What can be more than a nightmare when employers get to know that their valued staff member has decided to quit working with them and their organization? One of the biggest pain points for companies is managing employee retention. Apart from plenty of challenges business owners now need to find time to recruit new employees.
Employees are considered to be the biggest asset for an organization second being customers. If you carefully deal with your employees they will reflect this feeling to your clients and customers making you stand apart from the rest in the market. Big brands like Facebook Amazon, TATA, Google are a few to name who have one thing in common and that is they hire talent and they keep them.
In today’s competitive world highly skilled workers may feel compelled to hop to another job if they get a better offer. An employee who doesn’t feel rewarded or is not making any progress in your business will start looking for other better options.
Do you wish to reduce your staff turnover? Do you wish to keep your productivity flourishing? If you have just given a nod then creating an effective employee retention strategy should be on high priority on your to-do list.
What is an Employee Retention Strategy?
Employee Retention Strategy is all about a series of measures and initiatives designed by the management to embolden and convince your top performer to stay within your business.
When we talk about strategies it could be anything from reward and recognition policies, training and development to employee benefits.
Why is it Important to Retain Employees?
To find good talent for your organization is a difficult task. If you think you have found one don’t be happy as your job is not done yet. The next pain point is, you need to give your time and shell out money to train the new resource to make them efficient enough to achieve the targeted goals of your organization. So when you end up finding good talented staff for your organization you as an employer need to ensure that you are doing all that you can to retain and nature such talents
Did you know that 43% millennials plan to quit their jobs in two years while 28% plan to stay beyond 5 years (Deloitte). Employee turnover is extremely injurious to your business.
Right from your services rendered to your financial bottom line everything gets disturbed. If you don’t rectify and strategize an effective employee retention program, you won’t be able to fully concentrate on maintaining a high standard of efficiency. Realization of this fact makes you halfway through the battle. Deciding upon the course of action to reduce employee retention rate is the other half of the battle which you need to ponder about.
Technology advancements have offered a variety of options for employees to look for jobs. According to Willis Towers Watson, 46% of high retention risk employees used the internet or mobile apps to find new jobs. Glassdoor the largest job and recruiting site state that nearly 35% of hiring decision makers expect more employees to quit in 2018 than they did in 2017.
How to Calculate an Employee Retention Rate?
When we talk about employee retention strategies it is advisable for HR to have specific measures to track the statistics of employee retention rate. When you trace such statistics you will be aware of what actionable initiatives could be used to curb employee retention rate.
Calculation of employee retention rate is simple: Divide the total number of employees who left during a period by the total number of employees at the end of a period to get the percentage.
Period: 3rd quarter
Total number of employees at the beginning of Q3 = 34
Total number of employees who left in Q3: 4
Calculation: 34-4 =30
Employee Retention Rate = Total number of employees who left during a period
Total number of employees at the end of a period
Employee Retention Rate = 30 / 34 = 88%
A research by Center of American Progress states that the cost of replacing a highly trained employee /executives can easily exceed double their annual salary.
Every company‘s goal is to hire talented staff and get them to stay around for a longer period. Employee retention is not an easy job. A recent study by Willis Towers Watson states that more than half of the firms globally report difficulty retaining some of their most valued staff members.
Here are a few tips on how you can reduce employee retention. Some of these tips may be known to you while some may be new to you, but the bottom line here is that all these tips will help you to stimulate long-term loyalty from your top performers. However, to keep it simple let's break down these tips into three parts:
- Improving the work environment
- Enhancing HR practices
- How to curb employee retention.
Part 1: Improving the Work Environment
- Increase the pay scale:
According to Glassdoor 45% of hiring decision makers considered salary as the top reason for the employees job change. If you wish that your employee does not join your competitor, an increase in pay scale could be one of the ways to retain your employee from joining your competitors. When you increase employee’s pay scale it’s an added advantage for you as well. An increase in the salary demands an employee to put in hard work and commit themselves to their job. If you feel that your competitor has offered your employee a high salary package which you cannot pay that X amount to your employee at the moment thinks of creative ways. For instance: Offer your employees, company stock options or equity plans. These options give employees financial share in the company meaning if they put in hard efforts and help the company in achieving its targets the stock value will shoot up and they will too make money along with the company.
