Employee Retention

There is an enduring truth: it is people — especially employees — who innovate and are always there, which moves your business forward.  The Covid era has revealed (or reinforced) this adage.

With one resignation wave behind us and another due soon, now is a perfect time to look at employee retention and what you can do about it. Remember, losing just one key employee can negatively impact your business.

The cost of resignations is high, so let’s look at some of the reasons they happen. 

A few statistics:

  • The average employee exit costs 15-250% of their annual salary depending on their pay.
  • Employee burnout (caused by many factors) is responsible for 50% of turnover.
  • 80% of employees would seek a new job after just one bad day.
  • 70% would leave a company for better development and learning.

Reasons employees leave their jobs include:

  • Inadequate salary and benefits
  • Not happy at work
  • Feeling overworked and/or unsupported
  • Limited career advancement
  • A need for better work-life balance
  • Lack of recognition
  • Boredom
  • Unhappiness with management
  • Concerns about the company’s direction or financial health
  • Dissatisfaction with the company culture
  • More desirable opportunities at other companies

Okay, in addition to employee dissatisfaction, better alternatives, a negative experience, some employee attrition happens due to a planned change such as relocating, managing a family-related matter, retiring, pursuing a desired change in career/industry, returning to full time education, etc.  Plus, there may be a few employees better off working elsewhere.

What you do not want to happen is to lose many or most of your employees, especially an employee or few who is/are key to your business success.

Now let’s explore what you can do to retain your employees.

First, your support as owner and/or senior leader is essential.  It sends a message to managers and supervisors emphasizing that employees are critical to the business’ short- and long-term success.

Encourage open communication – Foster an environment in which employees are free to express their ideas, questions and concerns at any time.  Having an “open-door policy” is one of the most effective communication strategies to establish a culture of transparency and trust.  It shows that you’re always available to listen to their views.  And as a leader, you need to make sure you’re doing your part to help promote timely, constructive and positive communication across the entire team, including on-site and remote employees.

Practice a feedback culture – regular feedback (on the work, individual’s performance, and how they are doing in their career) and suggestions can help you stay connected with your employees.  Checking-in with them helps you to get the pulse of your workforce; learn the work challenges they are facing.  Help them visualize their future with the company.  While you should never make promises you cannot keep, talk through potential career advancement scenarios together and lay out a realistic plan for reaching those goals.

This will increase their loyalty and trust in your leadership style and the company.  If your business receives negative feedback, it is important to take swift action to implement changes to make the employees feel they are heard. 

Bond with employees – A good manager works continuously to nurture their relationship with the team members; bonding with employees can be both inside and outside of the office.  Shared experiences such as team lunches, group treks, excursions are some methods to celebrate employees.  To deepen individual bonds, you might consider celebrating even their personal achievements, such as a new house, marriage, birth of a child, etc.

Focus on retaining all your employees.  Pay extra attention to your most valuable employees, those who handle special functions and/or are your top-performers.

Train and develop – Make it a priority to invest in your workers’ professional development through training and support.  Helping employees achieve their short- and long-term goals is one of the most crucial employee retention strategies; it shows that you are invested in their future just as they are.

As part of providing continuous feedback on performance, you can help employees identify areas for professional growth, provide training to learn new skills plus support upskilling to gain new abilities and competencies as business requirements continue to evolve.

Invest in your workers’ professional development.  Give them time to attend virtual conferences, provide tuition reimbursement or pay for continuing education.  Further, succession planning can be a highly effective method for advancing professional development and building leadership skills. 

Offer mentorship programs – All employees, new and your existing staff, can greatly benefit from mentor-mentee relationships as they learn from each other and form bonds.

Emphasize teamwork You should encourage all your employees, not just top-performers and/or critical players, to contribute ideas and solutions.  Promote teamwork by creating opportunities for collaboration, accommodating individuals’ work styles and giving everyone the latitude to make decisions and course-corrections, if needed.

Compensate your employees fairly It is essential for companies to pay their employees competitive compensation.  As mentioned above, one of the major reasons that make employees quit is the lack of compensation.  A salary hike is a way to retain top performers.  Further, your workforce would be demotivated if they do not receive the proper benefits.  You should build a competitive benefit package. 

