Retention of productive employees is a major concern of HR professionals and business executives. It is more efficient to retain a quality employee than to recruit, train and orient a replacement employee of the same quality.
What is Employee Retention?
According to Business Dictionary, employee retention is an effort by a business to maintain a working environment that supports current staff in remaining with the company. So, employee retention is the effort taken by an organisation to hold on to its employees. Moreover, low or high employee retention directly impacts the company’s employee turnover.
Employee turnover is the employee(s) replacing an employee who is leaving. A high employee turnover means that the average tenure of an employee in a company is less than others.
A successful employee retention strategy requires you to think about things from the team'sâ€¯point of view. No two employees are exactly alike, of course; each has unique desires and goals. But all of them want to feel appreciated by their employer and treated fairly. They want to be challenged and excited by their work. And they want to be paid at or above market rates with good benefits.
All of these concerns are important, but managers serious about retention do more than just the bare minimum. You should consider every area of the employer-employee relationship in developing your organization’s plan for keeping workers happy.
Employee retention rates
LinkedIn data from 2017 shows a worldwide turnover rate of 10.9%; the tech sector showed the most volatility with a 13.2% turnover rate, based on LinkedIn member data. Certain areas within the tech sector showed even higher turnover rates, which could indicate an increased demand for these skills, according to LinkedIn.
“The computer games (15.5%), Internet (14.9%), and computer software industries (13.3%) drove tech turnover the most — but those rates pale in comparison to the churn you see within particular occupations,” according to Michael Booz, writing for the LinkedIn Talent Blog. “User experience designers had extremely high turnover at 23.3% (they’re also extremely in-demand), with both data analysts and embedded software engineers at 21.7%,” Booz says.
Why do employees leave?
Employees leave organizations for different reasons. Some find a different job, some go back to school, some follow a spouse who has been transferred to a different location, some retire, some get angry about a work-related or personal issue and quit on impulse, and some simply decide they no longer need a job (these categories of departure are referred to as "voluntary turnover"). Still, others get fired or laid off by the organization (referred to as "involuntary turnover").
Generally, an individual will stay with an organization if the pay, working conditions, developmental opportunities, etc., are equal to or greater than the contributions (e.g., time and effort) required of the employee. These judgments are affected by both the individual's desire to leave the organization and the ease with which he or she could depart.
Research has shown that employees typically follow four primary paths to turnover, each of which has different implications for an organization:
- Employee dissatisfaction. Attack this issue with traditional retention strategies such as monitoring workplace attitudes and addressing the drivers of turnover.
- Better alternatives. Retain employees by ensuring that the organization is competitive in terms of rewards, developmental opportunities, and the quality of the work environment. Be prepared to deal with external offers for valued employees.
- A planned change. Some employees may have a predetermined plan to quit (e.g., if their spouse becomes pregnant, if they get a job advancement opportunity if they are accepted into a degree program). However, increasing rewards tied to tenure or in response to employee needs may alter the plans of some employees. For example, if a company is seeing exits based on family-related plans, more generous parental leave and family-friendly policies may help reduce the impact.
- A negative experience. Employees sometimes leave on impulse, without any plan for the future. Generally, this is the result of a negative response to a specific action (e.g., being passed over for a promotion or experiencing difficulties with a supervisor). Analyse the types and frequencies of work-related issues that are driving employees to leave. Provide training to minimize prevalent negative interactions (e.g., harassment, bullying, or unfair and inconsistent treatment) and provide support mechanisms to deal with those problems (e.g., conflict resolution procedures, alternative work schedules, or employee assistance programs).
Employee retention strategies
There are many strategies HR professionals and business executives can implement to retain their employees.
1. Hire the right people
80% of employee turnover is due to bad hiring decisions. First of all, hire the right people. People who meet the organization’s expectations and whose expectations you can fulfil. One way to do this is to go beyond the textbook interview questions.
Glassdoor found that 35% of those doing the hiring of new employees are doing so with the expectation that more employees will be quitting in the coming year. It’s a little disheartening to know that those doing the hiring are already envisioning over one-third of their hires walking out the door.
2. Provide ongoing education and clear paths to advancement
Helping employees achieve their short-term and long-term goals is one of the most crucial employee retention strategies.
Promoting from within not only provides a clear path to greater compensation and responsibility but also helps employees feel that they're valued and a crucial part of the company's success.
Of course, promotions go hand-in-hand with employee development and education, and this should be another tool in your retention arsenal, says Pickett. Whether by corporate training to help foster the acquisition of new skills, new technologies, or new processes or through tuition reimbursement from outside courses, furthering your employees' education can help them feel valued and invested in the company, he says.
According to new research from the Consumer Technology Association (CTA), high-skills training (80%) and professional development programs to hone soft skills (74%) are perceived among the top benefits for retaining employees’ services over the next five years.
"Learning cannot just be an afterthought, it must be a core focus of any strong organization," says Kevin Griffin, an IT advisor at Falco Enterprises and former CIO of GE Capital. "When learning is part of your culture, it doesn’t stand out as something outside the norm. For example, a learning-focused organization doesn’t just hold periodic learning events or workshops separate from the day-to-day work. Instead, learning is integrated into every project or task, and employees are encouraged to dive in and learn by doing, asking questions when they hit roadblocks. "
A focus on education is also key to higher retention rates, says Griffin. A commitment to training is seen by employees as an investment in their worth and a powerful incentive to stay at the company, he says.
"Investing in your employees’ education can help retain talent and intellectual property at a time when there's stiff competition for both," says Griffin. "The need for new skill sets and evolving roles are in demand at a rapidly growing rate, so putting someone on a career path that doesn’t have any room to develop is not only a career-limiting move for the employee but a business-limiting move for the company."
