One of your top-performing employees calls you out of nowhere, and tells you they are resigning.
This is a big hit to your company–not only because it was a top-performing employee, but also because it can affect the morale and drive other team members to leave as well. Now you’re scrambling to find a replacement and manage other employees at the same time.
This is a nightmare that no manager wants to experience, but it is one that’s becoming more and more common, especially in today’s current work climate.
That’s why it’s as necessary as ever for businesses to have a solid employee retention strategy. When you’ve invested time and money in training employees, it makes sense to want them to stick around. And while some companies may be comfortable with their own succession plan, that’s not a plan you want to use every day.
If you’re struggling with employee turnover rates, this guide will help provide the information necessary to boost employee retention. You’ll learn what employee retention is, how COVID-19 has impacted retention, reasons why employees leave, strategies to reduce employee turnover, and how to calculate your employee retention rate.
If you’ve already experienced some employees leaving and need help filling open positions, check out the Insight Global hiring page and we’ll instantly connect you with top talent.
Let’s get started.
What is Employee Retention?
Employee retention refers to the act of keeping employees within an organization. (In 2022, within tighter financial times, this practice is sometimes called labor hoarding.) It’s beneficial not only for business owners but also for its workers.
Employers must work to retain their employees through their own proper employee retention strategy. This helps to grow the company as a whole, as well as to show appreciation to employees for their contributions.
There are different methods an employer can use to ensure that they retain their valuable employees. One way is to motivate the workforce through engaging properly with employees. Employee engagement is the extent to which employees emotionally connect with their work, enthusiastically drive performance and ultimately stick around for the long term.
Employee retention is a must for business owners to succeed in their venture. It’s essential to know the ways in which employers can keep their employees satisfied and happy while working with them, thus creating a more productive workplace environment.
Why Do Employees Leave?
One of the most important things you can understand and address as a leader is why employees leave.
During the pandemic, the number of people who left their job was nearly all involuntary–in many cases there were no other options. But learning how to recognize why employees voluntarily leave can help improve retention and enhance business performance.
Unfortunately, it’s not always easy figuring out why employees are leaving. Getting them to open up can be tricky, though you might with strategic exit interview questions.
With that said, there are a handful of items known to be common factors that contribute to employees leaving. Recognizing and learning these will inform your employee retention strategy.
Toxic company culture
A toxic company culture causes employees to leave a workplace. This is the organization’s personality that defines how people should behave, interact, and communicate with each other to make things work.
It is like fresh air; you can’t see it, but when it’s there, life seems pleasant. When it’s lacking or polluted, it becomes hard to operate. Therefore, if an employee has left or decides to leave due to stress or dissatisfaction caused by the toxic culture, then the reason for this must be examined carefully. Otherwise, the company will experience poor productivity and impact on customer satisfaction levels.
Insight Global CEO Bert Bean has been open about Insight Global’s culture needing an about-face a couple years ago.
“In 2017, our culture at Insight Global was broken—the wolf was at the door,” Bean said in a guest article for Fast Company. “It was taking the average person twice as long to get to the same level of productivity as it had five years prior. And we were losing people faster than we could hire: We hired 1,600 recruiters and lost 1,100.” However, Bert and other company executives were able to recognize by looking inward and and finding out what was going wrong.
“Once we got locked into our values and our purpose,” Bert said, “we made hardwiring them into the company our only business priority.” That helped change the company culture.
If your company’s hiring process doesn’t include questions that help determine fit within your corporate culture, then you are likely losing potential great employees. It’s also important to practice what you preach. If your company isn’t demonstrating its core values on a daily basis, then employees aren’t likely to be reminded of them.
They want more training/development opportunities
In any job, staff will need to feel that they’re growing and developing new skills. This is especially true in industries where training opportunities are scarce or where job descriptions change frequently.
If your current employees cannot develop themselves with the organization, it’s not difficult for them to seek out greener pastures. It may be possible to keep employees by offering them more money or benefits, but these may not be the best long-term solutions.
