Employee retention: Everything you need to know
Employee retention is a company’s goal and ability to retain employees and reduce turnover. To retain employees, businesses aim to foster a positive work environment and utilize more strategies to keep employees. Organizations also aim to not only keep employees but also keep them happy and productive.
The Great Resignation has turned the employment market in favor of the labor market. Millennials have even coined the phrase “quiet quitting,” motivating employees to find workplaces where they feel valued financially and socially.
As a business owner or hiring manager, you know how vital employee retention is. Productive employees are the lifeblood of successful businesses, so retaining them is priority #1. This blog post will discuss how employee retention can improve your business and the strategies you can implement.
Why employee retention matters
Right now, there are more positions to fill than applicants and candidates. Even in strict hiring environments, the ways of the modern world have forever changed how people find jobs. In the past, you were generally bound to your geographical area. Then, airplane travel ushered in the new world, allowing us to pick up and move anywhere, anytime.
That wasn’t enough, though, as the pandemic introduced remote work on a scale never seen before. Before the pandemic, 6% of the employed worked primarily from home. By May 2020, that number rose to 65%.
What does this all mean?
Keeping good employees just got harder - and the demand for remote work is just the tip of the iceberg.
Recruiting employees is competitive and expensive
According to data from the Society for Human Resource Management (SHRM), the average cost per hire was nearly $4,700. Remember, this factors in every starting as low as jobs paying the federal minimum wage. When you only factor in white-collar jobs, the costs to hire an employee often exceed the salary of the job.
The competition has increased in the search for talent. Companies need to step up their recruiting efforts to get in front of the right talent faster and look more appealing. Many billboards, commercials, and social media campaigns by Fortune 500 companies aren’t just for customers.
And the cost to hire employees doesn’t end when a new team member signs on the dotted line. No, you also have to incur one-time administrative costs, onboarding costs, and sometimes relocation costs.
Team cohesion and morale
Even when you hire the best candidates for the right roles, you still haven’t arrived. Team cohesion is when a group of people align themselves to achieve a common goal. Teams that get along perform better and work harder for each other. It’s in our nature to want to work towards goals that are “bigger than ourselves.”
As a leader, you must foster a team culture that’s aligned with your company’s values and the people you want to hire. When you do this, you can enjoy a team that trusts each other and knows they can rely on each other. According to Bit AI, nearly 97% of employees and executives believe a lack of alignment within a team impacts the outcome of a task or project.
Loss of production when an employee leaves
You lose an employee, and now you have an open role to fill. The moment someone leaves, someone else in your organization must pick up the slack, or you’ll suffer. This is how high turnover can have a cascading effect across an organization.
Overwork is a common reason employees quit their jobs. If you saddle someone with extra burden without increasing pay, they’ll be more likely to leave. Many organizations fail to see this until it’s too late, and they face the consequences. It can take years for new employees to reach the same level of productivity as their predecessors.
If you experience high turnover in a customer-facing segment of your business, your customers will notice. High turnover typically signals that there is something wrong within an organization - and quite honestly, that’s usually true. Customers like to see familiar faces and know that the people they do business with are treated fairly.
The top reasons for high employee turnover
Employee retention strategies
Typically, the more you invest into a new hire, the more you’ll get out of them. An effective onboarding process may extend for months. Employees need time to gain familiarity with company processes, their role, and their teammates. According to a survey conducted by Careerbuilder, 37% percent of employees said their manager did not play a critical role in their onboarding experience support.
A good employee onboarding system is one of many systems your business should implement. The goal is to include new hires in the company culture right away. To inspire dedication from a new hire, you need to take the first step and show dedication to them. True leaders walk the walk, even when they’re uncertain if others will follow.
In addition to feeling welcome, low-turnover onboarding systems also push new hires towards competency fast. The first step towards competency is being clear on what you’re asking an employee to do from day one. After that, try and map out every step your new hire will take in the coming months.
It turns out that there is an art to offering competitive wages. At the end of the day, you want to offer wages that employees deem worthy of sacrificing their time and labor. No amount of culture, onboarding, and benefits can replace your team’s need to afford to live and control their financial trajectory.
There are four main factors you should consider when creating a wage structure:
- Supply and demand
- Geographic location
Having these five factors in place when you start the hiring process can help you find the right candidates faster.
Improve the working experience
There are many strategies you can employ to improve the employee experience at your organization. Know that number one, modern workers demand more influence on setting their own schedules. This is most relevant to employees with disabilities or children at home. Not everyone demands to work from home all or most of the time, but people want to feel like they’re in control of their schedule.
There’s only so much autonomy you can give someone until it loses effectiveness. However, want to know something every employer can give? Clarity. From day one, give new hires clarity on what you’ll expect from them time-wise.
Second, fostering interoffice relationships doesn’t happen on its own. Rather, it requires a concerted effort from senior team members to connect with people on common interests and values outside of work. We may mock the weekly bowling league TV sitcom dads joined after work, but they created a community bigger than their jobs.
Employees who feel appreciated at work stay longer and work harder. Hearing a “thank you” or “you’re doing a great job” is akin to hearing an “I love you” from a family member or loved one. A lack of recognition for their sacrifice is a top reason why people leave roles. This can cause leaders and hiring managers to assume modern workers need to be handled with kid gloves.
This is not true.
Rather, employees discover that recognition for their hard work and sacrifice feels good. More, they don’t need to stick around at places that either don’t recognize them or constantly demand more.
Sometimes, you won’t always have “nice” things to say to an employee. If you’re a people pleaser, you may find having these conversations difficult. Inevitably, most of your new hires won’t hit the ground running. Quiet honestly, why should they? They’re new to your organization, systems, customer base, and who knows what else. The best work performance is on the other side of tough conversations.
The typical corporate feedback loop includes a quarterly performance review. Many employers are abandoning this for more frequent meetings and check-ins. Things change fast in our world, including feelings, goals, and assignments. In these more frequent meetings, you can discuss career goals and present roadblocks with team members. Some people thrive on autonomy, while others need more frequent interaction.
The next step is creating benchmarks
If you suspect that your company has a higher-than-normal turnover rate, you need to create benchmarks. To do that, you need to know your numbers regarding employee retention and turnover. If you have a 15% annual turnover rate, you can compare that to your competitors and industry.
Knowing the numbers will help you zero in on where the problem exists. Next, you can determine over time if your employee retention strategies are working.
Great business, great employees, great tax strategies
There’s no guarantee that you’ll keep every employee. The least you can do is ensure the ones that want to stay are taken care of while giving the ones that plan to leave plenty to think about. You may not believe in karma, but something similar definitely exists in the business world. If you do right by your customers AND employees, good things are sure to come your way.
As a business owner, you have a lot to worry about from employees, customers, competition, and more. At the end of the quarter or year, when you think you can finally take a breath, you realize you also have to deal with taxes. If you want to spend less time and money on taxes, ComplYant may be able to help you.