Retention Strategies for Reducing Employee Turnover
According to LinkedIn, the worldwide employee turnover rate is 10.9%. In Canada, we have an average turnover rate of 16%, ranking us among the top 4 countries with the highest turnover rates.
Nearly 80% of business leaders rank employee retention as important or urgent. Having a team you can depend on and saving costs are all essential for smooth business operations. To ensure a unified and productive workplace, employee retention is something that cannot be overlooked.
Why Employee Retention is Important
Employee turnover, also called churn, is defined as the rate at which employees leave an organization over a set period of time. This includes voluntary leaves (employees resigning or retiring) and involuntary leaves (employee terminations).
Costs of High Employee Turnover
The more employees stay with your company, the higher employee retention you have. This is important because turnover costs are high. Separation, hiring, onboarding, or costs resulting from the unfilled position are all some direct expenses of employee turnover. Hidden costs can include lower team morale, poorer quality of goods and services, reduced productivity and engagement, increased workplace issues, or even decreased employee job satisfaction.
In terms of monetary expenses, the cost to replace an employee ranges from 6-9 months of that position’s salary. If the employee’s annual salary was $35,000, the cost of hiring, onboarding, and training a new employee could range from $17,500 to $26,250. This number increases as more employees leave the company, so a higher turnover rate could mean financial hardship for your company.
Benefits of Increased Employee Retention
On the other hand, focusing on employee retention and investing in your employees leads to increased performance, better productivity, higher employee morale, and improved quality of work. Once you invest in your employees, they will have a vested interest in the company and will be more motivated to see it do well.
But the benefits of high employee retention are not just limited to team dynamics—it can be financially beneficial as well. Keeping a well-trained and well-performing employee for 3 years as opposed to 2 years can save a sales company up to $1.3 million.
Reasons for Leaving
So why do employees resign? Gallup research found that 32% of employees quit their jobs due to career advancement or promotional opportunities elsewhere, 22% leave to seek better pay or benefits, and 20% leave because they do not feel like they fit in the position they’re currently in. Bad management or work environments cause 17% of employees to leave, while a lack of flexibility or scheduling can account for 8% of employee turnover. Lastly, 2% of employees leave due to unstable job security.
To directly address employees’ reasons for leaving, we’ve compiled a step-by-step guide for how to increase employee retention at your company.
Retention Strategies for Your Workplace
Recruit Engaged Employees
When recruiting employees, it’s important to emphasize your company’s values. Make sure potential employees are engaged with your business and can help it succeed—these enthusiastic hires are more productive over the long term. One study found that companies with engaged workers had a revenue increase two and a half times greater than that of companies with less engaged workers. Workplaces with high engagement rates reported a 10% increase in customer ratings and a 20% growth in sales. Employee engagement applies to compensation as well; engaged employees are nearly three times more likely to say they are paid appropriately for their work, compared to their disengaged or actively disengaged colleagues.
To ensure employee engagement, remember to ask questions that relate back to the potential employee during job interviews. You can use these questions to gauge how invested the potential employee will be once they are hired. For example, ask what the interviewee finds the most interesting about your company, why they want to work for you, or what aspects of the position they’re most excited or passionate about. A potential employee’s past experiences can also give you an idea of their level of engagement. If they have stayed at previous jobs for a long time, it’s a good indicator of a loyal employee. Team sports or volunteer activities can also show investment in a cause.
Ensure Effective Onboarding
A good first impression is essential; approximately one-third of employees know whether they would want to stay with a company long-term after their first week. You must have a strategy for how new hires will fit within your company. Developing a strategy can help determine clear steps for a new employee, and help them feel welcomed at the workplace. This can be done by communicating your company’s story and accomplishments, as well as helping the new employee apply their unique skill sets cohesively to the workplace. Employees who embody company values and are clear on the company’s mission are more likely to have emotional connections to the company and will be more motivated to see it do well.