Instead, take a look at available training opportunities and development within your organization to help in retaining key employees. Insight Global has made training and developing employees a key part of both the hiring process and our employee retention strategy, and our retention rate has improved in part because of these opportunities.
They’re overworked or underpaid
If you question a departing employee, you may come to find out that they believe their salary doesn’t align with their workload or responsibilities.
It’s important to note that this is highly subjective and doesn’t necessarily mean that the company has made mistakes in their approach. However, it can be a sign that there are problems somewhere in your organizational structure or communication between managers and employees. This kind of disconnect could cause employees to look for new jobs elsewhere, but solving it won’t happen overnight.
They don’t feel appreciated or valued by management
This may seem obvious, but it’s important to understand that employees need to feel valued for their role at your company. If they don’t, it’s going to hurt your employee retention rate.
Just because they’re not in a front-line position doesn’t mean they don’t work hard. Everybody has the potential to make or break an organization.
If this is lacking within your workplace and you don’t have engaged employees, take steps to identify where trust or appreciation is lacking.
They’re constantly stressed
As an employer, it’s not feasible to monitor all the tasks your employees are completing. You can’t be everywhere at once or keep track of every assignment that was completed after hours–but you don’t need to.
Your staff has an obligation to manage their own workloads and deliverables in a reasonable manner, but they should never be overwhelmed. If they are, this is a sign of poor management or mismanaged expectations on the company’s part. Over time, stress may cause job dissatisfaction leading to employees wanting more out of life than their current roles have to offer.
It’s essential to be aware of how your employees feel. Encourage employees by letting them know that there’s support and management understands their needs.
They don’t like the direction your company is going
Disagreements about the future of a company are common and lead to turnover. It happens if employees feel that this disagreement will never be resolved.
If an employee brings up concerns about your organization’s future, don’t brush them off and ask them to get back to work. Your employees expect you to listen to their complaints and take their opinions seriously. They may be able to help you make decisions that will benefit both of you.
Developing An Employee Retention Strategy
Employee retention is a challenge for every organization, regardless of size or industry. Each employee plays an integral role in the success of your business, and it’s critical to have the right people in place to see projects through from start to finish.
Organizations must first look at what is driving employees away and then take steps to retain their employees. Sometimes companies use outside help like strategy consultants to do this.
The following are steps you can implement in your employee retention strategy.
Improve your employee experience
Companies should invest more money annually on employee experience solutions than ever. This leads to higher levels of retention and employee engagement.
Some things employers can offer to improve the employee experience include:
- New and improved benefits
- Unlimited paid time off
- Improved recruitment and onboarding experiences
Insight Global has a generous sick time policy, provides free mental health counseling and proactive mental health resources, and offers 40 hours of paid volunteer time so employees can give back to causes important to them, among other benefits.
The majority of employees today care deeply about their workplace experience. They want to be heard. They want to feel valued. That’s why employee engagement will help you know what they need.
Employee experience can be used as a competitive advantage when attracting top talent in the future. Exceptional employee experience solutions can help you boost your customer satisfaction ratings through improved communication with customers, resulting in better business performance overall. This will lead to increased sales, which means you’ll have greater revenue for your organization in the long term. (Our CEO preaches how culture relates to your bottom line, as he did here in an article for Forbes.)
Create career advancement opportunities
Employees are a crucial resource to any business. Companies spend a lot of money recruiting and training their staff only to lose them after a year or two because they lack opportunities for advancement.
It’s vital to have a company culture that offers advancement opportunities to reduce turnover and keep employees.
There are many promotional paths available for staff members who would like to advance their careers in a large corporation.
Employers can approach employees interested in growing within the company with special projects or temporary assignments in the marketing department, the finance division, or another department that interests them. Employees can also volunteer for these projects, and when they do, it’s important that a manager or director take real consideration to that employee willing to step up.
Most companies also have internal programs that allow staff members with leadership potential to move into management positions with less experience than usual.
