The Great Resignation. This voluntary mass exodus of employees from their jobs began in the spring of 2021. It could affect your organization, and you don't know what to do. The shift of employees taking more control of their careers has been more evident than ever, and if there has been one specific issue that employers have faced in the post-COVID-19 world, it's how to hold on to good employees.
The challenge of hiring outstanding employees and keeping them employed in your organization is nothing short of herculean. But, if you have faced low employee retention, there are ways you can hold on to your employees for more meaningful and productive relationships. It's vital to keep your company desirable and profitable. Employees now more than ever want to be happy in their roles and have a sense of purpose. Companies need to adapt to meet the needs of their employees to keep them for the long haul.
What is Employee Retention Rate?
Employee retention is simply the percentage of the workforce that stays in your organization. A low retention rate is costly for an organization, not to mention other negatives. A constant revolving door of employees is challenging, and it can cause frustration and burnout for organizations.
Human capital is the most vital piece of any company, and organizations need a skilled and consistent workforce to produce optimal results. Low retention will always have you climbing an uphill battle to compete. Retention constantly needs to be monitored and prioritized.
Talent is critical to creating a winning culture and a positive employee workforce. You might ask yourself, "Why do the good ones always leave?" Unfortunately, you'll be left with the average and bottom performers to meet your targets. It's a recipe for failure, but fortunately, it can be turned around.
Why is it Important to Know your Employee Retention Rate?
Understanding your employee retention rate is critical for any organization to thrive and survive. The employee retention rate is a simple calculation system that can be used to drive your team. If you constantly replace employees, you cannot focus on other essential issues like employee engagement.
Employees that stay longer in organizations are generally more productive. They may have mastered their role or grown into a leadership role to coach and train others on how to master the craft. However, when you are always starting at square one, it disrupts the natural progression of an employee, especially one with outstanding talent.
The target retention rate depends on the industry you work in. Typical retention rates with the highest turnover are service and retail positions, while the lowest turnover is in government or state positions. However, you should aim for retention of over 90%. Some turnover can be good for your organization as it allows new talent and fresh ideas to be brought in. However, high turnover is a red flag for current or prospective employees looking to join your company.
Reasons for Low Retention Rate
It's hard to pinpoint the exact reasons for low retention, but some consistencies exist across the board. Here are some of the most common reasons.
- Employee Benefits - Health insurance is crucial and sometimes a dealbreaker for employees. Many employees may take a position only until they can find a better one that offers more comprehensive medical benefits.
- Poor Management - A great leader can make all the difference in keeping employees. People most of the time leave their boss and not the company. Leaders coach people and managers manage tasks. Look at the retention of your staff. Is there a trend in one team or department versus another? If one has high turnover and not the other, start by analyzing who is in charge.
- Toxic Culture - Culture is the behaviors its leaders exhibit, tolerate, and reward. Often, leaders within companies will boast about their unique company culture while they can't keep an employee longer than six months. The culture is the brand of your organization. From performance reviews to team building, look at every detail, and ask yourself, "Is this a company I see a future with?"
- Low Wage - Salary isn't everything, but employees need to be compensated fairly. Employees in 2022 have the upper hand when it comes to pay, and you have to offer competitive wages for them to stay.
- Limited Decision Making - Employees can become quickly disengaged if they are not involved in any initiatives. Micromanagement hinders innovation and growth.
What Type Of Employees Are Affected By a Low Retention Rate?
One of the most challenging employees to keep is young, entry-level workers. Over 50% of workers in their 20s plan to leave their jobs. Stagnant growth, lower wages, and lack of support contribute to the younger workers leaving more frequently. Organizations need to think outside the box to keep younger workers engaged and productive.
A 2021 study from the Harvard Business Review, also shows how retention affects mid-career employees. These are individuals who are between 30-45. Strenuous workloads and other stresses have led employees to rethink their career goals. Another reason is they could feel burned out from being with a company for an extended period. Along with the ten strategies discussed below, companies must balance keeping routines in place while still mixing things up to keep all employees engaged.