Employees are 66% more likely to stay with a company for at least three years if they experience efficient onboarding. Some methods you can use to ensure this include:
- Having a “meet the team” photo board to put names to faces
- Writing a to-do list or cheat sheet for the handbook
- Outlining key policies
- Encouraging questions
- Making time for social connections in the workplace
- Including team building activities
- Asking for feedback
Provide Ongoing Education and Advancement Opportunities
While nearly all employers recognize that internal promotions are essential to improving employee retention, only 33% of these employers actually prioritized internal hires. Seeing as a significant portion of employees leave a company due to career advancement or promotional opportunities elsewhere, it is crucial to provide your employees with the opportunity to grow within your company. This can help you retain valued talent and prevent the significant costs of employee turnover.
Providing your employees with the means to increase their knowledge and skill sets can help them advance within your company. It is also beneficial to integrate learning into projects and tasks, so employees can ask questions and learn something new while also solving problems. Having educational training shows employees that they are being invested in and provides them an incentive to stay with the company. You can also leverage your employees’ newly-learned skills by focusing on their strengths and learning how to improve upon any shortcomings.
Include Good Benefits and Work-Life Balance
Benefits go beyond healthcare coverage and sick leave. For example, you could provide employees with stock options (whether it’s stock with your company or an RRSP/TFSA), financial rewards for exceeding performance goals or staying with the company for a certain time period, additional vacation days, and sick or personal days. Since better pay and benefits account for 30% of employee turnover, it is important to ensure that your employees are happy with the benefits and flexibility provided. Additionally, happier employees are also 12% more productive, which is another reason to make sure to invest in your team.
Flexible work schedules, working from home, and generous paid leave are all ways to make your employees feel valued. Ask your employees what they prioritize in their lives. If it’s family, offering extended parental leave can ensure happier employees who can return to work engaged and productive rather than resentful and distracted. Studies have shown that remote workers are 50% less likely to quit, and that people who work from home are more satisfied. This is because working from home allows employees to work at their own pace in a comfortable environment that offers more flexibility. If an employee values family, commuting to work could mean less time spent with family, resulting in an unsatisfied employee. This could account for why employees with one-way commutes of 45 minutes or more have higher turnover rates.
Foster a Good Workplace Culture
Companies with a strong workplace culture consistently see increases in revenue growth. Businesses that have a reputation of being a good place to work have reported a .75% stock jump. Evidently, a good workplace culture contributes to better outcomes for everyone.
Open communication and transparency can contribute to a sense of community in the workplace. If employees know why decisions are being made, they can feel a sense of shared purpose with the company as a whole, and become more engaged and dedicated to the company’s values. Encouraging ideas and questions from employees can mitigate some of the common reasons for employee turnover, like a perceived lack of good management or an unsuitable office environment. Praising employees for their hard work, offering them flexibility in the workplace, and making time for social connections and team-building activities all contribute to a good workplace culture, which leads to happier and more productive employees.
Leverage Technology and Data
The world of business changes a lot, and so do people. It’s important to stay updated with technology developments. By showing employees that your company can adapt to changing times while maintaining stability, you are addressing another reason for employee turnover: job security.
Collecting data about your company is also beneficial. Studies have found that the timing of employee resignations isn’t consistent with the calendar month; rather, resignations are timed around internal processes and structures such as quarter bonus payments. Data can help you uncover patterns and analyze how to achieve company goals. It can also help pinpoint specific questions to ask or provide insightful information that will help you increase employee retention. For example, data showing that employees with children who have long commutes are more likely to resign can suggest that one of their contentions is less family time, rather than a bad commute. Paying attention to data can help you address employees’ conflicts and provide a solution for a more productive workplace.
Let Us Help
In addition to providing strategies for reducing employee turnover and increasing employee retention, Imagine Better Solutions also helps with recruitment, onboarding, and orientation strategies. Let us realize your vision and help you and your company excel.
Feel free to contact us for more information at https://www.imaginebettersolutions.com/.