by: Robert Imbrie
It always hurts to lose a great employee. One moment you’re flying high on ambitious projects, the next you’re scrambling just to get the basics covered.
You can’t stop every employee from leaving, but you don’t have to feel helpless either. In this post, we’ll start by exploring why employees leave. Then, we’ll show you the best employee retention strategies—and how the practice of talent optimization helps you execute those strategies. Finally, we’ll go over which retention strategies are most effective for which roles.
Why do employees leave?
Bad work environment
One of the most common reasons employees leave? Because the job makes it too stressful to stay. When every project needs overtime, every initiative is disorganized, and every interaction with your boss leaves you pulling out your hair, you’re not likely to stay long.
Poor employee benefits or pay
A 2017 Glassdoor study found that compensation and benefits were the most common drivers of employee turnover. It’s easy to understand why. If your competitors can double your pay package, even the best company culture won’t be enough to keep turnover low.
Uninspiring company culture
Most companies can avoid a bad work environment. Creating a dynamic company culture is much harder. When employees don’t feel inspired by their work or their company, they may tough it out for a while, but eventually they’re likely to get bored and leave.
No development opportunities
Many employees don’t just want a job. They want a career. If you can’t provide mentorship, learning, and other professional development opportunities, you may struggle to retain top talent.
Lack of employee recognition
When people do good work, they (usually) want other people to recognize it. Employees that feel underappreciated may become demoralized and walk out, even if the job is otherwise excellent.
High turnover
Low retention often reinforces itself. When employees leave, it stresses and concerns the remaining team members—which can often lead to them leaving too.
No consideration for the employee lifecycle
Even the best jobs are rarely permanent. Eventually, people become want to try new roles and learn new skills—or they just need a change of scenery. It’s a natural part of the employee lifecycle.
When employees reach the end of their lifecycle, companies have two options: They can provide a new role for the employee to pursue. Or they can watch the employee leave.
Why is retaining employees so important?
Lower training costs
When employees start a new job, they usually aren’t productive on Day One. In fact, according to MIT’s Sloan Review, it can take anywhere from two to six months for a new employee to become fully productive.
New hires often need help from more senior co-workers to learn their role. They may even require dedicated internal learning courses. All of this adds up fast.
The bottom line? The better your retention rate, the less time, effort, and resources you need to invest in training new employees.
Better company culture
When employees constantly enter and leave a company, it’s hard to maintain a consistent culture. That’s because culture isn’t built by stating your values in a PowerPoint. Instead, it’s usually transmitted directly, from supervisor to employee and from peer to peer.
According to the Harvard Business Review, companies with lackluster cultures have 18% less productivity, 16% lower profitability, and 37% lower job growth than companies with great cultures. In other words, to be an effective company, you need an effective culture. And to get an effective culture, you need high retention.
Increased productivity
As mentioned above, it takes months for new employees to get up to speed. But even afterwards, it helps to have employees with tenure.
Employees that rise through the ranks of a company often have an intimate understanding of its business components. They may have strategic insight that’s hard to get from an outsider. On the other hand, when those employees leave, your organization loses valuable information that’s hard to transmit.
In other words: To maximize productivity, it helps to have great retention.
What employees expect from their employer in 2023
Remote work options
During the pandemic, many workers got a taste of remote work options—and liked it.
Many workers who prefer the office even like the flexibility of a remote work option, even if it’s just a day or two a week. Spending time with family or on hobbies instead of commuting leads to greater life satisfaction, which in turn leads to higher job satisfaction.
Not every company can or should go fully remote. But if you want to be competitive in today’s job market, it helps to have remote options.
Flexible work schedules
A recent IWG study confirmed 80% of workers would choose a job with flexible schedules over without. It makes sense why. Workers want to be judged on the quality of their work—not what hours they choose to work.
Flexible schedules can be especially attractive to employees with families. When you don’t have to choose between spending the morning working and spending the morning taking care of a sick child, the result is higher employee satisfaction.
Better work-life balance
In the past, employers have often expected employees to work long hours to advance their careers—even though it’s often counterproductive.
These policies have never been great for employee engagement. But increasingly, employees want to relax after they’ve put in hard work. If you want to reduce the risk of employees jumping ship, you’ll need to encourage boundaries between work and life.
A job that matters
A separate HBR study revealed 90% of people would earn less money in exchange for more meaningful work. Put another way: Giving people meaningful work can help retention just as much as raising their salaries.
That doesn’t mean that every job needs to save the world. But if you want to keep your current employees, it helps if they feel like their jobs play into a larger goal or mission.
Before we start: Assess your situation.
It’s important to understand the scope of your retention problem before you try to address it. For example, if your retention rate is above average for your industry, change may not be a high priority. On the other hand, if your retention rate is far below average, you might want to move aggressively. Likewise, it’s important to understand the source of your retention issues: Do you have retention issues everywhere, or only in certain places?
What is employee retention?
