Employee retention is essential for any company to undertake its businesses smoothly as they are the most important resources for any organization. Hence, companies invest a lot in their employees while onboarding them, as well as, while developing their careers through dedicated initiatives.
Such investments in top talent in the form of time, money and efforts are laid to waste when the employee decides to switch to a new job at another company. Hence, it is essential to ensure that employees who are planning to leave the organization are retained with effective human resource management.
Businesses should also ensure that the employees who are staying with their organization for longer are rewarded in the form of competitive salaries, recognition for their work, attractive benefits, supportive work culture, and more. It will provide them with enough incentives to stay back and be an asset to their company.
In this blog, we will be discussing the causes of employee dissatisfaction and turnover, the benefits of employee retention and the factors that improve it, as well as lay down ten of the best strategies that ensure the retention of the top performers and talent on your staff.
What is Employee Retention?
Employee retention refers to the process of retaining employees with the help of effective strategies. Since retaining employees directly affects the business, companies all over the world are trying to find out innovative ways to retain their staff.
However, employee retention is often a question of rectifying the basics instead of trying to aim for the sky. To help retain your employees, you need to understand the relevance of your retention metrics, as well as the definition of employee retention rate and employee turnover rate.
Once you understand the current footing of your staff, you can take adequate measures to improve their engagement and enhance your employer branding, to effectively retain them.
What is Employee Retention Rate?
Employee retention rate is the measurement of the employees staying in the company versus the number of employees who left the company within a specific period. It is usually measured in percentage for added clarity.
The formula for the calculation of the Employee Retention Rate is:
Employee Retention Rate for a Period = (No. of Current Employees / No. of Employees at the Start of the Period) * 100
What is Employee Turnover Rate?
Employee turnover rate refers to the calculation of the number of employees who have left the company versus the number of employees in the company. It is measured in percentage of the average number of employees.
The formula for the calculation of the Employee Turnover Rate is:
Employee Turnover Rate for a Period = (No. of Employees separated during the Period / Average No. of Employees) * 100
Where the ‘Average Number of Employees’ is calculated by:
Average No. of Employees = (No. of Employees at the Start of the Period + No. of Employees at the End of the Period) / 2
Causes of High Turnover
High turnover is a major issue in companies as employees quit for numerous reasons such as a better career, growth opportunities, convenience, etc. However, some factors are universal, which results in employees leaving an organization. Some of these universal factors are:
➔ Poor Compensation
Inadequate salary is always an issue in companies as several factors influence the compensation packages provided in organizations. Competitive compensation is a major reason for employees to understand that their company values their contributions.
Hence, you should provide annual appraisals and ensure that the employee’s salary packages are competitive as per the industry standards. It will make poaching for your competitors harder, effectively retaining your staff.
➔ Poor Work-Life Balance
Having a good work-life balance is essential for the mental health and well-being of the staff. If the staff are provided adequate work-life balance, they would be willing to stay in the company for longer.
Work-life imbalance is ranked among the most critical factors for lower morale of employees. Hence, companies need to provide flexible work schedules and even remote work and hybrid facilities if required.
➔ Lack of Career Growth
Career growth is another essential factor for employees to ensure that they remain employable and productive for the organization. Hence, they tend to leave if they find their personal growth to be stagnant at their workplace.
It is essential to cultivate a culture of continuous training and mentorship programs to ensure that your staff have the essential skills to stay on top of the competition and help them stay engaged with their work.
➔ Disengaged Work Culture
If your staff is disengaged from their work, you may find it extremely hard to stop the workers from leaving despite having better compensation packages and added benefits. Hence, it is essential to have a positive company culture full of mutual respect and nourishment.
Having such a positive environment ensures your staff that they are valued workers since their work is being recognized by the management, giving them a purpose to stay longer with the organization.
➔ Lack of Rewards & Recognition
Rewards and recognition provide employees with additional incentives to undertake their work well. Having attractive rewards and incentives ensure employee productivity, while recognition keeps them motivated to undertake their work well.
A recent survey of American employees by Gallup reveals that employees who receive positive feedback from their managers are four times more likely to stay engaged with their company and hence stay with the same organization.
Benefits of Employee Retention
Employee retention is essential for the smooth functioning of any business. Retaining employees with employee retention strategies has multiple benefits for the company since it ensures that the employee training and other resources spent on them stay within the company.
Additionally, tenured staff can undertake their tasks well. Apart from that, there are numerous other benefits of employee retention, such as:
1. Engaged Employees
Employees who have been working for longer with an organization remain highly engaged with their workplace. They would be well-versed in the ins and outs of the company culture, the organization’s ability and the inner workings of the company.
They would also have a clear idea about the working of the different departments, too, helping them stay engaged with their company.
