6 Employee Retention Strategies That Pay Off
Keeping a high retention rate is important for your organization for many reasons, including money-related matters. Here we’ll talk about 6 employee retention strategies that you can implement in your company to make sure that your employees actually have a passion for their work, and are happy, engaged, and satisfied in the workplace and the work environment you created.
No matter what kind of leadership position you find yourself in, it is always important, as a general rule, to take a look at your employee retention rate, especially if you have reason to believe that you have not implemented sensible employee retention strategies. This is an insightful piece of data that often fairly transparently reflects how your employees feel about working at your company.
It does no one any good to just assume that everyone loves working for you or that every single employee is down to give their 100% to grow your business. Here we'll discuss 6 employee retention strategies that can help you counter a possibly bad or unexpected situation and eventually turn things around.
After all, it's much easier (and financially more convenient) to engage with your current employees, implement retention strategies, and make sure they are happy and satisfied, rather than replacing them (with all the costs attached to this).
Why is employee retention important?
Employee retention is the company’s ability to keep its employees.
It’s usually represented as a percentage, so if a company has an annual retention rate of 90%, it keeps 90% of its employees for more than a year, while 10% are replaced.
A high retention rate is important because it affects the bottom line of the company. The average cost of replacing an employee is around 20% of their annual compensation package. However, there are some outlying cases in which the replacement process might cost the company much more — highly specialist positions, for example, or positions that require a lot of onboarding.
High turnover is not only costly, but it can also be highly detrimental to the morale of the employees that are staying on. They begin to think about their options, are they treated right or not? Should they be looking for greener pastures? And so on. All this creates needless stress at the workplace and, ultimately, leads to lower productivity.
The most important thing that you can do as an employer to ensure your employees keep on their role is to implement employee retention strategies grounded in high engagement.
While numerous gimmicks can increase employee retention in the short term, certain things need to be implemented company-wide to effect long-term change. Let's dive right in!
1. Personal growth
Encouraging and investing in the growth of your employees will pay off way more than ensuring that they are merely happy with their work.
On top of that, personal growth encompasses many things — mentorship programs, working together on work-life balance, continuous education, and more. Investing in it means building up your employees, who then build up your company.
2. A fair pay
When it comes to how much you pay your employees, use the equity theory as a guide. It says that the pay should be perceived as equal to the amount of work an employee puts into the company. This is a fundamental employee retention strategy — regardless of anything else, if an employee feels that they are paid less than their counterparts in competing companies, they will start looking elsewhere.
Make sure that the compensation package you’re offering is competitive, or today’s employees might turn into your tomorrow’s competitors.
3. Perks and benefits with perceived value
While you need to keep salaries in the same ballpark as your competitors, you can always sweeten the deal for your employees by investing in perks and benefits that everyone can enjoy.
Investing in a gym, workplace showers, team-building activities, and office parties can make your employees feel appreciated, and it’s often cheaper than giving everyone a raise. Think hard about what perks your employees would welcome.
For example, an in-house daycare center for kids might be great if many of your employees are young parents. However, if most of your employees are single, a child-care option will not be perceived as valuable.
4. Employee recognition
People love to get praise for a job well done and will often work even harder to earn that praise the second time around. That’s why it’s disheartening to see how many companies and managers are getting this wrong, especially when a tap on the back and a kind word cost absolutely nothing.
Instruct your managers to find one positive and encouraging thing to say weekly to every employee that reports to them. These things can be small — and they often will be — but they must get communicated often.
This way, you'll be able to not only show your employees you're not afraid to recognize them for their efforts and good work, but you'll also create a much more relaxed, friendly, and encouraging work environment.
5. Deliberate and thoughtful hiring
Train your hiring managers to sniff out the right fit for your company early in the hiring process. This includes them being able to manage the expectations of potential hires when it comes to their duties and the benefits that will be included in their compensation package.
If your strategy consists of promising a whole lot just to get a person to bite and then delivering less than expected, you can expect a high turnover rate.
37% of hiring managers say that they could achieve higher employee retention rates if they were empowered to inform new hires more thoroughly (and truthfully) during the hiring and onboarding process2.
Make sure to empower them and turn your hiring process into a winning employee retention strategy.
6. Make your employees proud of your brand
When people invest eight hours (and sometimes even more) of their day into a company, it becomes much more than a place of work. Or at least, it should. Strive to build a company that employees are proud to work and advocate for.
Employees who are driven and care about their legacy and the future that they create for those who come after will consider working for a positive branded business a serious benefit.
Companies that align their values with their employees can count on more employee advocates. If you’re contributing to your local community or regularly support charities that your employees care about, make sure to let your employees know about it and enable them to spread the word about it.
Focus on employee retention strategies to grow a recognizable culture and save money in the long run.
If you let this one slide, ultimately, your employee turnover rates will eat into your profit. They will also continue to do considerable harm to the morale of your remaining employees until your company culture is virtually non-existent.
Keeping an eye on employee engagement and making sure that you’re continually growing can go a long way when it comes to employee retention rates.