7 Effective Employee Retention Strategies
The so-called "Great Resignation" is in full swing, significantly impacting enterprises of all sizes, from sole proprietorships to multinational conglomerates. Even though a record number of 4.3 million Americans resigned in 2021—leaving only 10.4 million jobs available—the mid-career workers are still leading the exodus. With that said, organizations are now confronted with one major issue: how to attract and retain the best talent. And this issue calls for effective employee retention strategies.
The pandemic served as the impetus for some workers to finally switch professions for good. This is why HR managers voted employee retention (47%) as the most challenging obstacle of people management, followed closely by recruiting (36%). The fact that these two are connected should not come as a surprise, but what options do you have? Raising everyone's salary only to wait for your competitors to lure away your best candidates by offering more is definitely not worth it.
Considering this scenario, businesses urgently need to grasp the primary component contributing to employee retention. Now that you know retention is not only about giving employees more money (although no one will say no to that), what's the secret sauce? Below we have compiled a list of the best employee retention strategies that genuinely work for nearly every business industry that exists.
What is Employee Retention Rate?
The percentage of a workforce that remains with the company is referred to as employee retention. In most cases, these workers are only considered "retained" if they are productive, engaged, and not actively seeking employment elsewhere. The prevention of high turnover is the primary objective of an effective employee retention strategy, often implemented through employee engagement, competitive incentives, recognition programs, mentorship programs, and voluntary benefits.
Why Is It Important to Track Employee Retention Rate?
Monitoring your employee retention rate is essential in evaluating the efficacy of new initiatives and company culture. In addition to this, it can assist you in determining the rate of employees leaving and new hires. According to Human Capital Institute, 20% of new employees quit their jobs within the first 45 days, and this high turnover rate results from an ineffective onboarding process.
Remember that employee turnover is an inevitable aspect of running any company, but what really counts is how you react to excessive turnover and how you strive to reduce it with retention efforts. Therefore, always remember that the employees who contribute to the growth of company culture and move the business ahead should be the primary target of your retention strategy. To further prove the importance of employee retention, consider the following statistics.
The average employee exit costs 33% (one-third) of their annual salary.
Retaining your best employees has a serious payout (worth 10-100x).
Witnessing team members leaving regularly reduces employee productivity by 77%.
With a departing employee, the company also loses training expenses and expertise.
How to Calculate Employee Retention Rate?
When assessing employee retention, start off by establishing a time frame (annually or quarterly) suitable for your company. It would be best to have the start and finish staff counts. You may calculate the turnover rate by dividing the final number of workers by the starting number and then multiplying the result by 100. Make sure to calculate voluntary and involuntary turnover separately since this lets you determine the proportion of laid-off vs. voluntarily-left staff.
On January 1, you had 475 workers, and on December 31, 440.
Multiply 440 by 475 to get your annual retention rate.
(440/475) X 100 = (92.6%) ARR
Thirty-three workers on July 1; 28 on September 30.
Divide 28 by 33 and multiply by 100 to determine the RR
(28/33) X 100 = 84.8% July-September retention.
Your company had 1,455 workers in Q2 of 2021 and 1,375 at the end.
Divide 1,375 by 1,455 and multiply by 100 to determine Q2 retention.
(1,375/1,455) X 100 = 94.5% Q2 retention.
Now that you know how to calculate employee retention rates, you can easily boost employee retention by making adjustments based on the collected data. With that said, remember that an employee's decision to remain employed at a company is impacted by various factors, including professional development opportunities, healthy work life balance, job satisfaction, competitive compensation, leadership development, the company's culture, flexible schedules, industry events, tuition reimbursement, and ongoing education support.
Effective Employee Retention Strategies to Follow in 2023
For every business, big or small, employee retention demands a complete revamp—from the beginning to the end of the hiring process. There is no such thing as a "quick fix" or a Band-Aid solution; therefore, if you have any reason to believe that your company is in danger of losing its best personnel, act immediately to strengthen the staff retention methods in place. Start by implementing the following effective employee retention strategies to keep your top performers around.
Strategy #1: Recruit Smart
Retention begins with recruiting, and the most reliable strategy for doing so is to focus on bringing in qualified candidates for open positions. This way, the quality of your application pool will increase, and you will be better able to identify top talent among decent ones if you tailor your techniques to the specific candidate personas. This is a particularly vital practice to adhere to because high-demand technical positions, such as software engineers and developers, have much in common.
Strategy #2: Onboarding and Orientation
Have you ever entered a workplace and suddenly realized it is not the right work environment for you? Have you discovered that even on day 60, you still feel just as bewildered and disoriented as you were on day one? If yes, then being an employer or maybe a senior vice president, it is your duty to carefully focus on the retention process from day one to keep your new hire far away from this thought.
Individuals better trust a company when the onboarding process is streamlined, which helps them feel valued and welcomed. They will have a sense of security that allows them to learn actively and ask questions. During the onboarding process, new employees should learn not just about the duties of their jobs but also about the company culture and how they may contribute to that culture and prosper within it. Remember, cutting corners on this essential initial step will take you nowhere.