Salaries – Employers need to evaluate and adjust salaries regularly.  For merit, cost of living (especially with inflation), etc. consider giving a raise; 35% of workers will quit if they don’t receive one.  Even if your business can’t increase pay right now, consider whether you could provide other forms of compensation, such as bonuses.

Bonuses – For meeting goals; paying out more frequently and/or at key times during the year (just before summer vacations or year-end holidays) will mean more to your employees.

 Health benefits – As the cost of healthcare outpaces wages and inflation, providing or supplementing health coverage is appealing to employees.  A low cost alternative is a high-deductible health insurance plan coupled with a health savings account, which is owned and controlled by the employee plus has triple tax advantages.

Perhaps offer a profit-sharing plan – This is a plan used by employers to distribute a portion of a business’s profits to employees.  It can help retain valuable talent, giving people an incentive to work harder and better over the long-term.

Also, consider an employee stock ownership plan – An ESOP is an excellent way to compensate your employees as a bonus or incentive.  Making employees stakeholders of your company helps them stay invested in its performance.

Beyond compensation, you might consider the following for your employees.

Add perks Nice-to-have additions to an employee’s salary and benefits package can make your workplace stand out to potential new hires and re-engage current staff, all while boosting employee morale.  Flexible schedules and remote work options (separate from pandemic-related stay-at-home orders) are the perks many professionals value most.  Also, paid parental leave can be a big plus for some.  Some companies use food and beverages to bring their employees to together. 

Set-up recognition and rewards systems Every person wants to feel appreciated for the work they do.  Acknowledge your employees for good work; doing so can reduce turnover up to 30%.  In today’s “anywhere workforce,” an employer’s gratitude can make an especially big impact in making employees feel valued.  When employees feel a sense of belonging, they tend to be more loyal.  So be sure to thank your direct reports who go the extra mile and explain how their hard work helps the organization.  You can institute compelling recognition programs, even if you have a limited budget.  While it can be an award or corporate gift, consider giving virtual rewards to your employees, such as online gift cards, Spotify or Netflix subscriptions, and more.  Also, a day off is always welcome. 

Further, recognize and reward your long-term employees for their years of service.  Employees feel valued and appreciated for recognizing the time and hard work that they have put into your organization.

Engender peer-to-peer recognition – Employees who trust and believe in each other value one another, they will help each other and work as a team.  This will lessen internal conflicts, and create a culture of peer-to-peer recognition.  Further, think about rewarding efforts, not just results.  Consider recognizing with the hard work put forth to get something done.  Also, consider rewarding employees who have helped their coworkers.

What makes people happy at work varies. Social elements for many are more important than compensation.  The social factors that matter most to employees include being energized by their work, feeling like they belong, and having a sense of purpose.  Here are a few things you can do.

Establish flexible work arrangements – If possible, allow employees a partial remote work option; this will lower your turnover by 25%.  One in three professionals working from home would look for a new job if they were required to return to the office full time.  Flexible working arrangements have become one of the top things that people look for in a new job.  The option to work remotely can be a win-win situation for both employees and employers.  Employees save time and money to commute, have less stress, improve their work-life balance, have fewer distractions, and it is safer to work from home.  Employers save on infrastructure costs and overhead costs, avoid office politics, reduce absenteeism, plus there is no geographical constraint in hiring people so the company gets access to a bigger pool of talent.

Provide work-life balance – A healthy work-life balance is essential to job satisfaction.  10% of workers have refused a new job due to a lack of good work-life balance opportunities.  People need to know their managers understand they have lives outside of work; and recognize that maintaining balance can be even more challenging when working from home.  Encourage employees to set boundaries and take their vacation time. And if extended hours are necessary to complete a project, consider giving them extra time off to compensate.  To help meet your employee’s personal needs you might consider varied schedules and/or staggering shifts.

Reduce workdays – Think about focusing on the work accomplished, not the amount of time it takes to complete it.  Often workers fulfill their daily obligations in different time frames, especially if have another commitment.  Consider allowing employees who finish their tasks ahead of schedule to leave for the day.