2. Better Employer Branding
With the retention of long-term employees, your company will become better as an employer since your HR departments and management would be able to understand your staff better and resolve their problems in the workplace.
Long-term employees would also be more vocal about any issues they might be facing, enabling you to make any required changes. Being employee-centric results in increased revenue and better employer branding for your company.
3. Improved Productivity
Engaged employees will also be more productive as they have a personal stake in ensuring the profitability of the brand they work for.
Additionally, they would also be well-versed with the systems and software required to undertake their tasks, improving their productivity further.
4. Increased Morale
Since the employees understand their relevance for the company and are actively engaged with it, they have increased morale to undertake their daily tasks as well as provide their inputs in improving the processes and operations.
Due to improved employee morale and additional support from the management, the staff remains engaged, leading to an improved retention rate.
5. Enhanced Customer Service
Since experienced employees can undertake their tasks well, it leads to better products and services, making it easier to service the clients and customers.
It leads to increased customer satisfaction, which is essential for improving your business. Due to enhanced customer service, you also gain long-term customers who would further promote your brand.
Factors that Help Retain Employees
Employee retention is based on several factors which help in improving employee morale and the employees’ well-being in the company.
These factors ensure that the employees feel appreciated in the company and hence, they encourage employees to stay motivated and engaged, which also results in improved productivity.
Some of the most essential factors that result in improved employee retention strategies are:
➔ Competitive Salary Packages
Providing competitive salary packages is essential to ensure employee retention since the staff feel valued and appreciated for their work if they are paid well.
Providing remote employees with the right remuneration along with a good work culture would also ensure that the staff remains with you for longer as they would want to remain associated with a brand that is flourishing due to the productivity of its engaged staff.
Additionally, you should also provide health insurance and other wellness offerings to new employees.
➔ Engaging Work Environment
Having an engaging environment will help the staff in staying competitive, which proves to be ideal for your company’s productivity too.
Engaged employees tend to stay with their companies for longer since they understand their relevance and value for the company and are motivated to remain associated with their brand.
➔ Flexible Work
Having the option to work flexible hours helps the staff maintain a good work-life balance. Hence, many companies are adopting flexible-work cultures to attract more talented candidates to their business.
Additionally, many companies have started offering remote working options for letting their staff work from their homes. Hence, you need to provide these options to stop departing employee from leaving your company for more compelling job opportunities that would be providing such options.
➔ Open Communication
Open communication is essential for employee retention as it provides the staff with an avenue to voice their opinions. Additionally, it also ensures that the employees can fearlessly speak their minds about the issues they face, as well as provide feedback on the operations.
It helps HR professionals and management understand their plight as well as make employee-centric changes.
➔ Career Growth Opportunities
Providing your employees with career development and growth opportunities has dual benefits. Your staff will be better equipped to undertake their work due to the training opportunities provided, while you gain skilful team members who can undertake their work better.
Hence, it is essential to provide career development and growth opportunities to your employees, which also helps them understand their relevance to the company.
4 Pillars of Employee Retention
Employee retention is dependent on several factors, which are centric to ensuring their well-being in the company. If your employees feel valued and are actively engaged with your organization, they would stay longer with your company.
Hence, if you wish to retain them as longer term employees, it is essential to consider the four basic pillars of employee retention, which include:
1. Effective Onboarding
The effective onboarding process for new hires starts by attracting candidates from the job market with the right set of skills as well as those who are an ideal cultural fit for the company.
Hence, it is essential to have a well-defined job description as well as help them understand the work culture with the help of dedicated career pages. Such measures will ensure that you attract many workers who would want to work for your organization.
2. Continuous Upskilling
Monotonous repetitive work and lack of career growth opportunities are major factors for why employees leave their organizations.
Hence, it is essential to provide continuous training to the staff to help them get new skills, upskill themselves as well as ensure continued productivity.
Providing such training opportunities will help the staff to stay engaged with your company, effectively retaining them.
3. Employee Job Satisfaction
Having an engaging work culture is essential for helping your staff stay longer with your organization. An engaging work culture promotes ownership of the work, which can be achieved by clearly defining the role of each team member.
Additionally, you can also recognize them in front of their peers for their work, which promotes a culture of mutual respect and motivation too.
4. Secure Environment
Another effective way of ensuring employee retention is to provide a secure environment for the staff to undertake their tasks well. It is especially relevant for companies that require their staff to work in hazardous environments.
Hence, the company should ensure that adequate health and safety protocols and measures are in place to avoid accidents, as it leads to improved employee experience.
Herzberg’s Two-Factor Theory
Frederick Irving Herzberg proposed the ‘Two-Factor Theory’ of employee satisfaction, which is also known as ‘Herzberg’s Motivation-Hygiene Theory’ or the ‘Dual-Factor Theory’. This theory explains the relation between two different sets of factors that are responsible for keeping an employee motivated and satisfied with their company.