Make sure your employees don’t feel overwhelmed and overworked
Promotions and extra benefits are no good if the employees are miserable. If you notice one of your staffers struggling, you can ask them if they feel they have too much work on their plate or they need some time off. Listen to them, and care about what they say.
The idea is that each employee should feel challenged but not overwhelmed at all times. This way they will stay motivated, productive, and happy on the job.
Offering to adjust workloads during peak times of stress is one way to balance out overworked staff members. If you also see your team starting to look stressed, exhausted, and overwhelmed, try asking them what’s wrong. Is there too much work? Are they feeling overwhelmed because the company isn’t organized enough?
Make sure your employees feel appreciated and recognized
Your staff members want to feel like their work matters. Every employee wants to know that they’re an integral part of the business, and they want to be recognized for their achievements.
Managers need to let employees know when they do a good job so their hard work is rewarded with compliments or even promotions or raises.
Employees who feel recognized and appreciated on a regular basis are more likely to stay loyal and productive. As a manager, you should always be looking for opportunities to praise your team members’ efforts. If one of them is dealing with a difficult situation at home or with family members, try to make them feel like their work is appreciated so they can focus on getting through the day. If you need any ideas for how to make employees feel recognized or appreciated, read our article on employee recognition and rewards.
The rewards of retaining staff members far outweigh the benefits of having them walk out the door, often with all their knowledge and experience in tow.
Having an employee retention strategy doesn’t just protect your bottom line–it gives you access to a team of motivated professionals who are very likely to go above and beyond in their work.
Make sure managers are not forcing great employees to leave
Some managers have a bad habit of taking team members for granted or sometimes going as far as mistreating them. It’s important to make sure that your managers don’t do this, because you will have a tough time keeping great employees around if they are being under-appreciated.
If one of your team members is being mistreated by their manager, encourage them to speak up about how they feel. Investigate the issue and talk to your manager to make sure they know what they did wrong.
If you find that the manager is not willing to change their behavior, or if the bad behavior continues, it may be time to go a different direction. You want managers who reflect a positive company culture and are part of why employees want to stay on.
Retaining employees is about making them feel valued for their contributions and putting together an effective team that can work well together. Good managers will have the communication skills to express that the employees are valued. When you make the effort, your employees will stick with you for the long haul.
Improve the onboarding process
When you bring on a new member to your team, be sure to make them feel welcome and appreciated. Insight Global just started a Welcome Week training for its corporate employees, full of social events, team-building exercises, and presentations from company executives.
Ease new employees into their roles by having everyone spend some time getting to know them, through an introductory Zoom call or by scheduling some one-on-ones with their new team members. Just because your team works remotely doesn’t mean you can’t meet in person or on a video call.
You can also organize lunch outings, celebrations, or team-building events where everyone can get together and have some fun. Your employees will be much more productive and engaged in their work when they have a great relationship with the people they spend a significant part of the day working with.
Create flexible working arrangements
Make flexible working arrangements work for you and your staff to increase the employee retention rate. People who work flexibly are more satisfied with their jobs, less likely to leave, and generally more committed to the company.
One way to implement this is to value output over hours.
If an employee can get their work done in an efficient manner without sacrificing the quality of the work, they don’t need to act like they’re busy until the clock hits 5 p.m.
Other companies have experimented with the four-day work week, working longer hours from Monday to Thursday and having Fridays off. Microsoft Japan even tested a four-day work week with normal working hours–around 32 hours instead of 40–and found productivity boosted by 40%.
Some businesses have a hybrid schedule for this reason, too. Instead of working a normal five-day work week every week, some companies will give employees every other Friday off. Some companies every Friday off during seasons where travel increases–like the summer–or give full weeks off around holidays.
Regardless of how you do it, creating flexible work arrangements for your employees will benefit them because they will have more time to meet their personal needs, which you can then use to build better relationships with them.
Creating a great work-from-home experience is one way of showing your appreciation for your employees, which goes a long way in strengthening their work-life balance and making sure that your employees stay with you for a long time.
