Employee retention is a barometer of your organization’s health. It’s a measure of how many employees choose to stay employed over a course of time.
As more organizations begin to understand why employee retention is important, they can struggle with how. That’s why understanding various strategies and their impact can lead to improved retention rates.
While fair and competitive compensation is one way to drive retention, there are other ways to inspire employees to stay.
There is a broad range of options when developing an employee retention strategy. While some involve an investment of financial resources, not all do. What they all need to be successful is commitment and investment of energy and time.
Leaders at all levels of the organization should buy into the strategies, endorsing, promoting and encouraging participation. They also need to understand what an employee retention strategy is and why it’s important.
Below is a look at 10 proven employee retention strategies.
What is an employee retention strategy?
Employee retention is a measure of how many employees remain employed over a period of time, typically annually. The employee retention rate is a calculated measure. The number of employees at the end of the timeframe is divided by the initial total employee count.
Companies across industries are focusing their efforts on improving employee retention by developing a comprehensive employee retention strategy.
Having an employee retention strategy in place can have a marked impact on the business. The strategy should have well-defined outcomes and measures and buy-in at all levels. Businesses with higher retention rates perform better, and their employees are more satisfied and speak better about the organization.
An employee retention strategy is a multifaceted approach. There’s not one solution, approach or tactic that will improve retention rates. Broad, well-informed employee retention programs will reach more employees, increasing the impact of the work on your retention rates.
Conversely, an employee retention strategy that is not well thought out or applicable can have the opposite effect. Tone-deaf strategies can actually worsen your retention rate, leading to more ill will, dissatisfied team members, and shorter tenures.
There is no single approach that works for every business. Instead, the best employee retention strategies are based on intentional listening to employees. By understanding what employees need, employers can craft strategies that will be most resonant.
Why should you implement employee retention strategies?
Your business will experience multiple benefits from having a high rate of employee retention. These benefits shape every aspect of your business and can have a multiplier effect. As retention improves, these benefits increase, leading to higher employee engagement.
Here is a look at some of the benefits of having an employee retention plan:
· Lower training costs. When your employees stick around, you will pay less to train new employees to replace them. While existing employees also need training, the costs of bringing new team members up to speed are considerable.
· Improved morale. With positive employees happy with their employer, morale will improve throughout the organization. Satisfaction can be infectious, spreading to other employees. Of course, dissatisfied employees can also color morale.
· Improved recruitment. Employees will talk about their employers, both directly and indirectly. Employers with positive reputations are likely to have an easier time attracting top talent.
· Stronger company culture. With low employee turnover rates, your employees will be closely aligned with the organization. Employees will be more supportive of each other, fostering teamwork and a stronger company culture.
· More revenue. Long-tenured employees will have more knowledge and experience with the organization than new hires. These employees are going to be proficient, efficient, and effective. That means more revenue for the business.
· Increased productivity. Retaining employees means your teams are familiar with each other, maximizing the processes and procedures. Your teams will work better together, boosting productivity throughout.
· Better customer engagement. Customer experiences are vitally important. With higher retention rates, company staff maintains customer relationships, which can boost revenue. In addition, one-off interactions with employees who are positive about their employer will be more positive.
· Reliable processes and systems. Technology is an important component of any workplace today. With seasoned employees managing technologies and processes, there is less downtime or disruption. Experts in day-to-day operations can teach others, prevent mistakes, and maximize solutions.
· Brand reputation. Employees, for better or worse, are great brand ambassadors. They will talk to neighbors and friends about the business. Employees who remain are more likely to speak about their employer in positive ways.
10 effective employee retention strategies and how you can implement them
Understanding how to retain employees requires careful study of the current retention rates, conversations with employees, exit-interview insights, and analysis of current initiatives.
Below are 10 effective strategies for employee retention to consider.
Invest in team-building activities
Team-building initiatives are an important way for employees to feel connected to each other. When done correctly, these activities strengthen ties that team members have and build affinity for the organization.
There are many things you can do to foster connections among employees. These events are even more important given the rise of hybrid and remote work arrangements.
Effective teams are those that have a shared sense of trust and collaboration. They seek to help each other and communicate effectively. Team-building activities strengthen the connections employees have with each other and engender the traits that keep teams strong.
Team-building events can be in-person or remote and may include team lunches, happy hours, book clubs, or Slack games. Another consideration is to form affinity groups based on identity characteristics, such as gender, ethnicity, race, or sexual orientation.
