Employee retention has become a key struggle for many modern entrepreneurs and managers. To retain your top employees, you will need to ensure you use many employee-oriented business and leadership strategies so the employees remain fulfilled and productive.
However, this can also be quite complicated for the average business owner. You may be wondering: how do I manage the employee’s productivity, while still giving them independence and avoiding employee burnout?
Or, why do employees suddenly gain interest in joining a competitor after working with me for years? The good news is that these questions can all be addressed and such issues can be solved by you paying attention to employee retention.
In fact, it’s even more efficient to retain your employees than to begin new employee onboarding. This article will help you identify ways you can retain your top team members without hassle.
What is Employee Retention? Definition
Employee retention is relatively straightforward in principle. It essentially means that employees stay with their current employers without seeking out other job opportunities.
The opposite of retention (keeping employees) would be turnover, where employees leave their workplace in favor of other opportunities for a variety of reasons.
Retention involves companies taking action to ensure employees do not have a reason to leave their job. Retention rates vary from industry to industry and company to company.
To calculate your own unique retention rate, simply calculate the percentage of employees who have left your company in a given time frame (employees who left/total employees).
Employee Retention – Why is Crucially Important & List of 10 Benefits
Turnover can have serious negative effects on businesses of any size. It impairs continuity, breaks employee relationships, and boosts businesses operating costs through the high payments needed to replace employees.
As a result of increased turnover, businesses can also expect decreased productivity and even a loss of competitive advantage. This can all be avoided by retaining your employees.
By keeping the same workers, a business can create stable employee relationships and keep steady levels of motivation and productivity. It ensures employees feel comfortable with one another, know each other on a more personal level, and gain a genuine interest in collaboration.
List of 10 Employee Retention Benefits
- Quality customer experiences.
- Boost in revenue.
- Increased satisfaction among employees.
- Reduced costs, both in hiring and other departments.
- Stricter adherence to company values and rules.
- More experienced and insightful employees.
- Better morale.
- Increased efficiency and work ethic among employees.
- Improved hiring process and less strain on HR managers.
- Higher employee satisfaction rates.
List of 5 Strategies for Retaining Employees
Now that you know the benefits of employee retention, you may be curious about the most commonly used effective strategies for keeping employees fulfilled. Every business has its own approach to achieve retention, but there are a few approaches you can use to get you started.
Here are a few of the best employee retention strategies almost any business can implement:
Employee Retention and Engagement
Employees need to be actively engaged to stay with an employer. They should be continuously given opportunities to challenge themselves, go outside of their comfort zone, and experiment with new strategies.
The worst situation to be in as an employer is having a bored and unmotivated employee. This is what occurs without proper engagement, and it often leaves employees with no choice other than to seek out additional employment opportunities.
Employee Retention and Motivation
Motivation is a critical factor for individual success. To get the most out of your employees, motivate them to see their own potential. This could be as simple as acknowledging an employee’s success or complementing a worker on their effort.
It shows you care about their success and want them to achieve everything they are capable of achieving, maybe more than they ever thought possible. Having a supportive boss makes employees less likely to leave a company, especially once they see the results of their increased motivation.
Employee Retention and Job Satisfaction
The number one reason employees seek out new jobs is because of job dissatisfaction or lack of fulfillment. Ensure you provide an environment where employees are able to pursue activities they legitimately enjoy, instead of simply performing tasks for the benefit of the business.
Aligning employees with tasks that interest them will result in the workforce being more interested and engaged in their work, thus less likely to leave their job because of the immense satisfaction provided by their work.
Employee Retention and Collaboration
Many employees benefit from having open communication and collaboration channels between their colleagues. While some prefer more independence at work, other employees may need more consistent contact with their peers. However, nearly all workers enjoy feeling like they belong at work.
Being emotionally connected to a workplace decreases turnover, and this is best achieved through collaboration and communication between team members and departments as a whole.
Employee Retention and Opportunities
Opportunities often bring out the best in employees and make them more focused on goals within their current workplace. Keep in mind that growth and opportunities are more than simply becoming a “senior” or no longer being viewed as an “associate.”
Too often, businesses offer false incentives without truly encouraging employees to grow and develop. Promote employees when they go above and beyond your expectations, as this can be a great way to strengthen employer/employee bonds, boost motivation as well as satisfaction, and give an employee more control and independence.
How to Improve Employee Retention & List of 5 Techniques
Retaining employees is crucial to a team’s overall success. Consider any of the possible reasons an employee may wish to leave your company. Address some of these inner weaknesses and continue to ask your current workers for feedback on their fulfillment levels.
Here are some other techniques you can use to improve your retention rates:
Offer an Employee Evaluation
An employee evaluation gives your workers one on one time with their managers to speak about their own unique needs, desires, goals, and performance.
This is a great time to speak about strengths/weaknesses as well as the individual’s potential. Taking time to speak to workers on an individual level boosts their trust in you as a leader and ensures they continue to have goals to work toward.
Create an employee development plan so employees understand what they need to work on and which abilities they can strengthen. This plan should outline goals they can work toward to serve as motivation.
Maintain a Positive Work Environment
Employees dislike remaining in a negative or toxic environment. Often, negativity in the workplace arises from a conflict between coworkers or with managers. Ensure that such conflicts are properly addressed and that both sides have time to voice their concerns to their higher-ups.