- Promote Them From Within:
Employees tend to put in more efforts when they feel that their work is rewarded. “The AttaCoin 2017 Employee Appreciation Study” states that 88% of employees agreed that it’s important that employers reward employees for great work. Offer them the opportunity to grow with the organization. You can reward talented resources by increasing their responsibilities and promoting them to other important titles. Employees who have advanced from entry level to a manager grade will tend to remain more loyal to an organization as compared to those who are doing the same task with same titles for years. This makes your staff aware of the opportunities the organization offers them move up the ladder of success in terms of career growth. This will push them to put in more efforts to climb the ladder thereby increasing your employee loyalty toward your firm. If this is done in a right way you will find that developing your team from within will be cheaper than relying on outside candidates or new joiners.
- Work Life Balance:
Research by Right Management Global Career Aspiration, 35% employees switch job for a better work-life balance. If employees work get monotonous and stressful offering different jobs with less workload would be a smart move. When you make an employee work to the point of exhaustion this is one of the reasons why they start searching for work elsewhere.
- Provide Competitive Benefits:
According to Clutch 2018 Employee Benefit Survey nearly 49% of employees state that receiving perks/benefits means they know that their employers have invested in them as an individual. Besides salary employee also see to the benefits they are offered by the employers. Offering benefits like physical and mental well-being, health insurance, 401K plans, ESOPS etc. would make your job more appealing to your employees and would help in reducing employee retention. Make sure that you review your benefit plans every year. Try to figure out the benefits your competitors are offering to their employees to make sure you remain on the same page in the market and that your competitors don’t move ahead of you by stealing away your best talent. For instance: In the US medical coverage is expensive so most of the employees depend on the employer’s healthcare plan. Offering a good health insurance plan makes your job attractive, reduces employee retention and makes the hiring of a new employee a bit easier. It also serves as a wise investment in the long run as if your employees are healthy they will be productive workers too.
- Encourage Friendly Employee Relationship:
Try to develop a warm, carefree environment at your workplace. Employees should feel comfortable talking, making plans outside workplace etc. with each other as long as it does not hamper their work. You can plan a fun outing; watch a movie etc. to lighten up the mood. This would serve an ideal way to build a bonding with your employees. It will also allow employees to build a bonding with each other as colleagues.
- Trust your Employees With Responsibility:
IBM Analytics states that 83% of employees experienced a more optimistic work environment when they experienced that there was the trust factor in their managers and organization. Try to give your employees the minutest job. This will develop a sense of responsibility in them. Did you know that added duties, increases responsibilities and this can actually make a job attractive? However, if you want to try out this option be open to selling some amount from your pocket as no one would like to be entrusted with more responsibilities without being compensated for the additional tasks allotted to them.
Part 2: Enhance HR practices:
- Have Selective Hiring:
According to a new CareerBuilder survey, organizations lost an average of $14,900 on every bad hire. One of the ways to reduce employee retention is to make sure to place the right talent in the right job and at the right place. Selecting employees whose qualification and personality matches with the job will help you a lot. As they will be quick learners, perform well and will feel delighted to do the job as it is off their interest field. Below are few criteria’s that you need to bear in mind while selecting employees:
- Skill –Does the employee possess skills that would increase your business’ worth?
- Personality –Does the personality of the candidate match your organization’s culture?
- Intelligence – Is the employee able to make smart moves when under pressure.
- Commitment – Does this person display the same level of commitment that you’re in search for?
- Conduct Regular Employee Feedback/Reviews:
One way to understand and reduce employee retention is to directly get in touch with your employees and ask them for their feedback and reviews. Ask employees what they like and dislike about their job. This will make them feel valued and they will notice that their concerns are being acknowledged. Reviews must be used as an opportunity for employees to critique you and not vice versa. For instance: An employee may not like the keyboard on which he works for reasons say like, he feels the keys are hard and that he has difficulty typing. In such a case, you could make him feel comfortable by providing him with a soft touch keyboard. This will also help to increase his efficiency in work.