The key is to be consistent and incorporate these activities, especially ongoing ones, into the work schedule. Getting feedback on which activities work allows you to develop the right mix. It’s OK to experiment to find the right activities that work, knowing they may differ from team to team.
Promote a healthy work-life balance
Work-life balance has become increasingly valued in the workplace, especially since the start of the COVID-19 pandemic. Employees today are looking for ways to balance their obligations to employers with family, hobbies, and wellness. Work-life balance is closely connected to the benefits and any flexible work plans you offer.
However, there are non-financial ways to develop a stronger work-life balance in the workplace. For one, ensure that employees and managers alike respect time off and boundaries. That means limiting emails and texts sent after hours and on weekends.
Managing workflow is another way to ensure work-life balance. Whenever possible, work should be balanced between busy and slow periods. Doing so reduces overtime costs, and lets employees plan non-work activities better.
Paid leave, childcare options, and family activities are all good ways to maintain a work-life balance.
In addition, employers should consider limiting the carryover of paid time off balances. While this may seem counterintuitive, requiring employees to use their available time ensures that they take vacations and days off each year. These initiatives can prevent burnout, increase employee satisfaction and improve workplace culture.
Focus on employee engagement
Employee engagement is a measure of the emotional connections employees have for their employers. It’s an indication of how employees feel about the work they do, customers, teams, and the organization.
Highly engaged employees are more likely to stay with the organization long-term. Disengaged employees can be negative or disruptive and are unlikely to stay. In the middle is a range of employee sentiments from cautious to indifferent.
Employee engagement is usually measured via employee surveys that assess the overall impressions workers have. These surveys measure the health of the organization, teams, and work. Typical questions include:
· How likely an employee is to leave
· Whether they recommend the organization as a great place to work
· Whether they and their coworkers are committed to company goals
· How accepted they are by coworkers
· If they find their work engaging
· If they are happy with their job
· Whether they are supported by their managers
· If they believe they are compensated fairly
Employee engagement is based largely on the broader workplace experience. In addition to examining your benefits package, your organization may consider the following to boost employee engagement:
· Mentorship programs that pair experienced and inexperienced workers
· Encouraging regular and consistent feedback
· Regular communication about company goals and progress
· Providing work-life balance
· Creating a workplace recognition program
The key to improving employee engagement is by establishing a baseline and measuring regularly, at least every year or two. Correlating these measures against retention can help you better understand what is and is not working.
Provide rewards and recognition for accomplishments
Rewards and recognition programs are a powerful way to celebrate individual and team successes. A meaningful recognition shows employees that their work matters and their contributions are valued.
Implementing a rewards and recognition program takes careful study and messaging that makes it feel valued. Here are a few ideas for rewards and employee recognition programs that boost retention:
· Employee appreciation day. An annual day that celebrates employees and their contributions can be an ideal way to express gratitude. Breakfasts, picnics, catered breaks, or a short day can all help employees feel valued.
· Employee awards. Awards programs that recognize outstanding employee work can be a way to celebrate employees that make a difference. Awards programs can be tied to organizational values or business goals. Consider allowing colleagues, customers, and managers to nominate employees for work well done.
· Service days. Service to the community or to causes employees care about can be a great way to build teams. Allowing employees to give back to causes that matter will engender goodwill and appreciation. Be careful not to make these experiences “forced volunteer” work that feels like an obligation, not an opportunity.
· Discounts and perks. Your organization can negotiate discounts on warehouse club memberships, theme park admissions, and local and national products and services. These perks often do not cost your organization much and can be a great way to give a small extra to workers.
Develop management’s leadership skills
Managers play a critical role in the employee experience. People want to work for great managers. Conversely, employees who have a bad supervisor are more likely to leave. Developing leadership skills within your managers can go a long way toward improving employee well-being and retention.
Managers may be promoted from within or brought in from the outside. In neither scenario should employers presume they have all the necessary skills to be a successful leader. Strong leadership programs engage employees and help all employees gain a better understanding of their roles and responsibilities.
These training programs show managers that the organization is invested in their growth as leaders and the influence they can have on their teams.
Leadership development programs should focus on the following:
· Teaching emotional intelligence
· Fostering relationships
· Identifying and closing skills gaps
· Encouraging participation in on-the-job training and development opportunities
Prioritize flexibility
Flexible work environments are the expectation rather than the exception today. Alternative work options give employees the opportunity to create flexible schedules that work best for them. In return, your organization has more grateful and appreciative employees.
