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Are you one of those managers who believe that everyone loves working for them? Or an exec that’s confident that everyone in the company is giving 110% to grow the business and make the life of the customers easier? If you are, you might want to check your employee retention rate, especially if you have reason to believe that you have not implemented sensible employee retention strategies.
The retention percentage that you end up with after this little exercise might come as a cold shower, but don’t worry - in this post, we will show you six employee retention strategies that can help you turn things around.
These strategies are simple to implement, although they might require an attitude change that the management brass often struggles with. However, it’s much easier to adjust the way you’re treating your employees than have to replace them every year. A Compdata survey shows a considerable uptick in employee turnover in the US between 2013 and late 2017 - it went from 15.1% to 18.5%. That’s one statistic you definitely don’t want to be a part of!
What Is Employee Retention & Why Is It 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% this means that 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 whole replacement process might cost the company much more - when we’re talking about highly specialist positions, or positions that require a lot of onboarding and training.
High turnover is not only costly, but it can also be extremely detrimental to the morale of the employees that are staying on. They begin to think about their own 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 continue in their company role is to implement employee retention strategies that are grounded in high employee engagement. Ambassify’s employee engagement ultimate guide talks more about the importance of highly engaged employees so make sure to give it a read.
6 Core Employee Retention Strategies
While there are numerous gimmicks that can increase employee retention in the short-term, to effect long-term change, certain things need to be implemented company-wide. Here are 6 employee retention strategies that you should try to mimic if you want to have satisfied and engaged employees that will stick with you.
1. Personal Growth Is Front & Center
Encouraging and investing in the growth of your employees will pay off much more than ensuring that they are merely happy with their work. Happiness is a vanity metric that doesn’t translate very well into work outputs. On the other hand, personal growth encompasses a lot of things - mentorship programs, working together on work-life balance, continuous education, and more. Investing in it means building up your employees, which then build up your company.
CarMax Example: In 2008, during the worst days of the financial crisis, CarMax won the Gallup Great Workplace Award because they focused on helping out their employees. When most other companies were cutting costs, CarMax invested in people by providing them with easier access to training programs and, ultimately, to promotions. It paid off - the company won the Gallup award four more times in the meantime, and their sales are record-high.
2. The Pay Is Fair
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 that an employee puts into the company. This is a fundamental employee retention strategy - no matter everything else, if an employee feels that they are paid less than their counterparts in competing companies, they will start looking for greener pastures. Make sure that the compensation package that you’re offering is competitive, or your today’s employees might turn into your tomorrow’s competitors.
3. Perks & Benefits Have Perceived Value
While you need to keep salaries in the same ballpark as your competitors, you can always sweeten the pot for your employees by investing in perks and benefits that everyone can enjoy in. Investing in a game room, a gym, workplace showers, and TGIF 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 a lot of your employees are young parents. However, if most of your employees are single, a child care option will not be perceived as very valuable.
4. Employee Recognition Is High Priority
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 it’s imperative that they get communicated often.
Southwest Airlines Example: Each week, the CEO of Southwest Airlines gives a shout out to employees that went above and beyond in their work. Additionally, the company’s internal magazine features a spread that’s all about the employees of the month. These practices inspire people, letting them know that hard work is not only appreciated but also recognized and awarded.
5. Hiring Is Deliberate & Thoughtful
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, as well as 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. In fact, 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/onboarding process. So, make sure to empower them and turn your hiring process into a winning employee retention strategy.
6. Your Employees Are Proud Of Your Brand
When people invest eight hours (and sometimes even more) of their day into a company, it becomes much more to them than a place of work. Or at least, it should become much more. 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.
Ambassify Tip: Companies that align their values with those of 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 use the Ambassify platform to enable your employees to spread the word about it. Ambassify lets you easily create social campaigns that will grow your online word of mouth and increase your brand awareness.
Focus On Employee Retention Strategies To Grow A Recognizable Culture & Save Money In The Long Run
It’s literally that simple!
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 it can go a long way when it comes to employee retention rates. Read Ambassify’s complete employee engagement guide here to learn how it affects everything in your company - from retention rates to your bottom line.