- Conduct Exit Interviews:
According to Robert Half 83% of organizations fail to do the exit interviews. However friendly and open the organization is, employees are bound to leave and hop to another organization. You need to make sure that you conduct exit interviews before the employees leave. Exit interviews serve as a last opportunity to understand what went wrong and why you are losing the employee. Exit interview could involve few questions like:
- What you like the most and least about your job?
- Was there anything that made it tough for you to perform your duties as per the expectations?
- Any suggestions that you could offer for improvement for any kind of problems you faced at your workplace?
- Is there anything that the organization could have done but so far didn’t do it?
- Review And Assess Employees Concerns:
Just taking reviews from the employees is not enough you need to put its efforts to address their problems. If employees feel that their problems are being adhered too they begin to feel that their opinions matter to your business. This is something which even makes down the level employee feel happy.
Part 3: How to Curb Employee Retention.
- Be Flexible with Your Employees:
Flexibility is not associated with work from home. It also includes when top managers let their employees bring their work with them provided they have the net connection while they are on vacation. Employees are likely to perform best when they are provided with the flexibility to work according to their time. Flexibility in the job is more appealing to millennials.
- Retrain Manager with High Turnover:
Effective managers are essential for an organization’s success. Making an investment in the ones you have can help you reduce employee turnover. The one-time investment of a short management course is much low than the time and money that is wasted in finding a replacement for a highly paid and skilled management vacancies.
- Try Out Alternate Role with Your Employees:
Sometimes productive employees are not fit for the job. Even after they put in hard efforts their skill set may abstain them from reaching the full capability of their job role. In such cases, before you terminate the employee try and look for other roles that you can assign to them. If you terminate the employee you are forcing your organization to undergo the cost and training procedure again. How you convey the role change to an employee is very important. For instance: If you directly tell the employee that he/she is performing poorly hence the management has thought of another role. This could hurt the feelings and sentiments of the employees. On the other hand, if you approach positively and tell them that the management has another important role for him/her to do this sound much better than the first message and your employee may take the new role as a promotion.
- Invest in Training:
As an employer, you need to get tools that your employees need to succeed. Companies should encourage mandatory training programs. Training programs could cover topics like safety, human resource, client interaction and much more. With proper training, you can channelize your employees and mould them to perform much better thereby reducing the employee retention chances.
- Recognize and Reward Employees:
Show your employees that they are appreciated for the efforts they put in by offering them recognition and rewards that hail the success of their hard work. Did you know that 69% of employees prefer to work harder when they experienced that their efforts are being recognized. Enhancing your performance management could be one way by which could help you to reduce the employee retention rate. Rewards could be cash incentives for an outstanding performance by a team, making announcements, special perks, gift vouchers and a lot more.
- Fire the Bad Employees:
Bad employees here refer to employees who are negative and whose performance is poor. Organizations should fire and get rid of such employees, as these employees can set your company back from achieving its goals. Such employees can pass on the negativity to other employees in the organization too. If you fire bad employees right away you will have to fire fewer employees later
Here an Outline/Checklist for Employee Retention:
Below is the checklist that you can use while planning an employee retention strategy for your organization.
- Gauge your employee retention rate.
- Make use of established and verified retention strategies, avoid guesswork.
- Avoid the false assumption that your employees are happy instead; regularly get feedback from your employees.
- Implement benefit plans like health insurance.
- Depending upon the grading plan out different benefits for different employees at all grades.
- Conduct exit interviews to understand what went wrong and recognize areas that need improvements.
Follow the golden thumb rule: Place yourself in your employee’s shoes and try and see where things are going wrong. When you try to improvise your workplace by making necessary changes your employees will take note of it. This is what will drive your business to achieve great success. Employee retention is an on-going challenge that is faced by all organization irrespective of its size. Use the above-featured list of ways to reduce employee retention as a preliminary point to frame your employee retention strategies. Once you frame them try them out and see the difference it does to your employee retention rates. All you need to do is identify which points you need to include, frame those points as strategies, try them out, if its successful bingo you have gotten there and if not identify and make the necessary changes as and when required.