3. Provide out-of-the-box Benefits
50% of adults would leave their job for better benefits. Catering to the needs of your employees is important. Employers should provide benefits apart from the usual vacation leaves, sick leaves.
Moreover, employees favour benefits like financial incentives, retirement savings plans. Other benefits are sabbaticals, incentive stock options, life insurance, etc.
4. Encourage transparency and open communication
Creating open communication between employees and management can help foster a sense of community and a shared purpose, says Pickett. Regular meetings in which employees can offer ideas and ask questions as well as “open-door policies” that encourage employees to speak frankly with their managers to help employees feel they are valued and that their input will be heard, he says.
5. Appreciate your Employees and provide positive feedback
Every employee wants appreciation and recognition for their work. Appreciating your employees for their efforts and achievements goes a long way.
Some meaningful ways are through handwritten thank you notes, social recognition programs, etc. These things motivate and encourage an employee to contribute and excel.
A study on Harvard Business Review shows that the ideal ratio between positive and negative suggestions is 5.6 (positive) to 1 (corrective).
Positive feedback should be given frequently to motivate employees and to give them the determination they need to do their best work. But constructive and corrective feedback is also important, particularly when there’s an urgent issue that needs to be nipped in the bud.
Moving forward, become more aware of how many negative comments you’re saying to your employees about positive comments. Move the ratio towards six positive comments for every negative comment.
According to Entrepreneur, people have a “deep desire to feel they’re succeeding and that their talents and capabilities are being used in a way that makes a difference to the business.”
6. Balance Employee Workload
57% of employees feel less productive and disengaged due to work stress. Tower Watson says stressing your employees can be unfavourable. Thus, encouraging team members to share the workload and take time off can be effective.
7. Encourage Employee Creativity
Although many companies say they value creativity, they don’t necessarily have any initiatives or policies in place to support it.
Google, for example, has a 20% program in which their employees are allowed to work on side projects that interest them.
Michael Poh, freelance blogger at Hongkiat suggests the following steps for encouraging creativity in the workplace:
- Offer rewards.
If you’re going to encourage suggestions, take them seriously. Recognize and incentivize employees that contribute tangibly.
- Provide an outlet.
Not all employees are going to want to be named or recognized for their ideas. Managers should create opportunities for both public and private contributions and feedback.
- Set up, innovation teams.
These are individual teams that are tasked with coming up with ideas on a specific topic.
- Demonstrate the value you place on creativity.
- Hire a variety of different people.
Creativity will not come from a group of people that all think alike.
- Have fun.
Create a positive working environment where creativity and spontaneity can occur.
8. Put data (and AI) to work
Dave Weisbeck, CSO at workforce analytics software firm Visier once said organizations have incredible amounts of employee data available, why not use it to identify who’s most likely to leave, why, and then take steps to prevent that. While on the surface, an employee’s departure may seem obvious or to fit a pattern, but using AI and advanced analytics can help pinpoint underlying factors that contribute to attrition, ones that might not be as obvious as you thought.
“I recently stumbled upon this Glassdoor survey that calls out January as the month when more employees are likely to leave,” says Weisbeck. “But contrary to that survey finding, a lot of the data from our clients shows that’s not necessarily true. We looked across all of our data — about a million employees — and what we’ve found is a very clear pattern every quarter, and Q3 is the biggest quarter for resignations.”
Why is that? From the data, Weisbeck says Visier’s team extrapolated that the timing of these resignations isn’t necessarily defined by the calendar, but around internal processes and structures like bonus payments.
“People are thinking of this like, ‘Okay, I received my bonus and now I can leave,’ not ‘Oh, it’s a New Year, time for a new job,’” Weisbeck says. “Since many organizations time their bonuses to hit around Christmas and the end-of-year holiday season, it makes sense to see the January exodus. The pay and bonuses or lack thereof, aren’t the reason they’re leaving; often they have decided to leave months before but have hung on until they receive this money.”
Looking more closely at the data can help uncover patterns like this, potentially contradicting conventional wisdom, he says. AI and machine learning can help identify and address these issues before they lead to attrition and turnover.
9. Bond with Employees and team members
A good manager works continuously to nurture his relationship with his employees. Above all, bonding with employees outside work is as important as inside the office. You can do this by celebrating your employees’ major milestones.
Team lunches, group treks, excursions are some methods to celebrate employees. Celebrating even their achievements- a new house, marriage- will deepen your bond.
10. Make Employee Engagement Possible
According to a Gallup poll, 56% of somewhat disengaged and 73% of actively disengaged employees are actively looking for a different job.
Your first response, however, shouldn’t be a matter of blaming employees for their distraction as a reason for their disengagement. Distraction is associated with motivation problems. As an employer, you need to understand what motivates people to want to become fully engaged with the work they do and what makes them merely punch in at the time clock until something better comes along.
11. Be prepared for turnover
Of course, sometimes turnover is inevitable. Organizations must be prepared to lose star talent, especially if they have the opportunity to move into their dream job, he says.
In summary, there are several ways to manage employee retention. It’s no secret that employees don’t leave their jobs but their managers and bosses.
So, it all boils down to you. As a manager, HR professional, executive, or leader to check if you doing the bare minimum of at least acknowledging your employees? Have you successfully created an environment where they feel safe to confide in you? Are you sharing their workload and helping to build their team spirit?
The answer to all these lies in the above-mentioned employee retention strategies. The strategies can be used as a checklist to analyse the areas you need to develop.
With that being said, it’s time to step up your employee retention game!
Benjamin Sombi is a Data Scientist, Entrepreneur, & Business Analytics Manager at Industrial Psychology Consultants (Pvt) Ltd a management and human resources consulting firm.