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According to Gallup, 1 in 2 US employees are open to leaving their company. But hiring is expensive — many employers estimate the total cost of hiring new employees to be about 3-4 times the position salary.
That is a significant cost. And with the Great Resignation behind us, we know that employees are willing to leave jobs that don’t align with their career goals. This is bad news for organizations that stand to lose their top talent simply because they don’t recognize the signs of job dissatisfaction that lead to quitting.
It is becoming increasingly important to find and implement retention strategies that make your employees want to stay with your organization. In this article, we’ll look closely at what drives employee retention and what steps your organization needs to take to reduce high turnover.
What is employee retention?
Employee retention management is the process of taking strategic actions to retain your employees while keeping them engaged and productive. With the right employee retention strategy, your organization can increase job satisfaction and reduce high turnover rates.
Employee turnover and replacement costs are high with estimates up to $18,591 per employee. Plus, even if you hire a new employee with equal experience as the one that quit, there will be a knowledge deficit in the transfer. So, new employees may end up starting from scratch, and the work of your past employee may remain incomplete.
Why do employees leave their jobs?
As part of the workforce, you know that employees quit for a variety of reasons, including:
- Job burnout or overworking
- Physical and mental health concerns
- Lack of flexibility
- Relocation
- Lack of career growth
- Missing connection or alignment
- Managerial or team issues
- Uncompetitive pay and benefits, and so on.
And while some (like health and relocation) are out of your organization’s control, many of these concerns are fixable.
Of all these, studies show that the three major reasons why good employees leave include managerial issues, lack of career growth, and inadequate compensation. These are very much within your organization’s control but the key is to identify what your employees need and where you might be lacking.
7 Main drivers of employee retention
So, how do you retain employees and reduce turnover rates? You’ll need to identify what is driving your employees. Then, compare that to your workplace culture, goals, and expectations. Where can you meet your employees? How can you help them do their jobs effectively?
Here are the top employee retention factors your business should pay attention to:
1. Employee morale
Employee morale is determined by job satisfaction, workplace experiences, attitude, and overall well-being. All of these factors feed into how your employees view your business and the teams they interact with. In fact, according to Gartner Inc., employees seek value and purpose in their work. Therefore, the more happy and comfortable your employee is, the more they are invested in your organization’s goals. This then leads to productivity and loyalty.
In comparison, low employee morale will lead to employees checking out while on the job, feeling stressed, and choosing isolation over collaboration. So, it’s important to keep employee morale high and help employees feel they work in a good and safe work culture.
2. Presence of career development opportunities
No matter how employees step into these roles, most employees will want to grow, expand their skill set, and progress in their career path. If your organization fails to provide L&D resources or training, these employees will be disenchanted as they won’t see a way to grow in their roles.
For some employees, leadership is the end goal and a major employee retention factor. These high-potential employees will benefit from leadership training, sponsorship opportunities, and mentorship. Again, if your organization does not consider and offer such training, your top talent will look for opportunities elsewhere.
3. Employee-manager relationship
It isn’t surprising that managerial issues are a major reason for employees leaving. Strong employee-manager relationships are crucial to the satisfaction of both the employee and the manager. If managers don’t trust employees, they will often default to micro-managing. And if employees cannot comfortably approach managers, they will be left without guidance.
Without making an attempt to resolve these issues, managers will fail to build strong employee-manager relationships. This can lead to misunderstandings, negative reviews, lack of support and knowledge-sharing, and so on. Even with good pay and flexibility, employees will leave if they have a toxic manager who only focuses on losses or a detached manager who doesn’t acknowledge wins.
4. Work-life balance level
Work-life balance continues to be important for employees; especially with younger generations paying closer attention to health and awareness. Proper balance without overtime, paid leave, and flexible hours will lead to productive and efficient employees. Otherwise, employees cannot take time to take care of themselves and may suffer from stress, burnout, and health issues. All of this will inadvertently lead to productivity issues for your organization.
5. Onboarding and training
Another key employee retention factor is proper onboarding. Avoid dropping new hires into the thick of it without any guidance or support. Simply expecting them to know what to do is a disservice to them and your organization as a whole.
Create a space for proper onboarding and training to help them understand your organization’s specific workflow, mission, and goals.