Create professional development opportunities
A top employee retention strategy is giving them opportunities for professional growth. This is a great way to show them that you care about their future, which will motivate them even more to produce quality work for your organization. Any sort of positive or constructive feedback to employees shows you’re invested.
Some professional development opportunities include:
- Paid classes or workshops
- A mentorship program
- Industry networking events
- Conferences and forums
Encourage employees to attend these events and share what they learn with the rest of the team when they return, so everyone benefits from their knowledge.
And don’t forget about social activities within the organization!
Not only do social events help strengthen the relationships within your team, but they also provide employees with opportunities to meet people from other teams or executive-level staff. You could even organize a day where everyone can bring their kids to work so that parents can spend some quality time with them while still being productive at their job.
This is an important aspect of employee happiness and retention because it reminds employees that you care about them as individuals, not just workers.
How COVID-19 Has Impacted Employee Retention
When COVID-19 swept the nation in 2020, it flipped many businesses upside down.
Companies were jostling for answers on how to keep their head above water and not go under. Employers had to think of employee retention strategies to keep their staff at work for their own sake and the benefit of the business, not to mention ensuring employees maintained a healthy work-life balance.
But one of the biggest issues during the pandemic was that many companies were forced to let employees go because they no longer had the ability to keep them on payroll. Many people began to worry about their job security, the future of their companies, and if they would have to take a pay cut.
Forget about job satisfaction for a second–some people didn’t even know if they’d still have a job that week.
Beyond their concern about their future, people were also concerned about the health of their families and friends. Meanwhile, companies were trying to shift to a remote workspace and still keep productivity and engagement high. Combine all these factors and you get a stressful situation for both employers and employees.
Fast forward to 2022, and the economy has made rebounds. Nevertheless, these retention strategies can help reduce turnover even while business are continuing to rebuild and potentially work through a recession over the next couple years.
How do you calculate employee retention rate?
Your employee retention rate the rate at which employees remain with your company during a certain time period. Calculating your employee retention rate is important because it will tell you how often your employees are staying with the company.
For example, say your company started a six-month period with 100 employees. At the end of a six-month stretch, you have 60 of those same employees. That makes your retention rate 60%.
The higher the retention rate, the better, because it means more employees are sticking around. A retention rate of 60% means your company has some work to do to find out why 40% of your employees left over a six-month stretch. (The percentage of employees who leave is also known as attrition rate.) Forty employees may have left for other opportunities, disliked your culture, felt they weren’t appreciated, or didn’t feel like they could grow within your company. As we discussed earlier, it’s important to find out why those employees left.
Knowing your retention rate is important for attracting talent to your organization, because if they see that other people are leaving frequently, they might assume that there’s something wrong with working there. Conversely, if you have a high retention rate, it shows employees like staying within your company.
The Bureau of Labor Statistics said in 2021, the average voluntary turnover across the work force was 25%, meaning companies generally retained about 75% of its employees disregarding outside factors like layoffs or long-term disability. This number varies by industry, but if your retention rate is lower than about three-quarters, that seems to be below-average.
Wrapping Employee Retention Strategy
In today’s ever-changing world of work, employers must have a strong employee retention strategy in place to ensure their business has sustained, long-term success. This starts from your recruitment plan all the way to how employees are treated while they’re working for your company.
Companies that don’t know how to effectively retain employees will get left behind. They’ll be trying to handle employee engagement and the recruitment process all at once (and it likely won’t go well).
In this post, we’ve reviewed what employee retention is, reasons why employees leave, and actionable employee retention strategies you can start implementing today. If your company has already felt the effects of the wave of employee resignation that has hit the job market, check out the Insight Global hiring page and we’ll connect you with top talent so your business can get back on its feet.
If you have an employee retention strategy in place but it just doesn’t seem to be working and your company’s culture needs a reboot, explore the Insight Global managed services page and learn how we can create a custom solution for your company.