Employee retention is a success metric that’s top-of-mind for HR teams and company leaders in any era of mass resignations and talent shortages.
The good news is, managers have the power to make a serious impact on their organization’s ability to retain talent. According to Gallup research, 52 percent of employees who choose to leave a job say their manager or employer could have done something to keep them around. Managers who step up in these make-or-break moments are driving employee retention. Here’s a look at some actionable steps managers can take.
How Do You Improve Employee Retention?
If your organization is seeing low turnover, that means your employee retention strategies are working. You’re keeping the most experienced, valuable, engaged talent on your team, which saves money and time, with downstream benefits for productivity, company culture, team morale, customer experience and more. But what really drives employee retention?
1. Hire the Right Person
Know what you’re hiring for. Design roles thoughtfully. Communicate your requirements well, internally and externally. Then put the infrastructure in place to attract the right candidates. An employee who has the full picture of what they’re signing on for, who is both well-matched to your company’s culture and to the role’s responsibilities will stick around longer.
2. Provide a Great Place to Work
Research indicates a staggering 86 percent of new hires who quit within the first six months report it’s because their managers let them down during that time. Start off on the right foot with a thoughtful, thorough, welcoming onboarding process. Build workplace policies based on employee feedback and preferences. Ask your team members what they want in a workplace, listen to their answers and design your workplace strategy accordingly. Be competitive with your benefits packages and workplace amenities, whether your workplace is in the physical office, hybrid or remote.
3. Consider Each Employee’s Experience
The world is changing fast and change is hard. Managers, be attentive to your employees and proactive about offering appropriate support. Don’t try to figure out what the entire workforce wants and needs; instead, consider the unique individuals who power your company. Everyone works differently and each person may need something a little different from you in order to thrive. Learning what that is, for each person on your team, is key to boosting talent retention.
4. Invest in Your Employees
The most important driver of employee retention is investment in talent. As humans, we all need to grow and evolve. If we aren’t willing to help our employees do this, they might become disengaged and disillusioned — and sooner or later, they are likely to hit the road looking for better opportunities.
How do you help employees grow? Develop young talent from the start of their careers. Help your team members upskill or reskill, year after year. A 2019 LinkedIn Workforce Report found that 94 percent of employees surveyed said they would stay longer with a company that invested in helping them develop their existing skills or learn new ones. Investing in your talent will drive retention and developing early-career employees into leaders is the answer to the talent shortage.
Why Is Employee Retention Important?
Your organization’s ability to retain talent — to keep great people at your organization and help them thrive — touches virtually every part of your business. Employee retention has the capacity to boost everything from team morale and workplace culture, to revenue and customer experience.
Inevitably, people come and go. The stigma around job-hopping is dissolving. Every organization is going to have some turnover but too much puts you at a business disadvantage. Here are a few ways that high employee retention rates helps a company stay competitive.
1. Boosting Employee Retention Reduces Costs
Job postings, candidate screenings, background checks, possible recruiter pay or referral fees: These are just some of the expenses associated with hiring — and this is all before you even get someone in the door. Then, your organization will need to make expenditures on training, onboarding, corporate equipment, credentials and more. If your new hire doesn’t stick around, all of that investment is lost. With all the costs tallied, replacing an entry-level employee could cost as much as 90 percent of their salary, while replacing higher-level executives might cost more than double their salary. Keeping employees longer means reducing your hiring costs. Hanging on to your employees saves money.
2. Longer Employee Tenure Means a More Productive, Experienced Team
It costs money to rehire for a position — and it also costs time. Hiring, onboarding and training are a time commitment for all involved. Every time an employee leaves, the process starts all over again. On the flip side, businesses with high talent retention rates are more likely to have employees who like their jobs, who are engaged in their work and more productive overall.
3. Higher Retention Indicates a Happier Workplace
Research shows that employee happiness and employee retention go hand-in-hand. Companies with lower employee turnover typically have better team morale and a stronger, more vibrant company culture. When employees choose to stay at their jobs over a long period of time, they have the opportunity to build stronger relationships with one another, strengthening the fabric of the entire organization. On the other hand, low retention — lots of people choosing to leave their jobs — might indicate that workers are unhappy, and that can become a vicious cycle of negativity: Every time someone leaves, it causes a disruption that could lead to more work for the people who stay as they pinch-hit to cover gaps, help new team members get up to speed and more. That can add stress, invite scope creep, risk burnout and ultimately spur a domino effect of turnover.
4. A More Experienced Workforce Will Serve Your Customers Better
Teams with long-time employees have deep experience working with one another and deep experience in their jobs and at the company. This earned knowledge and developed skill set bolsters an employee’s ability to provide the best service to their customers. New hires, on the other hand, are still learning the ropes. They lack institutional knowledge. They are strangers to the workplace’s dynamics and processes. They lack relationships with coworkers and customers. It will take them a while to get up to speed and contribute at the same capacity as a seasoned employee.
What Hurts Employee Retention?
Employee turnover could be caused by any number of factors: An employee may need to leave their job for family or personal reasons. They could be unsatisfied with the pay, benefits or maybe their financial situation has changed. There might be a cultural incompatibility with the organization or they might have an untenable relationship in the office that they’d rather leave behind. An employee might leave because they see no opportunity for growth.
Some of these issues are beyond your control as an employer but if you want to retain your talent despite them, it helps to be attentive to red-flag signs of job dissatisfaction or difficulty at work. For example, you might notice a sudden change in attitude or a downward shift in an employee’s motivation, enthusiasm or productivity. The best path is to respond with support and flexibility.
Some of the reasons above, however, are within your control. During the Great Resignation, the world of work took note of droves of white-collar workers leaving their jobs in search of more flexibility around where, when and how work happens, better work-life balance, or for a role at an organization that is more compatible with their personal values.
Many leaders have recognized that they need to embrace and accommodate the demand for flexible work, offering the flexible workplace policies their teams are after. Those who don’t risk hurting employee retention, not to mention talent acquisition.