6. Employee well-being
Studies have shown that improving employee well-being is associated with better work, productivity, and performance. And employee well-being generally includes workplace, financial, social, and physical well-being. If employees are struggling, they may choose another organization that works better for them. Organizations can help employees take care of themselves by providing wellness stipends and benefits.
7. Compensation
And finally, one of the most important employee retention factors is competitive compensation. You can show how you value your employees in a few different ways such as acknowledging their achievements, providing deserved promotions, and adding new benefits.
Competitive compensation and good raises are also significant ways to show your employees you see their hard work and that you appreciate it. In fact, improved compensation along with a comfortable work-life balance is the ideal working situation for most employees.
8 Effective employee retention strategies
So, now that you know what it takes to retain your employees, it is time to build a usable and thoughtful employee retention strategy. With this plan, you can put programs, resources, and processes in place to increase employee engagement, well-being, and productivity. Plus, you help them do their best in the workplace, which only furthers your organization's success.
Here are 8 of the most effective employee retention strategies to get you started:
1. Recognition and appreciation
Take time to recognize and acknowledge your employees’ work. This could be new initiatives they start, milestones they achieve, problems they’ve solved, and so on. Recognition comes in different ways — you can share updates on group chats, run an employee of the month program, provide rewards, offer promotions and bonuses, etc. These acts will increase employee morale and keep them invested as they can see you value their work.
2. Effective mentoring opportunities
For employees who love to learn or wish to grow in their roles, offer coaching and mentorship opportunities. Depending on your business goals and resources, you can run a mentorship program for all employees or a leadership training program for high-potential employees.
In these programs, you can pair them with seasoned professionals or peers at a similar career level. You can also run an onboarding mentorship program to help new hires assimilate better. Mentorship is an effective employee retention strategy as it creates a space for learning and career development.
3: Amazing work-life balance
As established, work-life balance is crucial to employee engagement. So, check in with your employees and understand what they need to work effectively without damaging their work-life balance. Then work with management to find a middle ground that satisfies both employees and leadership.
4: Flexibility
Make sure to add flexibility in your company policies; especially if you offer flex hours, remote work or hybrid days, and so on. There will be situations or emergencies where employees need to take an hour or so off, leave early, or work remotely. Flexibility ensures that your employees don’t have to ditch work or worry about taking time off to complete other important tasks.
This is especially helpful for employees who suffer from health issues, have children or pets, or are caregivers in their families. By giving them leeway, you ensure that they don’t need to worry about personal stuff when on the job.
5: Training and development
As with mentorship and coaching, L&D and training resources give your employees a chance to expand their skill set, bring new ideas to the table, and contribute in different ways. Most employees will end up taking on new responsibilities that weren’t part of their original job description. As they learn, they will identify new areas of improvement and innovation that will ultimately benefit your organization as a whole.
6: Competitive pay plans
Take time to research salary trends for different positions within your company. Your employees are aware of market trends for their skills and will expect competitive salaries from your organization as well.
Try and cultivate an open and transparent culture where employees and management discuss their salaries, expectations, and what’s needed to get there. An open conversation allows both employers and employees to be on the same page.
7: Continuous feedback on performance
Prioritize a culture of learning and feedback. Even highly educated employees will need to learn on the job and make mistakes here and there.
But in a learning-focused culture, you give space to constructive feedback and guided training that can equip these employees with a better understanding of the job and their role. Take time to provide feedback on their performance, specific tasks and projects, new initiatives, etc. This can be different from annual performance reviews.
8: People and culture
Finally, what can you do to make your employees love working for your organization? Promote a healthy work environment by emphasizing the importance of:
- encouraging communication
- building trust and empathy in work relationships
- creating a community of support and understanding
- valuing constructive feedback
- socializing across departments, and so on.
When people enjoy working together, they are more likely to feel a sense of purpose and belonging in the workplace. And this further encourages them to do their best for your organization.
Bottom line
Unhappy employees will leave to find another offer that better aligns with their own personal career goals. You need to give them a reason to stay, and this reason can be different for each employee.
So, make the effort to understand what your employees need in order to be successful and contribute effectively to your business goals. It is easier said than done, but you can start somewhere. Together’s mentoring platform is one such step — with our platform, you can pair mentors and mentees together to promote learning and development. This way, you can create a space that focuses on building skills, experience, and by extension, careers.
Use Together Platform to seamlessly connect members via mentorship — by ensuring that members are matched with relevant mentors determined by the skills and experiences they want to advance in their careers.