Allow workcation – A combination of work and vacation; it is taking a trip while continuing to work online.  A unique working environment can be a unique differentiator when looking to improve your staff retention strategy.

Wellness offerings – It is good business to keep employees fit: physically, mentally, and financially.  The pandemic caused employers to expand and improve their wellness offerings to help employees feel supported and prioritize their well-being.  Offer programs that interest employees and foster their engagement.  Here are some programs to consider.

Physical – Beyond health insurance, sick leaves, and free health checkups, the physical programs you can offer range from hygienic workplaces to fitness activity.

Especially with the Covid pandemic, you need to make your workspace clean and comfortable if you want your employees to stay healthy and be productive.

Provide location, stipend and/or time for fitness activity; it may be partial compensation of a gym membership or reimbursement for fitness classes, an in-house workout room, or even maps of fitness trails and free activities in the areas.  Some managers go on talking walks with employees; they discuss business while strolling, accomplishing two things at once.  Also, health insurance coverage (discussed above).

Mental – Beyond providing counseling (stress management, grief, etc.) as needed, consider offering sabbatical & refresh programs.  Employees can benefit a lot from time away from the business; they come back much motivated and refreshed after a good long break.  During a sabbatical leave, 6+ weeks, your employee gets a chance to spend time with love ones, work on a passion project, and/or develop a new skill.  Also, you can offer a refresh week-off for your remote employees.  These programs are a great way to prevent burnout and retain top talent; it shows that you appreciate the hard work and service of your long-term employees.

Financial – 80% of employers believe that financial wellness programs deliver more loyal and satisfied employees, and as a result improves employee retention.  Some employee financial wellness benefits include: student loan repayments, flexible paydays, personalized financial advice programs, and retirement plans and planning services.

Other programs build employee engagement and commitment include the following.

Engage in corporate social responsibility (CSR) programs – Look at your company’s commitment to manage the social, environmental and economic effects of its operations responsibly and in-line with public expectations.  By contributing to society and helping those in need are some feel-good factors for your employees, they can inspire their loyalty and engagement plus team bonding.  Further a CSR initiative where the workers can contribute their participation fosters employee retention.

Change-up work responsibilities – Doing the same work becomes boring and tedious.  Allow employees to become involved in different tasks and work with other departments.  This will help generate better ideas and improve coworker relationships.  It will also improve their skills and advance in their professional development. 

Use Virtual Team-building Activities – These activities are carried out by managers to enhance group processes and interactions, increase employee engagement and morale.  It also develops better working relationships between employees.

Provide Diversity and Inclusion – A workplace which identifies and respects people from all backgrounds and sexual orientation will definitely retain and attract more talents.  Small changes like removing gender coded signs, having lactation and multi-faith prayer rooms, and other changes can be introduced to make all your employees feel included.  Plus it is another way to improve your employee retention policy.

Effective change management – During times of disruption and change, employees look to managers for insight and reassurance.  If your business is going through a big shift, keep your team as informed as possible; it will help ease anxieties and manage the rumor mill.  Also, when you make big announcements, either individually or in a group call or meeting, always allow time for questions.

The employee retention strategies outlined above are just some ways to help increase your team members’ job satisfaction.  Be sure to re-evaluate your efforts regularly.  That includes staying current on market standards for salary and benefits, and best practices for developing an attractive workplace culture and strong manager-employee relations.

It’s inevitable that some team members will leave your organization sooner than you’d like.  But you can at least make their decision a little tougher.  And if those employees leave your firm knowing they were valued and supported, they’ll likely say good things about your business and, perhaps, even come back to work for you one day.

When it doesn’t work out – Conduct an exit interview just before an employee is about to leave.  Ask your departing employee about his experience at the company.  This process can help throw light into things like poor management practices, conflicts among personnel, etc.; it will help determine whether your employee retention strategies need improvement.

Being strategic about employee retention can make or break a small business.  Setting up the current employees for success and making them feel valued should always be your business’ first priority.  Small business owners face many hurdles right now, but with a strong team, anything is possible.

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