Strategy #3: Avenues for Professional Development
Did you know inadequate employee training may cost an organization up to $13.5 million annually for every 1,000 workers? It should come as no surprise that a lack of investment in employee development is directly linked to high levels of workforce turnover. On the other hand, encouraging professional growth is one of the best ways to keep them happy and boost employee retention.
Investigate the possibility of financial support for participants in continuing education and certification programs or conferences related to their field. In addition, you can host internal knowledge exchange sessions, in which staff instruct one another on various new skills. Make it feasible for your staff members to choose how they would want to advance in their careers and keep in mind that it is possible to support growth in certain ways without breaking the bank.
Finally, suggest to the senior vice president or managers to provide workers who have shown interest in a new field the opportunity to work on a side project by asking them to take a risk. When this is done, it demonstrates to workers that their supervisors care about the professional trajectory of their careers and trust them to bring their knowledge to other parts of the company.
Strategy #4: Offer Winning Incentives
Incentives are a tangible approach to showing appreciation to workers for their outstanding performance. First and foremost, check to see whether your pay scale is competitive (dissatisfaction with wages is one of the leading causes of employee turnover). The next step is to consider other monetary incentives, such as profit-sharing and tuition reimbursement schemes. On top of that, various additional perks may be provided to maintain your workforce's mental and physical well-being.
Your team members will be better able to de-stress and take care of their mental health if you provide wellness benefits like gym memberships or subscriptions to meditation applications. In addition to providing more conventional forms of incentive, other excellent options that are just as effective in motivating employees include allowing them to choose the projects they work on and offering them additional paid time off to rest and recharge their brain batteries.
Beyond the 401(k) and essential medical coverage, employers have begun to look more holistically at their employees' benefits packages. In today's world, both children and animals are welcome in the workplace to motivate employees, especially parents and pet parents. Therefore, to improve employee retention, you must offer what they need and when they need it—to retain them longer.
At Corestream, we provide businesses with the assistance necessary to guarantee that their team members have access to benefits that safeguard their mental, emotional, and financial well-being. Interested? Click here to learn more about our employee well-being products.
Strategy #5: Prioritize Work-Life Balance
The term "work-life balance" is more than simply a catchphrase. Even though encouraging employees toward remote work and implementing flexible scheduling policies are important aspects of achieving a healthy work-life balance in many organizations, these policies are of little use if remote employees are given more work to complete than they can accomplish in a reasonable amount of time or if the company values and culture expects remote employees to check their email even after business hours.
Managers and HR professionals must check in with their team members frequently to ensure they do not have more on their plates than they can manage and to foster open lines of communication on workloads. In addition, businesses may alleviate some of the strain by reducing pointless one on one meetings and administrative responsibilities that consume everybody's time without contributing much to the company's bottom line.
Strategy #6: Introduce Employee Recognition Program
Everyone craves the assurance that their efforts are recognized and valued. Additionally, with today's "anywhere workforce," appreciation from an employer may have a particularly significant effect. Therefore, make it a point to express gratitude to your direct reports, who go above and above, and describe how the company benefits from their efforts. Even if you're low on budget, you can still recognize them via discount programs. Not sure what it is? Click here to find out.
Strategy #7: Build Employee-Friendly Culture
Culture is of the utmost importance when it comes to luring in and retaining the best of the best. According to a survey conducted by Glassdoor, 77% of workers examine a company's culture before applying. At the same time, the Associated Press found that over 50% of employees would consider leaving their current job for a lower-paying position at an organization with a superior culture.
Building a robust culture will strengthen the ties amongst employees, open the road for improved levels of customer service, and attract top talent. In addition, if you attempt to rewrite your principles to create better alignment throughout the organization, approach your staff for assistance. After all, they are the ones immersed in your culture and have the expertise to shape truly meaningful values.
Implementing Your Retention Efforts
To evaluate your retention efforts' success, you will first need to establish a baseline (by using the formula provided in this article) to determine whether or not you have a high retention rate. In addition, evaluate your turnover rate compared to the average for the industry as a whole.
Use the information to see how your company's turnover rate stacks up against the norm for the industry. Remember, no list in the world can tell what causes your team members to remain loyal to the organization. You are required to communicate with them. Current employees are the single greatest source of information to evaluate your work environment. This will give you a clear idea of why they continue to show up—or not show up—to work.
However, that is not the end of it. Retention is an ongoing conversation; therefore, it is best to devote some time and effort to ensure that the many employees you hire are content. Your plan for retaining employees is at the core of what makes your business productive and lucrative, as well as a location where individuals can advance their careers and grow as professionals.
The Final Cut
These seven employee retention strategies outlined above are just some ways to reduce employee turnover. Some team members may inevitably depart your company earlier than you would want. However, you can at least make their decision a little tougher. If former workers leave your company knowing they were respected and encouraged during their time there, they are more likely to speak positively about it and may even consider coming back to work for you at some point.
Employee Benefit Programs @ Corestream
In this age of rising prices and tighter bottom lines, nobody can blame employers for trying to discover ways to retain top talent while spending as little as possible—or maybe nothing at all. Through the years, talent retention programs have fulfilled this role for many businesses. Now that you are familiar with effective strategies for talent retention, it's time to put your knowledge to use and join hands with Corestream. Any questions? We'd be happy to assist you.
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