Employee retention is a measurement of your ability to keep employees from leaving. Mathematically, it’s represented by your employee retention rate. Employee retention changes based on location, industry, and the economic environment. While you never have full control over your employee retention rate, you can often improve it with a strong retention strategy.
How to calculate your employee retention rate?
To find out your employee retention rate for a given period of time:
- Find out how many employees you had at the beginning of a given period. These are your starting employees.
- Find out how many of those employees still worked at the end of the period. These are your ending employees.
- Divide your ending employees by your starting employees.
- Multiply by 100.
- This is your employee retention rate.
Employee retention rate statistics and examples
Some industries have much lower retention than others.
Companies everywhere face increased turnover today. However, it’s much worse for some industries than others.
For example, according to the Bureau of Labor Statistics, hospitality businesses like restaurants and hotels lost an average of 86.3% of their workforce in 2021. In contrast, government agencies lost only 18.2% of their workforce. You should take this into consideration when developing your retention strategy.
17 employee retention strategies to keep your best employees
Once you know the scope of your retention problem, you can start taking action. We’ve included some of the most common and impactful retention strategies below.
1. Hire for culture fit.
Employee retention starts with the right hires. When employees are a strong cultural fit for your company, they tend to stay longer, work more productively, and report higher job satisfaction.
To find a great cultural fit, it helps to start with cultural interviews and similar strategies. You might also consider using hiring software, which can quantify your culture and help you select candidates that match your values and business needs.
2. Pay attention to your onboarding process.
An effective onboarding process helps new employees ramp up faster and stay longer. If you don’t currently have a system for onboarding—or if it’s not getting the results you need—you’ll want to consider building or revamping your onboarding process.
3. Compete with compensation.
Poor compensation is one of the most common ways companies lose great employees. Make sure you’re paying high performers the money they deserve. Otherwise, you may lose more money than you save in retraining and onboarding costs.
4. Consider ESOPs and profit sharing programs.
Profit sharing programs incentivize employees to have a long-term perspective. Often, these programs take several years before employees receive the full benefits—which encourages employees to stay longer.
5. Acknowledge and reward engagement and efforts.
Results are important, but so is attitude. When engaged employees actively work to participate in and improve the organization, make sure to support and reward them—even if it’s not one of their official deliverables. The more employees feel they have a voice in the organization, the longer they’re likely to stay.
6. Watch employee well-being carefully.
Stressed, distressed, and low-energy employees are often a precursor to resignations. When morale issues arise, try to address them early.
7. Encourage open communication and feedback.
Nothing saps motivation like a problem you can’t fix. If you want your employees to have a long, happy tenure, they need to know they have a voice in your organization. When an employee can fix a problem, they will. When they can’t, they’ll leave.
8. Provide training and development options.
When employees can’t grow in your organization, they might be happy for a little while—but eventually, they’ll leave. Training and development helps employees grow their career within your organization, which leads to motivated, knowledgeable employees with longer tenures.
9. Be transparent and honest in top-down communication.
Dishonesty is one of the fastest ways to alienate your employees. When big changes are happening, try to stay transparent and forthright with your employees through top-down communication. They’ll be more likely to face the new challenges with you—instead of running for the door.
10. Encourage teamwork and team synergies.
Different teams in your organization usually have different cultures. One might be more rowdy and risk-taking, while another might be careful and deliberate.
The best thing you can do as an organization is to guide these microcultures so that they match your business goals. Consider using talent strategy software to analyze and manage team dynamics.
11. Introduce meaningful perks and rewards.
Sometimes a small reward goes a long way. If your employees have to put in extra work to get a project out the door, consider using gift cards or other perks to make them feel recognized. These rewards don’t cost much, but they make a huge difference the next time your team needs to go above and beyond.
12. Embrace remote work and build a hybrid workplace.
In the past, companies could get away with forcing everyone to work in-person. Now that remote and hybrid options are more common, that strategy has become a retention liability.
By building a hybrid workplace—in other words, a workplace with both in-person and remote options—you can meet everyone’s needs. Employees that prefer remote work can do remote work. Employees that prefer in-person work can do in-person work. And employees that just want the flexibility to take a couple days from home every week can do that too.
13. Make work-life balance matter.
Often companies will claim to support a work-life balance—but reward employees that stay nights and weekends.
A bad work-life balance eventually drains morale, productivity, and retention. To keep your employees happy and functional, you need to enforce boundaries and reward people who can say ‘no.’
14. Allow reduced workdays and workweeks.
An occasional half-day can be as refreshing as a vacation—and it can be great motivation for a job well done.
If your employees are consistently hitting their metrics, consider allowing them to take off early. This rewards productivity over time spent at the desk—with the added bonus of keeping employees refreshed, happy, and loyal.
15. Let employees blow off some steam with company and team events.
When people have friends at work, they tend to be happier, more motivated, and more likely to stay at their job. Team retreats and events help your employees bond, which sets them up for retention and success.
16. Identify lack of engagement early (and fix it).
None of these strategies are effective if you’re not sure what’s wrong. That’s why recognizing when and where there’s a problem is so important. Engagement software can help you diagnose when you have an issue, and act quickly to address it.
