There was probably a time when you thought you had your employees locked in and were not going anywhere. That is no longer the case. The labor market is moving quickly and becoming highly competitive. For this reason, it is essential that you understand why some employees leave and others stay. When you determine what is valuable to employees, you are better able to create an employee retention strategy.
What is Employee Retention?
Employee retention is how well a company can prevent the turnover of its employees. Turnover is defined as individuals voluntarily or involuntarily leaving the organization within a certain period of time. Employee turnover significantly impacts the performance and success of any organization.
Employee retention has become more challenging for businesses as morale is taking a dive across many organizations. A report by the Work Institute states that in past years more than 42 million employees left their job because they thought there was something better elsewhere. The same report states that if this trend continues, by 2023, more than one in three workers will quit their jobs voluntarily.
Check out our ultimate guide on employee retention to learn more.
What is an Employee Retention Plan?
In its simplest definition, an employee retention plan is a plan or strategy to improve your employee retention rate. In addition to increasing retention, it helps reduce turnover, foster engagement, and prevent attrition.
There is always going to be some amount of turnover in every organization. However, a solid strategy can help reduce the percentage of employees leaving voluntarily. In addition, a successful retention plan can help save time and money for an organization. It is always more affordable to develop existing employees than to recruit, hire, and train new people.
Employee Retention Plan Strategies
Focus on What You Can Change
For an employee retention plan to be successful, you must understand your employees and accept what you can change and influence. First, you should consider the environment in which your employees work. That is something you can control. Perhaps your employees need quiet spaces to focus and different spaces that are open for collaboration. Assessing your office hours to determine if they are flexible and allow for work-life balance and providing work from home options are great ways to encourage retention.
Competitive Benefits Package
Another aspect you can control is the benefits package you offer to your employees. You must be competitive in today's market. Some employees will take a lower paying job for more comprehensive benefits options. Among these benefits should be a solid healthcare package and other benefits that are in alignment with the needs and values of your employees.
Recognition and Development
Other areas of interest to employees are recognition and development. Most employees want to work in an organization where there are opportunities for professional growth. Employees also want to feel appreciated and essential. It does not take much to recognize the accomplishments of your employees. However, employees are more likely to leave if they do not feel appreciated.
10 Benefits of an Employee Retention Plan
There are a tremendous amount of benefits to an employee retention plan for your organization.
1) Reduced Cost
It is not a secret that it is cheaper to keep existing employees. Employers spend a significant amount of money on recruiting and hiring people to replace employees they have lost. According to The Society for Human Resource Management, the costs associated with hiring are 6 - 9 months of that employee's salary. The example they give is for an employee earning $60,000; the overall cost for recruitment, advertising, screening, and interviewing is between $30,000 to $45,000.
However, that is only half the costs because once you make selections, you are faced with expenses associated with onboarding. These include training, oversight, and the time related to acclimating new employees to the organization and position. Other costs that are not often considered are the costs associated with decreased productivity, decreased engagement, and customer service issues.
2) Improved Morale
Having a revolving door of employees throughout your company can impact the morale of the employees you retain. When employees leave, those left behind have lost connections and often take on more responsibility and work. These additional tasks can have negative impacts on employee motivation.
When several employees begin looking for other employment, it can encourage others to seek other job opportunities. In addition, an employee retention strategy can improve morale, promote engagement, and create a culture of connection within the company.
3) Employee Experience
When you lose employees, you are losing not just bodies but skills, relationships, and knowledge. It is not just your organization that feels this loss, but so do your partners and customers. In addition to losing the existing knowledge, you also lose the potential value that employees could have brought to your organization. This loss is commonly referred to as the opportunity cost.
When you have top performing employees, especially if they have in-demand skills, there is always a potential you can lose them. This is why retaining your talent with a solid employee retention plan is critical.
4) Efficient Training and Recruitment
Any time an employee leaves, you have lost all the money you spent training them. The sooner they leave after being hired, the more money you have lost. In some cases, it does not take long for a new hire to determine whether a company is not going to meet their needs.
Another consideration is internal recruitment and promotion. This way, you do not lose all of the money you have spent. The cost of training can be high, and moving a current employee into a new role allows you to build on existing training. The employee may need additional training specifically for the new role; they already understand the organization's culture and policies.
5) Increase in Productivity
When there is turnover in an organization, it immediately has a negative impact on productivity. When productivity declines, it happens at a cost to the business. It is thought that it takes one to two years before a new hire is as productive as existing employees. When a company has a high rate of retention, they also remain highly effective. There is less burnout, better quality work, and fewer delays.
New hires take a certain amount of time to build relationships with customers and co-workers. These relationships are critical to engagement, productivity, and quality customer service. When you have employee retention, relationships are stronger, and the company thrives as a result.
6) Improved Customer Experience
Your customers make a determination about your company with their first interaction. They continue to form opinions through their involvement with your company, including support after the fact. The customer experience is directly related to employee engagement with them. An experienced employee may be able to satisfy a customer's request quickly and efficiently.
A new hire may have some uncertainty when interacting with the customer and need direction. This rarely leaves a positive impact on the customer. On the other hand, an experienced employee that is satisfied on the job typically has more positive interactions with the customers.
7) Healthy Culture
The culture of an organization is created by the behavior, preference, and perception of those working for the organization. This includes all people from the highest paid executive to the lowest paid hourly employee. Employees often leave due to a toxic culture and work environment.
When employees leave at a high rate, it does not take long before people notice and start asking questions. This can impact your recruitment efforts and, in turn, cost even more. When employees are engaged and are in alignment with the mission and culture of the company, it helps to strengthen the organization.
8) Enhanced Experiences
Every person that works for a company has their own perception of their interactions within the company. The relationships they have with co-workers, customers, and management also play a role in the experience of an employee. When employees feel positive about the company and their position within the company, they are more productive and positive. This also leads to better relationships with customers and improved customer loyalty.
9) Increased Stream of Revenue
When the company has fewer costs related to hiring, improved productivity, and greater customer satisfaction, that all leads to more revenue for the organization. When a company tracks the money they save and earn as a result of employee retention, it makes them more willing to spend money on employee development and retention.
10) Engagement and Satisfaction
Mentioned throughout this blog are all the ways that a positive employee experience improves productivity, enhances engagement, and increases retention. When an employee is connected to a company and its people, they are more likely to stay. The power of connection should not be minimized. Caring about a company, the people in the company, the product, and the customers helps employees feel committed and motivated. They are motivated to foster those relationships and help them thrive. They are also less likely to leave. Even during difficult times, when an employee feels connected, they are more likely to weather the storm.
Implementing Employee Retention Strategies
There are some strategies you should employ to increase your rate of retention. These include but are not limited to:
Listen To Feedback
Provide a space for your employees where they provide real feedback about their work environment. You want to really listen to them and make some changes based on feedback. You cannot implement everything, but there will be some feedback that you can act upon. When employees feel heard, they feel valued and want to stay.
Employee dissatisfaction can stem from a lacking of understanding of what is happening with the company. Lack of communication causes employees to feel like they are not valuable enough to be informed. If you keep all lines of communication open, you can avoid this. There are different avenues for communication, including meetings and emails.
Hire People That Fit
It is not enough to hire someone that has the skillset you need. You also want to ensure they will mesh with the culture of the company. In addition, anyone you hire should be a good fit for your existing employees. This means you must take a good amount of time to screen potential candidates.
When you focus on employee retention, it more than pays for itself. You will see a return on your investment throughout your organization. A robust employee retention strategy is an essential part of your planning. While it takes effort to create a successful plan, it is worth it. You will reap the rewards not only with production but with employee and customer satisfaction.