In 2020, the average U.S. turnover rate was 57.3% — a figure that has been on an upward trend for the past few years. While there are many reasons employees leave their jobs, the cost of replacing them is a significant factor for businesses of all sizes.
So, how can employers ensure they keep their best employees from walking out the door? Thankfully, there are a number of measures that can be taken to improve employee retention. In this article, we will explore the top five strategies for retaining employees.
Let’s get started!
What is employee retention?
Have you ever spent enormous amounts on finding the ideal employee, only to see them walk away from your company a few months later? Turnover is one of the most costly and disruptive problems a business can face.
The answer to this issue is employee retention. Employee retention is the practice of retaining employees in an organization for as long as possible, often by providing positive work experiences and a good work environment.
The cost of employee turnover
Replacing an employee can be expensive, especially if they have a high salary. In fact, research shows that it can cost up to 33% of an employee’s salary to replace them. This includes the cost of recruiting and training a new employee, as well as the loss of productivity from the departing employee.
The cost of turnover also extends to other areas of the business. When an employee leaves, it can create negative morale among their colleagues and disrupt workflow. This can lead to a decline in customer satisfaction and even decreased profits.
What is involved in employee retention?
Employee retention is focused on keeping employees in their jobs. But it’s not just about making the workplace comfortable — retention should begin right from the onboarding process, and continue throughout the employee’s tenure.
There are a number of things that can be done to improve employee retention, including:
- Offering competitive salaries and benefits
- Creating a positive work environment
- Providing training and development opportunities
- Offering flexible working arrangements
- Encouraging mentorship
These are some of the best strategies for employee retention, and with a bit of elbow grease, they can change your company’s turnover rate for the better.
Start with the onboarding process
Before diving into the top five strategies in more detail, let’s discuss best practices for onboarding. The onboarding process is critical for retention since it’s the first opportunity to make a good impression on a new employee and set the tone for the rest of their tenure.
The onboarding process should be welcoming, informative, and engaging. It should cover everything the new employee needs to know in order to be productive, from their job duties to the company culture. Onboarding should also include social activities so employees can get to know their colleagues.
When designing your onboarding program, be sure to take the following into account:
- Hire the right person. This means finding the right fit for both the role and the company culture. To do this, you’ll need to have an extensive job description and a well-defined company culture.
- Solidify your culture and values. Your company culture and values should be well-defined and communicated to new employees during the onboarding process. That way, they’ll know what’s expected of them and what’s important to the company.
- Make sure the employee is set up for success. The onboarding process should include training on the job duties, as well as introductions to key people and resources. Be sure to provide a clear roadmap for the first few months so the employee knows what’s expected of them.
- Create a social onboarding experience. New employees should feel welcomed and included in the company culture. This can be done through social activities such as team lunches, happy hours, or group fitness classes.
- Make the first day a good day. The first day is crucial for setting the tone for the rest of the employee’s tenure. Make sure they have a positive experience by providing a detailed agenda of what to expect and plenty of support from their colleagues.
Top five retention strategies, explained
Now that we’ve discussed best practices for onboarding, let’s move on to the top five strategies for employee retention.
1. Offering competitive salaries and benefits
Imagine you are looking for a new job, and you come across two positions that are identical in every way, even right down to the salary. However, you find out that one of the positions offers health benefits that the other one doesn’t. Which position are you going to choose?
Most people would choose the position with the better benefits, even if it means taking a pay cut. This is because good benefits can be worth a lot of money to employees. Some of the most popular benefits include health insurance, dental insurance, 401(k) plans, and paid time off.
Employers can improve employee retention by offering competitive salaries and benefits. This can be a challenge for small businesses, but there are many ways to offer competitive benefits without breaking the bank.
For example, employers can team up with local providers to offer discounts on health and dental insurance, or they can offer 401(k) plans with matching contributions.
2. Creating a positive work environment
Employees want to feel happy and valued in their workplace. If every day is a drag, and the team culture is pretty much non-existent, employees won’t want to stick around for long.
Creating a positive work environment is one of the most important things employers can do to improve employee retention. This includes:
- Creating a clear mission and vision for the company
- Encouraging team building activities
- Providing regular feedback
- Offering opportunities for growth and development
- Fostering a culture of innovation
Companies should also focus on creating a positive environment from the very beginning of the onboarding process. First impressions are key, and if employees feel welcomed and valued from the start, they are more likely to stay with the company for the long haul.
3. Providing training and development opportunities
This strategy is one that benefits both the employee and their employer: the employee gets the opportunity to learn new skills and grow their career, while the employer gets a more skilled and productive employee.
Employers should make sure that employees have access to training and development opportunities, both during their time with the company and after they leave. This can include things like:
- On-the-job training
- Online courses
- Classes and workshops
- Mentorship programs
For instance, if one of your junior software engineers shows interest in becoming a project manager, you can provide them with the opportunity to take a class on project management. Or if an administrative assistant wants to learn how to use Excel, you can give them access to online courses.
Failing to provide growth opportunities will only make employees feel trapped and restricted, which is a surefire way to lose them.
4. Offering flexible working arrangements
The traditional 9 to 5 workday is becoming less and less common, as more and more people are looking for flexible working arrangements. This is especially true for millennials, who make up the majority of the workforce today.
In fact, this is one of the main causes of the Great Resignation. Younger employees don’t want to conform to the traditional 9 to 5 workday (which is understandable, considering how inflexible and outdated it is), so they are resigning and finding jobs that offer more flexible working arrangements.
Employers who want to keep their employees should consider offering flexible working arrangements. Whether you allow people to work from home occasionally, or you let them shift their hours around to accommodate their personal lives, flexible working arrangements are a great way to show employees that you care about their well-being.
5. Encouraging mentorship
Mentorship is one of the most underrated retention strategies out there. Essentially, mentors are paired with mentees who you feel will benefit from their experience, knowledge, and advice.
Mentorship can help employees in a number of ways, including:
- Helping them learn new skills and grow their career
- Encouraging them to take on more responsibility
- Giving them access to valuable connections
- Teaching them how to navigate the workplace
Mentorship programs can be formal or informal, but either way, they are a great way to improve employee retention. You can set up a mentorship program, or you can simply encourage employees to form mentorship relationships with each other organically.
What if your employee just isn’t a good fit?
In some cases, your retention strategies won’t work because an employee is in the wrong job or just isn’t a good fit for your company. This can be difficult, but it’s important to remember that it’s not always the employee’s fault.
Sometimes, an employee is a great fit for a company but the company is not a good fit for the employee. In these cases, it’s important to be honest with the employee and help them find a job that’s a better fit for their skills and interests.
Employee retention is an important part of any company, and there are a number of things employers can do to improve retention rates. This includes offering competitive salaries and benefits, creating a positive work environment, providing training and development opportunities, offering flexible working arrangements, and encouraging mentorship.
However, if an employee is in the wrong job or just isn’t a good fit for your company, it’s important to be honest with them and help them find a job that’s a better fit for their skills and interests.