17. Learn from employees leaving.
When employees leave, it’s usually for a reason. The best way to understand why? Ask them.
Use exit interviews to understand what’s causing your employees to leave. Then create targeted strategies to address those issues.
What specific profiles expect from their employer
Not every employee wants or needs the same thing. Whether your employees are introverted or extroverted, whether they fly by the seat of their pants or stick to the rules, their behavioral preferences impact the kind of workplace they desire—and which retention strategies are most effective.
Let’s look at a few examples:
Retaining good marketing employees
Marketing teams usually have a wide range of behavioral profiles, but they often skew towards the creative and open-minded. For example, suppose you want to retain a Collaborator.
Collaborators get energized from supportive, creative environments and teamwork. On the other hand, they often struggle working alone or on detail-oriented work.
If you’re looking to retain a Collaborator, focus on those aspects of the job. Give them projects where their imagination and team spirit shine. They’ll be happier, more engaged, and less likely to leave—and probably more effective too!
Retaining good customer service employees
Anyone who’s worked in customer service knows it isn’t easy. The job often requires tact, precision, and organization—traits exemplified by profiles like the Altruist.
Altruists excel with clarity and structure. If your star Altruist is dissatisfied, it might be worth asking them: Are you stressed out by a lack of rules or direction? Are your tasks too ambiguous?
Likewise, Altruists tend to like variety in their work. You may want to give them a chance to work on new and exciting projects, especially if they can work with others.
Retaining good sales employees
It’s no surprise that sales employees are often competitive, motivated by achievement and recognition. Many companies use sales goals, commissions, and other external rewards to motivate them, but fewer think about the job environment.
Mavericks are common among salespeople, and for good reason: They’re competitive, goal-oriented, and individualistic. They do respond to external rewards—but it’s not always enough.
Even a stellar commission might not convince a Maverick to stay if you don’t meet their other needs. That means a work environment where they’re empowered to make change. If you load them down with rules and regulations instead, they’re likely to leave.
Retaining good developers
The best developers often combine an analytical approach with a desire to adopt new approaches and technologies. The strongest employee on your dev team? They might be an Individualist.
While Individualists love to develop new ideas, they often struggle with being told what to do. To retain them, it helps to have a hands-off approach. Too much micromanaging often sends an Individualist packing.
You can’t just leave an Individualist alone and call it a day, though. They need to feel like they’re accomplishing something. When they see leadership is willing to invest resources or take a risk on their projects, they’re more passionate and less likely to leave.
Retaining good designers
Great designers benefit from conscientiousness: The drive to create draft after draft in search of the perfect design. While some designers are more freeform, many fall into detail-oriented profiles like the Operator.
Unfortunately, perfectionism can come at a price. Operators tend to struggle in environments without clear rules. Without guidance and feedback, they may fall prey to stress and indecision. Ultimately, this can lead to burnout, and eventually, a resignation.
That’s why you should cultivate an environment in which Operators can excel. Reassurance, detailed plans, priorities that don’t change—all of these keep Operators operating at full capacity.
Retaining good engineers
Thoughtfulness is often key to an effective engineer. It’s usually less important to make a quick decision than to make the right decision—which is where profiles like the Analyzer do best.
Analyzers are data-driven. The downside? They have trouble making decisions without data. Likewise, they need time: time to think and time to do their work.
Given time, data, and challenging projects, Analyzers are likely to have a long and productive tenure. Without a work environment that meets their needs, they’re unlikely to stay long.
Retaining good managers
The traits that make a great manager depend largely on the team and the industry. After all, a sales manager and an engineering manager may have very different approaches. No matter what the niche, though, good managers are united by one thing: They like to act as leaders.
Leadership-focused profiles like Venturers are common among managers. If your manager is a Venturer, you’ll find they like a few things: speed, risk-taking, and a strategic approach.
The best way to hold onto a Venturer is to let them loose. By letting them explore uncharted frontiers in your organization, you’ll keep them motivated—and keep them as an employee too.
Retaining good leaders
Leaders exist at all levels of an organization, from your customer service team to the CEO. They’re united by a sense of teamwork and purpose, which is why they often have socially focused profiles like the Persuader.
Persuaders thrive on communication. While others might roll their eyes at team building and happy hours, Persuaders tend to get excited by them. They’re not competitive either: Persuaders feel like they win when the team wins. That makes them excellent at gathering people around them and directing them towards a common goal.
It also means they can feel alienated by lonely environments or disconnected teams. When you want to hold onto a Persuader, make sure they have the opportunity to bridge gaps across teams in your organization. You’ll soon find your organization working towards a single purpose—and your Persuader will feel purpose too.
Original article can be found at https://www.predictiveindex.com/blog/employee-retention/#
For help applying these concepts and initiatives in your company, contact Christie Cawley at Info@tHRiveHR.work for a complimentary discussion.
Website: https://thrivehr.work/