The first set of factors is the ‘Motivators’ which help enhance staff motivation and includes factors such as recognition, responsibilities, meaningful work, decision-making, relevance, etc.
These ‘motivators’ help the employee stay motivated with their company and hence, the employer should ensure that their staff are provided with these factors to retain employees effectively.
The second set of factors is ‘Hygiene’ which is not inherent in undertaking their jobs well. However, having these factors in the workplace ensures a happy workforce who remain actively engaged with their organization.
It includes various factors such as work conditions, job security, paid holidays, and good work culture, among others.
Both these factors influence motivation and are essential to ensure job satisfaction among your staff; hence, it is essential to ensure that you provide both motivators and hygiene factors in your organization to ensure employee satisfaction and retention.
10 Effective Employee Retention Strategies
Since employee retention is essential for the correct functioning of any organization, it is essential to have some handy tactics which provide the employees with multiple reasons to stay back with their company.
Such tactics will ensure that your best employees decide to stay longer, helping you avoid repetitive hiring and training as well as leaving you with long-term staff who are engaged and satisfied with your organization.
Here are 10 of the most effective employee retention strategies:
1. Provide Competitive Salaries
The most basic tactic to ensure employee retention is to provide them with competitive pay and salaries. It is extremely important to pay your employees adequate salaries on time to let them feel valued.
Additionally, employees expect their wages to be appraised according to the inflation rate to ensure that they stay with your company. Hence, you should start by understanding the rate of living as well as the salaries being offered by your competition and try to beat it by paying your staff more leaving them with fewer distractions.
2. Provide Hybrid & Remote Work
Another opportunity for improvement is to provide your staff with enhanced flexibility in terms of how they undertake their work.
For example, you can provide remote work opportunities to enable your new employee as well as existing ones to work from their homes, helping them maintain a better work-life balance.
3. Create Flexible Schedules
You can also provide flexible working hours, which will further enhance their lifestyle, making it easier for them to complete their tasks on time, while also enabling you to retain them longer.
Such features also help them understand the trust and responsibility conferred on them, improving their engagement with your company.
4. Provide Better Perks
By providing your staff with better perks and benefits, you are essentially letting them understand that you value them for being a part of your organization.
Additionally, it also encourages them to stay longer with your company as it enables them to save time, money, and effort. You can start with simple discounts on everyday items and move on to financial wellness programs to help your employees stay with you.
5. Promote Healthy Work-Life Balance
By providing flexible work opportunities and remote work options, you can ensure a better work-life balance for your workforce.
You can also go one step further by avoiding frequent meetings as well as any contact with your staff during their non-working hours unless it is an emergency.
Such initiatives would further strengthen the trust placed by your staff in your company, enhancing your retention rate.
6. Recognize & Reward your Staff
By recognizing and rewarding top performers in your staff for their contributions, you let them understand their value to the company.
Such employees would also be more productive and remain engaged with their work since they understand that they matter. Hence, it is essential to recognize your staff for their efforts and reward the ones who work well.
7. Build Employee Engagement
If you implement all the tactics from this article, we can ensure that your staff will stay engaged with your company for longer.
While employee engagement and job satisfaction are dependent on multiple factors, it can be increased by letting your staff know how relevant they are to the team building your company’s culture. By having employees who are engaged, you will also be able to retain your top talent for longer.
8. Emphasize Teamwork
Teamwork is another important factor for improving productivity as it creates good bonds among teammates. It helps improve the work culture of the company, making the office work environment conducive to work.
Good teamwork also balances the workload among the team members, ensuring improved productivity in the workplace. Because of these, the employees will remain engaged and hence, retained for longer.
9. Avoid Employee Burnout
According to a Gallup report from 2020, found that employee burnout is often influenced by how the staff experience their workload rather than the actual number of hours they worked for.
Hence, employees who are engaged and satisfied with their workplace have reduced burnout, while others may experience burnout despite the workload remaining the same. Hence, it is essential to avoid employee burnout with the help of these statistics.
10. Offer Professional Development
You should offer your staff multiple opportunities to upskill themselves as it improves their skillset and makes them more productive. On the other hand, it also lets them understand that their company is genuinely investing in their staff.
Such realization will help them in staying longer with their organization since they will want to remain associated with an organization that enables them to better their skills.
To conclude, your company needs to let your employees understand their importance to your organization. It will help them remain engaged with your company as they work for enhancing the products and services.
As a result, it will increase employee engagement and enables them to stay longer with their company and remain actively engaged. You should implement the ten effective employee retention strategies we provided in this article to ensure employee retention and increased employee engagement too.