There are many types of flexible work arrangements to consider. Not all of these may work for your business. However, it’s important to evaluate which may be beneficial to both the employee and employer.
Arrangements to consider include:
· Remote work. The pandemic made remote work a normal, reasonable accommodation for millions of workers. Companies have recognized that many jobs may be done by remote employees, either on a permanent basis or in hybrid arrangements with partial weeks in the office. Offering this option where applicable helps with both retention and recruitment.
· Compressed workweek. Some employees would prefer fewer days of work with longer days when working. For example, your organization may want to consider having four 10-hour days. Employees appreciate the opportunity to have an extra day at home.
· Flextime. Flextime is a structure that allows employees to set their own schedules for the workday or workweek. These arrangements may require employees to be available during certain periods while allowing them to have some autonomy regarding scheduling.
· Job sharing. Job-sharing arrangements allow two employees to split a full-time job. A successful arrangement requires lots of trust among the sharers and team members. Obviously, both employees must be qualified, and benefits may be prorated accordingly.
Revamp employee benefits
Are your employee benefits competitive and valued by your employees? Some core benefits, such as health insurance, paid vacation, and retirement plans, are standard. However, there are a host of benefits that can also lead to higher retention rates.
In evaluating your benefits package, consider asking employees what benefits they would use and value. You will also want to assess the usage and costs of your existing programs to determine which may be eliminated.
Benefits programs today frequently address work/life balance and the changing definitions and obligations of family. For example, many organizations now offer parental leave for births or adoptions, in-office daycare, or college savings programs. Others involve some creative options that are not a part of a standard package, including:
· Wellness programs, including at-work fitness classes, gym memberships, biometric screenings, flu shot clinics, or smoking cessation programs.
· Employee celebration programs, such as birthday or work anniversary programs, dinners with leadership, or service awards.
· Financial programs, including tuition reimbursement, home loan assistance, emergency funding, and adoption or fertility treatment assistance.
· Pet insurance, relaxed dress codes or days, or reduced summer hours.
Improve the employee onboarding process
First impressions go a long way. Consider rethinking your onboarding process to help employees gain a great first impression that stays with them.
Onboarding experiences help employees feel engaged and valued. Instead of an hour-long PowerPoint presentation and benefits sign-ups, consider a different approach. For example, sessions on company values and how employees fit in can help employees feel more connected to their work.
Strong onboarding increases employee confidence, showing the organization’s value in them and their role in company success. Effective onboarding can save time and expenses by reducing turnover and reinforcing workforce stability.
Encourage professional development
Employees want to know that their employees are invested in their professional growth. Professional development programs go well beyond training. When run effectively, they provide rich and valued opportunities to enhance education, learn new skills, and network.
Professional development opportunities run the gamut. You can begin by providing employees with access to professional journals and business networking opportunities. These career development programs—webinars, conferences, or sales shows—let employees build their own networks and reputations professionally.
Some companies provide employees with access to continuing educational opportunities, with financial coverage of certificate or degree programs. Employees whose employers help them achieve advanced credentials are more apt to stay.
Offer opportunities for advancement
Is there a career path for employees within your organization? Employees who see a path for career advancement may be incentivized to work harder and qualify. Advancement opportunities, in the form of better titles, more responsibility, and increased compensation, is a powerful enticement to stay.
Employees need to recognize these advancement opportunities in action. They need to see that their colleagues have been promoted based on excellence and hard work. If the programs are in name only, then employees will not believe in them.
FAQs
What are the most important factors in employee retention?
While there are many factors that contribute to your employee retention rate, the following have been shown to be the most critical:
· The people and culture within the organization
· Growth and career development opportunities
· Flexibility in one’s work schedule
· Providing great benefits
· The workplace environment
· Alignment with mission and values
· Acknowledgement for work done
· Ongoing training
How can I decrease employee turnover?
Calculate a baseline retention rate and begin to determine the causes of the turnovers. This can be done by using employee exit interview information and surveying current employees and managers. Implement and evaluate new initiatives designed to lower employee turnover based on feedback.
What is a good employee retention rate?
The rate may vary based on the industry and location. However, generally, an employee retention rate of 90 percent or higher is considered good.
The possibilities for using various initiatives to boost employee retention are endless. Looking at what programs would resonate best with your organization will help you plan accordingly.
The right programs will be those that are compelling, attractive, and impactful. To be successful, it’s important to measure the impact, both qualitatively and quantifiably. By doing so, your firm can correlate the programs to changes in your employee retention rate and adjust accordingly.
