Think of all the time and effort you put into your employees. From costly hiring processes to training and development once they’re in the door, every employee in the workforce represents a significant investment made by the organization.
Losing employees is a severe loss on investment. Employee retention is a critical metric that monitors the rate of workers who quit the organization.
In recent years, shifting dynamics brought about by the COVID-19 pandemic, remote work models, and tight labor work have caused unprecedented drops in employee retention across industries.
However, the Great Resignation appears to be waning. Let’s examine some valuable strategies for employee retention that potentially explain how employers are getting their workforce to stay with them for the long haul.
Why do people quit their jobs?
People quit their jobs for any number of reasons. Common reasons given for walking out include:
- Inadequate pay
- Unforgiving hours
- Lack of remote capabilities
- Poor work/life balance
- Lack of fulfillment at work
- Ineffective leadership
- Toxic work environments
The reasons quitting employees provide in exit interviews are as varied and personalized as the people themselves. Employee retention strategies must contend with broad-based trends and engage the workforce in an intimate, individualized manner to increase employee retention rates.
Why does employee retention matter?
A high employee turnover rate significantly burdens an organization’s bottom line. For one, hiring is an expensive process. Human resources spend vast amounts of time and resources finding new employees to fill vacant roles. The productivity tanks, the longer the vacancy goes unfilled, which is often a long time in a tight labor market.
Furthermore, when top talent quits, they take all the time and resources invested into their hiring and development with them out the door. In their wake, they leave the same burdensome vacancy. Organizational productivity stagnates as the onboarding process starts all over again.
Employee retention keeps an organization watertight. The investments made in human capital stay within the building, driving the productivity that promotes the organization’s growth.
Employee retention main drivers
While the reasons employees give when they quit are so different, there are some critical preventative solutions organizations often employ to curb turnover. Several factors drive employee retention. However, an underlying respect for and engagement with the workforce unites them.
Consider how each of these primary drivers behind retention has respect for the employee at their core.
Effective leadership
Strong leadership takes many forms. However, regardless of context, a leader’s primary goal is motivating their team.
Effective leadership doesn’t just align goals; it keeps the workforce enthusiastic about their work. Find leaders who inspire teams, and watch employees feel more passionate about their work.
Consistent feedback
Employees need to feel engaged at work to know that their work matters. Providing employees with consistent feedback drives engagement in two ways.
Firstly, positive feedback promotes a sense of recognition in the workforce. The organization sees and appreciates its hard work. Secondly, constructive feedback is a sign of respect. It provides employees with an actionable way to improve themselves and feel more confident. Keep that line of communication open; show employees that their work matters.
Advancement opportunities
Even the best employees experience burnout if they feel they’ve reached a dead end. When the prospect of advancement diminishes, the workforce has nothing to strive for; there’s nothing to look forward to on the horizon.
Employees often look elsewhere if they feel this way. Provide your workforce with clear, achievable opportunities for advancement to encourage their hard work.
Attractive compensation packages
Employees need to know their work is appropriately valued. Otherwise, they’ll look for an organization that knows their worth.
Compensation is the clearest indicator that an employee’s work has value. Offer your workforce attractive compensation packages, higher salaries, benefits, etc., to let them know their work has real meaning for the organization.
Healthy work/life balance
Work is a fulfilling part of our lives—but it’s not our whole lives. Post-pandemic, workers have reported a yearning for a more meaningful work-life balance. People want to spend more time with their families, enjoying the fruits of their laboring instead of laboring away all the time.
Give your employees the breathing room to get more out of their lives outside the office, and they’ll be more willing to keep showing up at the office.
How to reduce employee turnover
Now that you understand why people leave, address the issues using the recommendations below. Your retention and profitability then likely improves—sometimes significantly.
- Encourage motivation in the workplace by giving people meaningful work to do
- Strengthen their relationship with their work
- Strengthen the relationship between employee and manager
- Strengthen the relationship between co-workers
- Build an organization in which employees are proud
- Provide work and leadership initiatives that further their success
- Foster a positive company culture
Then, of course, pay them well (competitively) so that pay doesn’t become a reason for them to leave.
Here are some concrete ideas to encourage retention and motivation in the workplace:
7 tips to foster employee engagement
1. Give people a voice
Establish a two-way communication pathway so people openly express their ideas and issues and have them heard meaningfully.
2. Provide frequent reminders of why employees’ work is meaningful
Employees must never forget that their work is essential. No matter what they do, the fact that they’re a part of the organization means they are part of its mission.
Take every opportunity to reaffirm how meaningful your employees are to the organization. There’s always time in the workday to provide uplifting feedback to the workforce.
3. Don’t micromanage experienced, reliable employees
Here’s a definition of micromanaging: If you’re telling an employee what to do and how to do it, you’re likely micromanaging and hurting your employee retention rate.
