As we approach another potential recession, businesses are looking for ways to cut costs. One of the first places they often look is at their workforce. They may try to reduce hours, ask employees to take pay cuts, or even lay people off.
While reducing your workforce may be necessary in some cases, it’s not always the best solution. In many cases, it’s more expensive to hire new employees than it is to retain the ones you have. Not to mention, a mass layoff can do serious damage to your company’s morale and reputation.
So if you’ve decided to take the other tact, and try to retain the employees you currently have until times get a little easier, where do you start? In this guide, we’ll explain the normal strategies for retaining employees, different techniques for keeping them through a recession and list off a few things to try if you are having trouble.
Ready? Let’s dive in!
Retaining employees in a normal economic period
The first step in retaining your employees is understanding what they want. What motivates them? Do they care about salary, or are they more interested in flexible hours? Once you know what your employees want, you can start to create a retention strategy that works for both them and your company.
Ways to retain employees
There are a few common retention strategies that work well in most economic climates:
- Offer competitive salaries and benefits. This is probably the most obvious way to retain employees, but it’s also the most effective. If your employees feel like they are being paid fairly, they are less likely to look for other jobs.
- Create a positive work environment. This includes things like providing adequate training, interesting work, and opportunities for advancement. If your employees feel like they are stuck in a dead-end job, they will be more likely to look for other opportunities.
- Be flexible with hours and work location. This is especially important for employees who have families or other commitments outside of work. If you can be flexible with their hours, they will be less likely to look for another more accommodating job.
Mostly, it comes down to creating an environment where your employees feel valued, respected, and like they have a chance to grow.
Challenges you may face
Of course, retaining employees is not always easy. There are a few challenges you may face even when the economy is strong:
- High turnover. If you have a lot of employees quitting, it can be hard to keep up. This is often due to low wages, poor working conditions, or a lack of opportunity for advancement.
- Poaching. If your competitors are offering higher salaries or better benefits, your employees may be tempted to leave. This is why it’s so important to stay competitive with other businesses in your industry.
- Unhappy employees. Even if your employees are not actively looking for other jobs, they may still be unhappy at work. This can lead to low morale, decreased productivity, and a higher turnover rate.
We’ll get to some techniques for overcoming these issues a little later on but it mostly comes down to being proactive. By understanding the challenges you may face, you can be prepared to deal with them if and when they arise.
Retaining employees during a recession
There can be some stark differences in how you approach retention when the world is going through an economic downturn. In a recession, your employees may be more likely to look for other opportunities because of the fear of job loss. So it’s important to adapt your retention strategy to account for this.
Creative ways to retain employees
While some of the tips listed above will work here too, there are some other things you can do to try and boost that retention rate when things are tough.
- Offer job security: This can be in the form of guaranteed hours, salary protection, or even bonuses for staying with the company. If your employees feel like their jobs are secure, they will be less likely to look for other opportunities.
- Offer salary increases: It may seem counterintuitive when you’re trying to save money, but in a recession, it can be cheaper to give raises than it is to lose and replace employees. That’s because the cost of recruiting and training new employees can be very high.
- Offer training and development opportunities: During a recession, many employees are worried about losing their jobs. If you can offer them training and development opportunities, it will help them feel more secure in their position and less likely to look for other employment.
- Improve communication: During a recession, there is often a lot of uncertainty. Employees may be worried about their jobs, the future of the company, and the economy in general. If you can improve communication within your company, it will help to ease some of those fears and concerns.
- Be open about the state of the company: Many employees will appreciate honest communication from their employer during a recession. If you can be transparent about the financial state of the company and the steps you’re taking, your employees will be more likely to stick with you.
The key to retaining employees during a recession is understanding that things are more difficult for them on a day-to-day basis, and though they value the job they have, will have to do anything to support their families. Making them feel secure, communicating with them, and being flexible will go a long way.
Challenges you may face
While the strategies above can help you retain your employees during a recession, you may still face some challenges. Here are a few things to watch out for:
- Employees who are laid off from other companies. If there are layoffs at other companies in your industry, you may see an influx of job applicants. While this can be a good thing, it can also put pressure on your existing employees. Be sure to communicate with your team and let them know that their jobs are still safe.
- Employees who are worried about their jobs. Even if you’re not planning on making any layoffs, your employees may still be worried about their job security. This can lead to increased absenteeism, decreased productivity, and a general feeling of unease at work. If you see this happening, be sure to communicate with your team and let them know that their jobs are safe.
- Employees who are looking for other opportunities. Even in the best of times, some employees will always be looking for other opportunities. During a recession, this number may increase. If you see employees start to look for other jobs, be sure to talk to them and find out what their concerns are.
If you are experiencing some of these already, don’t panic! Below we have included some tips for retaining employees if you are having trouble.
What to do if you are having trouble retaining employees
No matter what you do, do you seem to lose employees quickly? If you are having trouble retaining employees, it may be time to take a closer look at your company culture. Do you have a high turnover rate? If so, that’s a red flag that something is wrong.
Make sure you are regularly:
- Examining your pay scale. If you are paying below the industry average, that could be one of the reasons your employees are leaving. Try to bring salaries up to at least the industry average and see if that makes a difference.
- Offering more training opportunities. Employees who feel like they are stuck in a rut are more likely to leave. By offering more training opportunities, you can give them a chance to learn new skills and advance their careers.
- Reviewing your benefits package. If your benefits are lacking, that could be another reason employees are leaving. Make sure you are offering a competitive benefits package, including things like health insurance, paid time off, and retirement savings plans.
- Looking at your company culture. If your workplace is full of negativity and politics, that can make it very difficult to retain employees. Try to create a positive work environment where employees feel valued and respected.
If you are having trouble retaining employees, it’s important to take a step back and see what you can do to improve the situation. In most cases, it comes down to offering competitive salaries and benefits, creating a positive work environment, and being flexible with hours and work location.
While a recession can be a difficult time for businesses, it doesn’t have to mean the end of your company. With a little planning and effort, you can weather the storm and come out stronger than ever.
If you take the time to understand what your employees want and need, you’ll be in a much better position to keep them during tough times. And if you do have to make some cuts, be sure to do it in a way that doesn’t damage your company’s morale or reputation.
With a little effort, you can get through this recession and come out the other side with your workforce intact.