employees generally treat customers better, whether they’re in a customer service role or working behind the scenes.
If your workers are being productive, that will directly translate to improved customer experiences as your customers are going to receive your service or product in a better manner.
#3: Increased ROI
There’s no denying, that retention problems reduce the ROI of your talent strategies.
Between…
Hiring costs
Training investments; and
Lost sales and productivity
… it’s costly to lose and replace a departing employee.
And these costs have both direct and indirect impacts on your bottom line.
Employee retention can help keep operating costs low. It’s much more expensive to hire and train a new employee than it is to invest in a current employee’s future at your company.
Sorbet & Employee Retention: Build a Better Business Culture By Offering More
What is meant to be a benefit can be a huge liability to both employers and employees.
We’re talking about PTO.
Offer your employees more options for their earned time off. Whether that means opportunities for them to take time away from work or by providing them with the option to cash advance their PTO, which is one of the best ways to financially support frontline employees, among others.
Sorbet revolutionizes the concept of PTO. Schedule a demo to learn what we can offer your business.
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