As a business owner or manager, you understand how important it is to have a team of dedicated and motivated employees. But what happens when those employees start leaving, and you’re left with a high turnover rate? Employee turnover can be costly, both in terms of time and money.
In this ultimate guide to employee retention, we’ll explore the cost of employee turnover, why employees leave, and strategies for improving employee retention. We’ll also cover how to create a positive work culture, provide growth opportunities, offer fair compensation and benefits, recognise and reward employee achievements, build strong relationships with employees, and measure employee satisfaction and engagement. By the end of this guide, you’ll have a solid understanding of what it takes to keep your employees happy, engaged, and dedicated to your organisation.
The Cost of Employee Turnover
Employee turnover is expensive, and the costs go beyond just the time and money required to replace an employee. When an employee leaves, you lose the knowledge, skills, and experience they brought to your organisation. You also have to spend time and resources recruiting, hiring, and training a new employee. Additionally, turnover can impact the morale and productivity of your remaining employees, as they may feel overworked or undervalued.
It is estimated that to replace a salaried employee it can cost, on average, between 6-9 months’ salary. This includes the cost of recruiting, hiring, and training a new employee, as well as lost productivity during the transition period.
Understanding Why Employees Leave
To improve employee retention, it’s essential to understand why employees leave in the first place. Some common reasons employees leave include a lack of growth opportunities, poor management, low compensation, and a negative work environment. Employees may also leave if they don’t feel valued or appreciated or if they’re not given enough autonomy to do their jobs effectively.
One way to gain insight into why employees leave is to conduct exit interviews. During these interviews, you can ask departing employees about their reasons for leaving and what they think could have been done differently to retain them. However, opinions can be subjective from departing employee experiences and in addition, some leaving employees don’t want to rock the boat, so they will give you what you want to hear, so getting accurate information is essential. The best way to do this is to conduct regular employee surveys to gauge employee satisfaction and engagement levels. This information can help you identify areas where you need to improve to retain your top talent. It is essential to keep these consistent in your approach to ensure you can compare over time.
Strategies for Improving Employee Retention
Now that you understand the cost of employee turnover and why employees leave, it’s time to explore strategies for improving employee retention. These strategies include creating a positive work culture showing trust and a flexible approach, providing growth opportunities, offering fair compensation and benefits, recognising and rewarding employee achievements, building strong relationships with employees, and measuring employee satisfaction and engagement.
Creating a Positive Work Culture
A positive work culture is essential for attracting and retaining top talent. Employees want to work in an environment where they feel valued, respected, and supported. To create a positive work culture, you should focus on employee well-being, open communication, and work-life balance.
One way to prioritise employee well-being is to offer wellness programs, such as gym memberships, healthy snacks, and mental health resources. You can also encourage open communication by holding regular team meetings, one-on-one check-ins, and anonymous suggestion boxes. Connecting each individual and team to the overall goal of the organisation is essential, so holding frequent companywide updates is a great way of showing the results of all the hard work. Finally, you can promote work-life balance by offering flexible schedules, remote work options, and generous vacation time. The expectation has been evolving in a post-COVID world, and now candidates feel an expectation that where the tasks of that day are not on-site, they will be trusted to work from home. Trust is the keyword, and showing that at every opportunity will engage your workforce.
Providing Growth Opportunities
Employees want to know that they have a future with your organisation and that they can grow and develop their skills. To provide growth opportunities, you should offer training and development programs, mentorship opportunities, and leadership development programs. You can also encourage employees to take on new challenges and responsibilities and provide opportunities for cross-functional collaboration. This motivation is very individual to each employee, so create the platform to ask the employee what they want/need in terms of development to achieve their goals and support them in their individual journey.
Offering Fair Compensation and Benefits
Fair compensation and benefits are essential for attracting and retaining top talent. The market can change quickly, so you should conduct regular salary reviews and review up-to-date salary guides to ensure your employees are being paid competitively. If you are in the bottom 40% of payers, you will have issues in the current skills shortage market. Similarly, you should also benchmark your benefits against competitors. These packages can be up to an additional 40% on top of salary, so you need to be on top of these exact numbers, total remuneration, to ensure you are comparing like-for-like packages. Additionally, you can offer perks such as educational assistance, commuter benefits, and employee discounts.
Recognising and Rewarding Employee Achievements
Employees want to feel valued and appreciated for their hard work and achievements. To recognise and reward employee achievements, you should have a formal recognition program in place. This program can include awards, bonuses, promotions, and public recognition. You can also offer non-monetary rewards, such as extra time off, tickets to events, or gift cards. Outside of monetary recognition, you can never underestimate the power of a platform to offer public recognition and a thank you.
Building Trust and Strong Relationships with Employees
Building trust with employees is essential for creating a positive work environment and improving retention. You should encourage managers to get to know their employees on a personal level and provide regular feedback and recognition. You can also create opportunities for team building, such as company outings, volunteer events, and team-building exercises. You can show trust on a daily basis, by giving them the freedom to make decisions, asking for input on team challenges, and always giving them the platform for recognition when the opportunities arise.
Measuring Employee Satisfaction and Engagement
Measuring employee satisfaction and engagement is essential for understanding how your employees feel about their jobs and your organisation. You can conduct regular employee surveys to gauge satisfaction and engagement levels. You can also track metrics such as absenteeism, turnover, and productivity to identify areas where you need to improve.
Conclusion and Next Steps
Maintaining a consistent focus on employee retention is essential for the success of your organisation. By creating a positive work culture, providing growth opportunities, offering fair compensation and benefits, recognising and rewarding employee achievements, building strong relationships with employees, and measuring employee satisfaction and engagement, you can reduce turnover and retain your top talent.
If you’re not sure where to start, consider engaging in our culture audit services. Our team of experts can help you evaluate your current culture, identify areas for improvement, and develop strategies to improve employee retention. Or if you think there might be progression or development opportunities within your team consider performing one of our Internal Development Assessments. Contact us today to learn more.
Associate Director | Munster