Low retention rates also affect in-demand positions such as technology and healthcare. You'll need to have an even stronger and more personalized retention strategy to prevent these workers from burnout. The pandemic added increased workload and stress for many employees without any intervention from companies.
Ten Strategies to Improve Employee Retention in 2022
Now that you understand the importance of employee retention, you can use the following strategies to keep more of the people you hire.
- Offer Hybrid Work - The pandemic has changed the entire work dynamic, and there's no doubt that employees desire flexibility. However, executives can get the best of both worlds by creating a hybrid work system in the company. Employees view hybrid work as a win, especially if it can help with work-life balance.
- Listen and Act on Employee Feedback - Do employees complain about feedback going into a black hole, never to be brought up again until the next institutional effectiveness day? If so, you can guarantee you'll soon have some resignation letters. Provide meaningful feedback, and don't overpromise and underdeliver.
- Promote work-life balance - Entering a new career can be all-consuming, and many employees quickly realize that they've taken on more than they can handle. Promote a healthy work-life balance by understanding and providing the resources they need to succeed. Some unique ideas include having an on-site gym, catered lunches, and flexible hours.
- Encourage Professional Development - Employees want to know that their company is investing in them and their future. Offer opportunities for employees to know the work they do is valued and develop their skills to advance in the company. This can be done through professional development such as structured training and workshops. Creating a culture of continuous learning will help retain employees. Employees with mastery and autonomy in their roles are higher-performing and happier. Employees will be able to develop professionally, and they'll be more likely to stay with the organization.
- Implement an Employee Recognition Program - A study by Globoforce found that employees who don't feel appreciated are two times as likely to say they'll quit in the next year. Acknowledge a job well done, and let your employees know that their efforts are not in vain. Have exciting ways to recognize your staff routinely, such as gift cards, company swag, or even half-days off.
- Invest in high-achieving employees - One of the best things you can do to keep good employees around is to invest in their development. High-performing employees are always looking for ways to improve, allowing them to do so. Don't be afraid to spend some additional funds to ensure they can represent the company's mission with fidelity.
- Focus on company culture - The heartbeat of any business is its culture. If you want to improve employee retention, focus on creating a positive environment that employees want to be a part of. Leadership should take an "open-door" policy, where employees' concerns and questions are addressed and considered to tweak the company's operations. Also, consider employee events such as holiday parties, office theme days, or competitions to boost morale and team camaraderie. The COVID-19 pandemic impacted our opportunities to connect, and employee events are an easy way to unite your team.
- Hire the right people - Finding the right people that mesh perfectly with the company's culture, values, and goals is difficult. Start by taking the time to screen candidates thoroughly and get a sense of their long-term aspirations. Consider using employee selection software that can help you identify the right individuals for each position. Hire employees who have intrinsic motivation and care about the company's mission instead of how much money they are going to make.
- Train the first time properly - It's better to take the time to train your new hires properly than rush them through the process. By ensuring they know the company culture and what's expected of them, you can avoid any unnecessary surprises or issues down the road. Employees with a memorable training experience are likely to apply for the training and are problem solvers when issues arise.
- Communicate, communicate, communicate - Often, employees leave companies because they feel out of the loop or unimportant. To prevent this from happening, keep the lines of communication open at all times. Utilize different ways, whether with regular emails or company-wide meetings, to keep everyone in the loop.
- It's important to know how a low retention rate directly affects your business now and in the future.
- Low retention rates affect younger and entry-level employees the most.
- You can take proactive steps to ensure you hire the right individuals for your business and retain the best talent in your organization.
Get Your Employees To Stay in 2022 And Beyond
Companies need to focus on more than just keeping their employees happy regarding employee retention. Build a culture and environment that encourages employees to stay with the company long-term. By implementing some of these strategies, you can create a more positive work environment and improve your retention rate.
There's no magic formula for preventing employees from leaving, but by focusing on company culture, you can create an environment that promotes longevity and positivity. Implement some of these strategies in your workplace, and you'll soon see the difference it makes.