4. Don’t direct or control
The biggest relationship-builder is often broadening the role of managers so that they inspire our employees. Warren Bennis and several other leadership gurus paint the distinction between directing and controlling—which sometimes weaken relationships with co-workers—and aligning and inspiring—which strengthens relationships.
5. Take 100% responsibility for the success of the people reporting to you
Take, for example, your lowest performer. If 100 other managers had the chance to manage that person, at least one manager—probably 10, maybe 30—could turn that employee around and lead them to success.
So it’s 100% up to you to find out how to make that happen. It’s your job.
6. Model that which you seek
A quote from Gandhi applies well to the workplace. He said, “You must be the change you seek in the world.” So, the task of managers is the following: If you want to influence those who report to you, find a productive way to let them influence you.
If you want to teach something to those you manage, find a productive way to learn from them. If you trust the employees you manage, find a productive way to trust them.
7. Focus on intrinsic, rather than extrinsic, rewards
As author Alfie Kohn has written and many have shown, setting certain expectations and giving gold stars and rewards influences people.
But the power of that influence is much less productive, especially over the long haul, than the ideas we’re dealing with here. All the above conversations touch on basic, intrinsic needs we all share as humans.
Top 10 employee retention strategies
1. Integrated wellness offers
Pay and benefits aren’t the only offerings employers make to encourage their workforce. Many organizations have offered their staff a range of wellness-promoting perks to enrich the employee experience. Wellness offers include free gym memberships, meditation sessions to promote mental health, and in-office recreational centers.
2. Effective communication
Communication is the cornerstone of any relationship—the employer and employee relationship is no exception. Employers must improve lines of communication to promote employee recognition.
Keep channels open so that the employees voice their opinions and concerns. When management actively listens to what their people say, they build a stronger working relationship and a more robust organization.
3. Learning and development
Investing in professional development initiatives is a fantastic opportunity to prevent turnover and promote better performance. Every employee wants development opportunities to bolster their career advancement.
Organizations that provide educational opportunities for their workforce inside and outside the office build better employees. Give the workforce chances for career development your peers don’t, and you won’t have to worry about them going elsewhere.
4. Target team building
Toxic work environments wreak havoc on employee retention. Bolstering work environments at the team level promotes a more collaborative, positive space. Good teamwork builds lasting bonds—employees with a strong rapport with their team members often build lifelong friendships.
5. Give employees the tools for success
Employers need to empower their employees. An effective way to accomplish that is by providing the workforce with the tools they need to succeed.
Listen to employee feedback on resources to improve their productivity. New software or specialized equipment often boosts employee retention and productivity.
6. Flexible working environment
The working environment has a massive impact on performance. Employees need to feel a sense of autonomy over where they work and how. Allow employees to retain flexibility within their workspace, whether that’s opportunities for personalizing their space or the freedom to have input on flexible schedules.
7. Promote hybrid and remote working options
One way to empower employee satisfaction is by promoting hybrid and remote work opportunities. Remote work models are overwhelmingly popular—87 percent of workers accept remote work capabilities when offered.
8. Develop a better organizational culture
Workplace culture is the character of an organization. Cultivating a robust set of values and a vibrant company culture is a way to help employees connect with the workforce. Employees who take pride in their organization’s values are more likely to invest in their work.
While less direct than employee appreciation and recognition programs or well-being initiatives, improving organizational culture is a holistic way to increase employee morale and job satisfaction.
9. Competitive hourly or base salaries
Compensation is a massive factor in your employee turnover rate. If current employees are paid more to do the same job for another organization, they will probably quit.
If an employer is experiencing high turnover, having to replace departing employees with new hires, salary increases often serve as stronger solutions than vague retention programs.
Employers must have a strong sense of industry standards for a given position and set competitive compensation packages to reduce the incentives that pull employees out of the organization.
10. Foster and promote work/life balance
Work is a massive part of our lives, but it’s only a part of it. Employees need the space to pursue their goals outside the workplace. Now, more than ever, workers desire a healthy work-life balance. Organizations that promote healthier levels of work-life balance provide their employees with a valuable asset they won’t take for granted.
How to implement employee strategies that work
There isn’t one blanket employee retention strategy to reduce turnover.
Implementing effective employee retention strategies depends on several factors: the capability of your HR department, the scope of your salary budget, and the specifics of your industry impact how you implement your strategies. Structural components like these are essential during the rollout of new strategies.
However, employee retention requires a deeper examination of the company values. To truly work, management needs to reflect on the organization’s values. Employee retention is a people-centric goal. Every strategy you choose must lead with genuine consideration for your workforce and their best interests.
Remember the big picture: You’re dealing with human beings
An organization’s balance sheet sometimes refers to its workforce as “human capital,” but management must never forget that their employees are human beings.
The workforce must be treated with respect, whether it’s through employee retention or equitable compensation models.
Payscale helps you implement people-centric programs in your organization. Learn more about how we help you connect with your workforce with a suite of software, data, and services that help you put people first.
