Updated November 2023
Top-performing employees resign from their jobs for all kinds of reasons. However, when one of your star employees suddenly resigns, it might feel like a sucker punch to you and your team.
While it is challenging for your organization to manage, it can also have a ripple effect on team morale when a trusted and respected team member departs. You might even find that other employees follow suit relatively soon after. This chain of events could easily leave you juggling to find, replace, and manage new and current employees in a massively disruptive flurry.
The best strategy to avoid finding your company in this precarious situation is to develop a robust employment retention strategy. And sure, succession planning is generally a wise ace in your pocket, but it can become time-consuming and risky in its own right.
In this blog post, we will define employee retention and discuss what you can do if you’re struggling with unusually high employee turnover rates. Let’s get started and find out how you can keep your best employees on board.
What is Employee Retention?
Employee retention is the act of keeping employees within an organization, and the practice is beneficial for business owners and workers.
A robust employee retention plan ensures that employees feel appreciated and valued while helping the company grow.
Employees choose to leave for different reasons, and an employer can use several methods to ensure they retain their valuable employees.
Let’s dive deeper into it all.
Why Do Employees Leave?
One of the most important things you can understand and address as a leader is why employees leave. Unfortunately, it’s not always easy figuring out why. Getting them to open up can be tricky, though you might with strategic exit interview questions.
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. A company culture is the organization’s personality that defines how people should behave, interact, and communicate with each other to make things work positively and productively.
In a toxic company culture, negativity is allowed to run rampant. This kind of environment might present with the following:
- Low levels of enthusiasm
- Lack of communication and engagement
- Lack of conflict management
- Chronic stress
Work with your management to lead by example to establish and exhibit your company’s positive mission and values daily.
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 in an exit interview, you may find out that they believe their salary doesn’t align with their workload or responsibilities. If you continue to receive feedback that your employees don’t feel their work is adequately appreciated through fair compensation and that their plate is constantly overloaded, it’s probably time for some candid self-evaluation of your company and its practices.
Conduct market research to learn what a fair salary is in your industry and for each respective position. If you find a discrepancy between what you are paying and the going market rate, you may need to decide if paying lower is worth losing high-quality employees.
They don’t feel valued
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.
Take steps to identify where trust, compensation, or appreciation are lacking and do what you can to correct it with an employee recognition and reward program.
As an employer, it’s not feasible to monitor all the tasks your employees work on and complete. Your employees are responsible to a certain degree. But if they feel worried about job security if they can’t complete tasks during a certain timeframe, it adds unnecessary stress.
Further, your managers can strive to understand their employees and their needs on your behalf. Ask that your management team listens to employees and works with them to assess their workloads and deliverables and offer guidance when necessary.
Over time, stress and your leadership’s lack of attention to it may cause job dissatisfaction, leading to employees seeking out better work-life balance.
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. 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
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 a clear path to 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.
Employees Shouldn’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?
Employees Need to 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
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.