When employees leave, companies are stuck spending additional time and money to find a replacement. According to a study from The Center for American Progress, the cost of replacing employees can account for around 20% of the replaced employee’s wage – this includes the loss of productivity when an employee leaves, hiring a replacement, training them, and getting them up to speed. If you’re paying a competitive salary, the cost of an unexpected departure can easily run into the hundreds of thousands of dollars.
What is Employee Retention?
Employee retention is the set of strategies that employers use to encourage employees to stay at their company. These strategies include but are not limited to fostering career development, encouraging employee feedback through company surveys, and promoting a healthy and safe work environment. Companies measure the success of their retention efforts using their employee retention rate:
This formula can be used to set benchmarks and assess the impact of various approaches to increasing retention.
Importance of Employee Retention
Employee retention is important because it allows for the continuity your clients and customers expect and helps to avoid the high cost of constant recruitment efforts. Some turnover is inevitable but developing a strategy to ensure best practices are put in place to mitigate loss is vital – your focus should be retaining and engaging top performing employees to enhance your employer brand and drive business.
Ensure Fit is Right from the Start
One reason employees’ leave their company is because they don’t feel like they fit into the office culture. According to Talent Lyft, if you get culture fit right from the start you can retain as much as 86% of your employees. But how can you make sure you’re attracting the right people to your company?
The first step is to understand your company culture. We suggest using an employee analytics software or surveys to understand what your employees think of the company and how they perceive the office environment. Once you know what makes this workplace different, build that into your recruitment strategy – talk about it on different channels that reach job seekers. Making sure your culture is clear from the start can help attract those with similar values, making it less likely that employees will leave.
Maintain a Competitive Salary
Another reason employees’ leave their company is because they are offered a higher salary elsewhere. Higher pay is one of the most common reasons people seek a new job.
Counter-offering a higher salary can be difficult to provide to someone who is already planning to leave but you can help prevent it from the start by keeping your salaries competitive. Employers should stay up to date on salary averages for various similar positions in your location and field to keep up with industry standards. Also keep in mind that great perks don’t always keep employees around. Perks do help to improve overall retention, but employees will leave them behind if they are not paid enough for the work they do.
Encourage a Healthy Work Life Balance
A healthy work life balance is directly correlated to high employee retention rates. Encouraging better time management between work and personal life can help keep employees happier, improve productivity, and reduce burnout.
Employers can improve a few key elements of their company culture to advocate a healthy work life balance:
- Allow flexible work schedules: This makes employees lives easier by allowing some time off during work hours to accommodate doctor’s appointments or childcare.
- Encourage PTO: Taking time off to enjoy life outside of work, whether it’s a vacation or just a day reading a book at home helps your employees’ recharge from the stresses of work and come back refreshed.
- Sustainable work hours: This differs from employee to employee but demanding long hours and expecting availability after hours can lead to burnout.
Opportunities for Learning
Robin Schwatz, HR Director at Career Igniter says, “one of the top things most applicants are looking for is future growth or promotional abilities at a new company.” When employees feel they’ve reached the maximum potential of what they can do in their role but aren’t receiving promotion opportunities they may seek higher positions at competitor organizations.
While positions at higher levels aren’t always available, offering educational opportunities to expand your employees’ skills reassures your team that career growth is important to the company. Employers can start by providing regular feedback on individual performance, identifying areas of growth, and providing guidance on how to improve. Making sure employees always have an avenue to learn new skills and improve performance will keep them engaged and at the company for the long run.
Engaged Employees are Retained Employees
The fundamental truth is that employees who feel valued will be less likely to leave your company. Having a welcoming culture that promotes healthy work life balance demonstrates to employees that they matter, and will help them remain engaged with the company with the company.
Improvement starts with measuring where you’re currently at. One way to assess your employee engagement is to monitor and read your reviews on sites like Glassdoor and Indeed. That process can take a long time and it can be hard to see trends across locations. See how Barometer can help you monitor your reviews and retain top performers here!