Losing an employee can have a huge negative financial impact on a business. It’s estimated that losing an employee can cost anywhere from 9 months of that employees pay to twice the employee’s salary depending on the job role.
Recruiting, hiring and finally training a replacement not only takes time but money too. For this reason, companies are looking for employee retention strategies that work.
In the blog post, we will discuss some of the reasons why your employees are leaving and what you can do to retain your staff and save your business thousands.
How common is employee turnover?
A study carried out by Linkedin saw a 10.9% worldwide turnover while the tech industry was above average with a 13.2% turnover rate. Another study from the work institute saw that 27% of people voluntarily left their jobs in 2019.
Using real-world numbers a manager making $60,000 per year could cost a company $45,000 to replace. A CEO making $100,000 per year could cost over $200,000 to replace. You can see from these numbers why it’s important to retain your employees.
When doing our research we found these numbers to be surprising, here are some other data we found which may surprise you.
Why do employees leave?
Employees leave a business for many reasons which can include:
- No career progression.
- Found a better paying job.
- Lack of praise.
- Bad management.
- Poor timekeeping or unrealistic deadlines being set.
- Unethical company policies.
- Lack of respect.
If you want to find out why your employees are leaving your company, you should conduct an exit interview. This will help you improve your retention rate as you will know which areas of your business you can improve upon.
Employee retention strategies that work.
Now that we have covered why employees leave, we are going to look at how you can retain these employees and save your business money.
We are going to cover the best strategies for keeping employees satisfied with their job roles. We have asked industry experts for their tips too.
Retain your employees by offering a better salary and benefits.
Money is a huge deciding factor to whether someone will stay at a company or leave.
Glassdoor did a survey where they interviewed hiring managers and found that the number one reason for leaving a job was the salary that was being paid.
You may not want to increase all of your employee’s salary but if you do find your employees are leaving for other opportunities you should recognise the cost of replacing that employee and compare this to the cost of raising an employees salary.
If you can’t afford to increase the salary of your employees you can look at other benefits that could be offered such as more paid days off, better healthcare plans and contributions to child care. Depending on the country your business is located in there may be grants available to help with some of these benefits.
Employees leave when they feel stuck.
Stagnation in salary, career advancement and training will leave your employees feeling stuck and this will lead them to seek opportunities elsewhere.
Helping your employees achieve both their short and long term goals is a great way of training them. Having a clear cut plan for employee progression will not only keep them engaged, but it will also push them up the career ladder which will increase their salary while you are getting a more skilled and motivated worker.
Employees like to be praised
It’s easy to praise an employee when they land a big deal for your business but what about those employees who are working hard but they aren’t yet getting the results they want yet?
Employees like to be praised and often aren’t.
Some bosses take it a step further and make negative comments to their employees which can demotivate them.
To help with retention you should praise efforts and not results.
A real-world example of this could be a salesperson who is putting more hours in than everyone else, phoning more people, booking more meetings but isn’t closing as many as anyone else.
Now you could criticise this person, but that won’t help them improve it will only demotivate them. Constructive criticism is fine but praising the efforts of this salesperson will go a long way in retaining them and helping them close more sales.
Retain employees by identifying candidates who are a cultural fit.
Hiring the right person for the job in the first place is going to help increase your retention rates. It’s important during the interview stage to ask good questions to find if there is a fit with your companies culture.
Asking common interview questions that don’t give you insight into the candidate is a sure way of not hiring the right person for the job. You should use the interview to find out if the candidate can do the job and then if they would fit in.
If your company culture requires outgoing, extroverted type personalities then hiring an introvert is probably not going to work.
In the interview you can ask questions to see if there will be a cultural fit, there is a far higher chance of retaining that candidate if there is.
Another way of increasing your employee retention rate is to interview candidates that have stayed at previous jobs for years. This shows they can be loyal to the right company. Serial job hoppers on the other hand will leave when another opportunity presents its self.
Retain employees by encouraging creativity
Employees will leave a business if they don’t feel a part of it.
Some companies may simply want employees to do their job and go home, and we all know of companies like this. These are usually the companies that burn through staff and have a bad reputation for doing so.
Encouraging your employees to be creative and take risks is going to keep them from being bored and also feel a part of the team. This benefits your business as innovation can come from the employee’s creativity which can make your business more profitable.
When encouraging creativity it’s important to know that not all employees will want public credit, so you should have a system in place where suggestions can be made both publicly and privately.
Employees want and deserve respect
As an employer, it’s your job to provide your employees with everything they need to do the job at hand. Some employers don’t understand this and seem to think by using a metaphorical whip they can make their employees work harder and get good results.
You can challenge your staff but you can never be disrespectful to them. You should create a culture where people are respected in the workplace.
Being disrespectful to your employees not only decreases your retention rate but also lowers the morale and the motivation of those who choose to stay.
Showing respect at work could be anything from greeting your employees when you see them to thanking them for their hard work every day. This doesn’t cost you anything and will make your staff feel appreciated.
Use a mentorship program to increase your employee retention rate
It’s hard to leave a company when you feel a part of it.
One way of making your employees feel a part of your company is to get them to invest their efforts into it. Using a mentorship programme is a great way of making senior staff embed themselves into your companies culture, but it also shows new hires how to perform their job effectively.
Starting a new job can be overwhelming and this can cause candidates to quit after the first day. Having a mentor, can slowly ease someone into a new job and make them feel more welcome as well.
Your new hire could also see the importance of the mentorship programme and could want to become the mentor in many years to come.
Avoid bad bonuses
People work to live, they don’t live to work.
