Only a year after unemployment skyrocketed during the COVID-19 pandemic, hiring trends took a radical turn. Where once workers were desperately seeking jobs, suddenly jobs were desperately seeking workers. This “Great Resignation” was sparked by a variety of factors, but at its root, it was an issue of employee retention.1
What is employee retention? Simply put, it’s a business’ ability to keep employees. As a business owner, few things can be as disruptive as having a low employee retention rate or high turnover. It’s estimated that replacing an employee may cost a company roughly six to nine months of that employee’s annual salary. This loss includes the cost of the hiring process, onboarding costs, and lost productivity as other employees must fill existing workflow gaps and other responsibilities.2 If you have multiple employees leaving at the same time, those costs can add up fast. The benefits of employee retention are numerous, but first and foremost, it’s crucial for profitability and growth. These employee retention strategies should be practiced in order to maintain a working environment where people will want to stay:
Hire the right candidates
The first step to keeping employees is finding candidates who are right for the job. Whether you are backfilling or hiring for a new position, you’ll want to identify what qualities are essential for someone in this role, and look for talent who fit the description. When you interview candidates, ask them questions that will give you an understanding of not only their experience and skillset, but what their personalities are like. Will they fit in with the company culture? You’ll also want to give them a fair and realistic depiction of what the job entails. You don’t want someone to say yes to a position only to learn on the first day that it isn’t what they signed up for.
It’s also important to take a look at a candidate’s resume and look for any patterns of job-hopping. Do they have a history of only staying at jobs for a short period of time, or do they tend to stay in positions for a couple of years? While a resume can’t tell a complete story on its own, it can give you an idea of how long you may expect a person to stay at your company.
Onboard new employees effectively
Once you’ve found the right hire, it’s important to onboard them properly to ensure they are set up on the path of success for the job. Set up an orientation that will provide them with an introduction to the company, an overview of the organizational chart, company policies, their department overviews, as well as a benefits plan overview. This is also where they should complete important paperwork and receive items like ID cards and computers.
Set clear goals with your new hire for what they may want to accomplish within their first month, six months, and year from their start date. Be sure to have frequent check-ins on these goals, as well as in general to get a sense of how they are feeling and if they have any questions.
Also be sure to give your employee a tour, introduce them around to their coworkers, and make them feel comfortable from the beginning. You may even want to set them up with a buddy – someone who can take them under their wing as they get started.
Have strong leadership
Most employees won’t leave a company because they hate their job – most do so because they experience a difficult time with leadership. According to a 2021 survey by GoodHire, 82 percent of respondents said they would consider quitting their jobs because of a bad manager.3 It’s plain and simple – if you want to keep your staff, you must make sure that you have solid employees in leadership positions.
This also means fostering effective leadership skills in those leaders. Whereas some leaders are ineffective because they use toxic leadership styles, some are simply inexperienced. Consider leadership trainings and make sure that executive level employees are actively working with lower-level managers to address ongoing concerns or hierarchical problems. Company leaders should also keep open lines of communication with employees so no concerns go unaddressed.4
Offer competitive salary and benefits
Salary and benefits are certainly a driving factor for people when choosing a position – so you will want to make sure that your company is offering competitive compensation for your staff. This includes offering a salary that aligns with the job title for your specific area, health insurance, life insurance, paid vacation time, family leave, and retirement plans with a company match.
If an employee asks for a raise when they have been doing an outstanding job and there is room within the budget, rewarding them for their hard work can also be a great motivator for people to stay onboard.
Place importance on work life balance and flexibility
According to an Argyle-Leger Confidence Report, Americans now value feeling respected at work more than they value a higher salary, with 58 percent listing it as their most important work-related motivation. That means respect in the workplace, good health benefits, and a healthy work-life balance.5 While it’s not uncommon for the occasional late night to deliver a project, it shouldn’t become expected of your employees to pull an excessive amount of overtime to finish their work. If this becomes the case, this is a major red flag that something is not working properly.
Employees should be encouraged to take vacations, enjoy their time off with their friends and family, and not have to worry about needing to stay online when they’re off work. Not only does this provide for a healthy work culture, but when employees do return from their breaks, they can be refreshed and ready for work with a clear and open mind.
It’s also important to be mindful that everyone is in different situations and may need flexibility. If an employee must shift hours around to accommodate family or personal needs, being flexible in allowing this change can be a significant stress relief.
Offer company perks
Are there any additional perks your company can offer? These are not necessarily things that your employees may need, but are certainly a plus if you can offer and let your employees know that you appreciate them and want them to stay. Some ideas may be:
- Subsidizing gym memberships
- Employee recognition programs
- Summer hours for employees
- Student loan assistance programs
- Employee discounts
- Diversity programs
- Commuter assistance programs for on-site employees
- Free meals, snacks, or beverages at work for on-site employees
Just as important as it is to have company perks, it’s also important to make sure your employees know what you have to offer! Make sure you build awareness around these perks, ideally as early as during orientation.
Provide career growth opportunities
Emphasize that as your business grows, you want your employees to grow with it. By offering development opportunities to your employees, you provide them with the resources they need to meet their goals and advance in their careers. Be sure to conduct annual performance reviews so that your employees can get a sense of where they are, and what steps they need to take to move forward. Mentorship programs and training seminars can be helpful ways to engage employees of all levels in active learning.
Employee retention is essential to maintaining a healthy work environment and growing your business. When you communicate to your employees that you value them beyond just the work that they output, they will be more likely to stay for a longer duration. For more helpful business tips and resources, be sure to check out Nationwide’s Business Solutions Center.