Also, try to keep employees calm and find ways to avoid such outbursts in the first place. Consider colleague relationships when creating team projects, for instance.
Imagine how your employees would feel if they went above and beyond, contributing all of their effort and challenging themselves to complete their work, only to not be rewarded or even recognized.
Clearly, this creates tension between employees and managers. If managers continuously neglect their employees in this manner, workers will start to feel ignored and will lose their desire to work hard.
Fine Tune Your Onboarding
It is best to hire the right individual immediately, rather than hire one person, then fire them, and seek out new recruits. Onboarding can be extremely expensive, with SHRM estimating the cost per hire to be as high as $4,129.
Many hiring managers already believe more than a third of their recruits will quit than in prior years. This negative mindset will do no favors for your business.
Consider the fact that more than 37% of HR managers believe more employees would stay with their company if they were better informed on company expectations and job responsibilities. Clearly communicate your needs for prospective recruits and do not sugarcoat elements of the job.
Stand Up for Your Values
Workers enjoy feeling like they are contributing to something that is greater than themselves. If employees start to see your company’s mission get clouded or obscured, they will likely look for employment at other businesses.
Social issues are extremely important to employees, and they want their employees’ views to align with their own priorities. In fact, a report by Gartner found that 68% of employees would leave their current employer in favor of businesses that take strong stances on social issues.
So, establish your values, make them clear to your employees, and stick by them. Incorporate these values into the tasks you assign to your employees to give them a greater sense of value and accomplishment.
How to Measure Employee Retention?
To begin improving your employee retention rate, you must first understand how you are currently performing. Measuring your employee retention rate is as simple as following a straightforward formula.
All you must do is divide the number of employees who remained with your company during a certain timeframe by the total number of employees who joined your company from your first day.
Then, multiply this amount by 100 to get your retention rate expressed as a percentage. Take time to track your retention rate over time. If you calculated a low retention rate before implementing retention strategies, implement a few of the previously mentioned techniques and measure your retention rate about a month or so after first trying the strategies.
You are progressing if the retention rate continues to increase while turnover decreases. If retention rates drop, reconsider the measures you have taken to retain your employees.
What is a Good Employee Retention Rate? Business Case Studies
The definition of a “good” retention rate depends on a multitude of factors, such as your goals as a business, prior retention history, industry, location, and so on.
The lowest retention rates are found within government positions, likely because of their pensions and attractive retirement paths. State and local government turnover rates are around 1.4%, with federal positions having even lower rates, at 1.3%.
Some private industries also have exceptionally low turnover rates. For instance, the wholesaling industry has an average turnover rate of 1.9% while financing and insurance positions come in at around a 1.7% turnover rate.
Other industries have much lower retention rates. Some of the highest turnover rates have been reported in the QSR or fast food industry. They lose about 50-100% of their new recruits annually.
Hotels, staffing, retail, and supermarkets also have notoriously low retention rates. In general, try to aim for at least a 90% retention rate, which is about average. However, also keep in mind which employees lose with turnover.
If your top performers are leaving, then the 90% retention may not be enough to keep you competitive and the costs will soon start adding up. Those leaving your company should be the low performers, not valuable team players and leaders.
Employee Retention Rate vs Turnover
Employee retention rates and turnover are often mentioned together in conversations about improving team performance and efficiency. However, these two terms refer to completely different formulas and ideas.
Both are crucial toward understanding your success as a business and calculating employee satisfaction, though.
Retention is the number of employees who remain with your organization after a set period of time. The number can be expressed as a percentage of overall recruits as well.
Additionally, retention can also be measured by calculating average or median tenure at a company. Retention rates answer the question: how long do my employees stay with me? They can also answer: how many employees stay with me?
On the other hand, turnover is the number of employees who leave your company during a set time frame. Many companies choose to calculate it monthly or yearly, depending on their unique goals and industry.
Attrition is also an element of turnover. Usually, it refers to the number of employees who voluntarily leave your company. Involuntary turnover is also included in general turnover calculations.
This is the number of employees who are fired or discharged by the employer. Usually, this occurs due to irregular attendance or improper behavior.
Employee Retention FAQs
What is good employee retention?
Good employee retention involves keeping all of the great employees that you hire. Of course, it is usually not possible to keep all the amazing employees you have. So, you have to maximize your employee retention rate.
A good employee retention rate is somewhere around 90% or hire in most industries. In the hotel, retail, and food industry, the number could be lower.
What are the 5 main drivers of employee retention?
Employees are attracted to stay at work if your company does 5 things. You must give your employees opportunities to grow and develop new skills.
Plus, all good businesses look after their employee’s satisfaction rates. Collaboration is another key driver of employee retention. Finally, support from leaders and rewards for hard work are also essential.
Overall Conclusion Of Employee Retention
Retaining employees is crucial for any business. It is best to focus on hiring the right employees immediately, rather than sugarcoating the job’s requirements and hiring someone unfit for the job.
While turnover can be extremely costly to businesses, employee retention is in your control. You will notice a boost in productivity, increased positivity, more collaboration, and better organization once you begin taking measures to improve your employee retention rate.
In fact, you can start by recognizing every employee’s effort and acknowledging employee success, as well as standing up for your values. Now that you are armed with strategies to reduce turnover, begin taking action and see the many benefits of improving your employee retention rate.