Managers can forget this and for some reason think that their employees are happy to work extra hours unpaid. Rather than pay, “bad” bonuses are often offered to try and cover this up. Some offices allow you to bring your dog to work or pay for your food when you work over your contract.
If you’re making your employees work over their contract, pay them for it.
A cold pizza, or having a dog in the office doesn’t make up for missing hours with your family and friends because your boss or manager couldn’t set a deadline correctly.
Bad bonuses or no bonuses at all can be demotivating and will make your employees quit their jobs.
Increase retention by improving the work-life balance
As a business, it’s next to impossible for all projects to run on schedule. Life happens and things go wrong which can lead to your employees needing to work longer hours to hit deadlines.
This shouldn’t happen all the time though.
If you do find your projects are always rushed, your employees work more hours than contracted and they aren’t getting paid extra this is going to cause you problems.
Firstly you need to fix your project management skills or set more realistic deadlines.
From experience, I have worked at companies that were dreadful at setting realistic deadlines which meant my coworkers and I would often have to put more hours in than we were getting paid for, we would get “bad” bonuses or none at all and we would be burned out at the end of every project.
The employee retention rate at this company was terrible and within 12 months, there were 0 employees left that were there when I first joined the company.
You can increase your retention rate by improving your employee’s work-life balance. This could be giving your employees early finishes on certain days, more paid leave, and if you do expect your employees to work longer hours for certain projects give them time off at the end of it.
Companies that are set in their ways and won’t listen to feedback are missing out on innovation and also the trust of their employees. Allowing your employees and encouraging them to give feedback shows them that you are a company that’s willing to listen to grow.
When an employee feels like their suggestions won’t get heard it stops them from getting engaged with company culture and demotivates them.
Feedback should be available in both public and private methods and you should go out of your way to thank your employees for feedback as even if the idea won’t work at least your employees are taking the time to try and improve your business.
As you can see from the tips above, creating a culture that involves your employees is going to make it much more difficult for them to leave.
Challenge employees to prevent boredom.
According to Glassdoor, 26.7% of people are tempted to quit their jobs due to boredom alone.
Unfortunately, some jobs are simply boring, but as an employer, it’s your job to keep your employees motivated so you will need to find a way to keep boredom at bay.
One way of keeping your employees motivated is to set them challenges. Challenges can help your employees grow and become more productive too. When setting challenges you need to set realistic ones and give your employees the self-belief that they can accomplish the challenge.
Setting non-realistic challenges will demotivate your staff and cause them to leave, so there is a fine line when setting challenges.
If at your company you have a sales rep booking 5 meetings a day and then you suddenly ask them to book 20 it’s not going to happen. Keep your challenges realistic and reward accordingly if you want to increase your retention rate.
Alter work responsibilities
Still sticking with the boredom theme, work responsibilities can get tedious over time so if you do have employees that can mix up their responsibilities be sure to do it from time to time.
Sharing or changing small responsibilities among your team will not only give you something different to do but will also give you an appreciation of the jobs carried out by your fellow team members.
Understanding your role along with your team members will create a closer team which creates a sense of belonging.
Avoid sudden changes to improve your staff retention rate.
People are creatures of habit and sudden changes can upset people.
Mergers, office relocations, new management, an influx of new staff and cultural changes put stress on your employees which can lead them to leave your company.
If you want to retain your employees, big changes shouldn’t happen all at once. Sometimes this has to happen, so communicating these changes before they happen will help the situation.
You can also help with retention levels by delaying these changes if you notice your employees have been under a lot of stress recently.
Provide your employees with the right tools
If you don’t provide your employees with the right tools you are causing them frustration and aren’t allowing them to be as productive as they could be.
Companies that won’t pay for the right hardware or software for their employees may think they are saving money but often it leads to frustrated employees and poor retention levels.
Flexible working improves turnover rates
Before the COVID-19 pandemic getting employers to let their employees work from home was very difficult. Employers were concerned that productivity would go down and business would be lost.
Because of COVID-19, many businesses didn’t have a choice and employees were allowed to work from home. According to Flex Jobs, remote working has improved job satisfaction by 7% and over 95% of their respondents said that they were more productive at home than working in the office.
Allowing your staff to work remotely will decrease your staff turnover rate.
Keep an eye on your managers
Your management team will play a huge role in your employee retention rate. Good managers will encourage your team members, bring them into the business and make them feel a part of it while increasing productivity.
Bad managers on the other hand will show a lack of respect, won’t nurture your employees and will eventually increase your employee turnover rate.
It’s often said that people don’t leave businesses but leave because of bad management and that’s something I can personally agree with. I’ve left many good jobs where management was poor and have stayed in bad jobs longer than I should have where management was good.
Be a company that people want to work for.
Whether you take your employees on retreats, let them have more time off than other companies or get involved in local charity work, getting involved and making your company a good place to work is going to increase your retention rates.
No one wants to work with a company that has a bad reputation, this can be in the form of how it treats its employees or how ethical it is seen to people on the outside. Creating a desirable company that people want to work for is not only going to increase your retention rate but it’s also going to help with recruitment too.
Finally, be prepared for employee turnover.
Unfortunately, even if you are the perfect employer people will still leave your company. The decision to leave may not even be company-related at all. Your job as an employer is to make the best working environment you can so that a positive work culture can be formed and employees are satisfied within their jobs.
By creating a positive workplace and valuing your employees when they leave they may even talk well about your company which could make recruitment easier in the future. Employees that leave may also see that the grass isn’t always greener and could miss their old jobs and come back to you one day.
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