How to Improve Employee Retention
Replacing an employee can conservatively cost one to two times their annual salary, according to Gallup. Considering the average rate of turnover is 23% per year, knowing how to improve employee retention should be a top priority. In years when the labor market is tight, employee retention becomes critical for business success.
Improving employee retention starts with understanding why people leave in the first place. It’s not just about bigger salaries — although money is undoubtedly a significant deciding factor. Employees often cite opportunities for career growth, management concerns, not feeling valued, company culture fit, and benefits.
During the pandemic, more complex reasons came to the forefront for employees choosing to quit their jobs. According to Robert Reich, former U.S. Secretary of Labor, workers reached a state of burnout. “They’re fed up. They’re fried.” In the wake of hardship, illness, and death, workers have had a mind shift, and the result is a reprioritization of what’s important to them.
People are now leaving their jobs because they want a better life for themselves and their families. They’re willing to trade guaranteed paychecks for flexibility in when and where they work. Low-wage workers are also more greatly impacted by the rising cost of childcare, cost of living, and concerns for their health and safety when working in environments that don’t allow for proper social distancing.
According to the Bureau of Labor and Statistics, in August of 2021, approximately 892,000 workers quit their jobs in accommodation and food services, and 721,000 left retail positions.
Along with the cost to replace their roles, Gallup says when people leave it breaks down morale and potentially impacts customer relationships. Your top talents are innovators you can rely on to win business and resolve problems. They are worthy of improving employee retention efforts.
Follow these key steps to keep employees engaged and reduce turnover:
Identify reasons employees are moving on
Get a clear understanding of why your industry might be struggling with turnover, and then take a look internally. Each business has unique challenges in retention, so don’t assume your challenges are the same as everyone else. Beyond looking at exit interviews, do regular and anonymous surveys to learn what’s on people’s minds.
Focus on why your employees joined your organization
Your employees have needs and desires, and employment with you enables them to meet those requirements — at least it did when they joined your organization. Make sure you’re still valuable to them like they are to you by ensuring your organization, culture, and employee benefits are still relevant.
Involve employees in how you deal with turnover
Often people leave jobs because they don’t feel like they’re growing or moving forward. Talk to your employees about what they value. Do they desire extra training or education to elevate their careers? Do they want more flexibility in how and where they work? Are they struggling with issues outside work, like the rising cost of childcare? Do they not feel valued? Does your organization have a problem with bullying, fairness, or discrimination that hasn’t been addressed? If you know why people have or are thinking about leaving, you can do something about it. So, ask and take a team approach to resolve issues.
Ensure your compensation is fair
You don’t have to pay people more than others are offering, but people deserve to be paid what their experience and training are worth. Make sure your organization is keeping up with — or beating — standard industry compensation. And remember to consider more than just money.
Perhaps you can’t afford to hand out fat bonuses, but it’s not always about money. What are the intangibles that your business can offer that would make people want to stay? People like to work in a culture where they feel respected and valued, and they like to have flexibility. Focus on creating a safe, inclusive culture that supports career growth and shows appreciation for its employees.
Make work meaningful and appreciated
Help your employees feel proud of the work they do. If you’re paying someone to do a job, it means that job is essential to your organization’s mission. And that mission has value. Make sure employees know that their work matters. Show your appreciation and gratitude. Recognize workers for a job well done. People want to feel appreciated, that they matter and that they’re involved in doing valuable work.
Finally, don’t forget workers are human and value friendships and strong relationships with management. Encourage social interactions among employees. Providing simple opportunities for people to interact informally strengthens employee commitment to your organization — even if they’re being offered more money elsewhere.