In 2021, the world experienced the Great Resignation, where many employees voluntarily exited their jobs. A study showed that nearly 63% of such employees cited low pay and lack of opportunities for advancement as the key reason they quit their jobs in 2021. High employee turnover impacts both small businesses and large multinational corporations. In such situations, employers lose some of their top talents.
With the escalating interest in remote work and a highly competitive jobs market, employment trends are shifting too fast. Now, employees have a wider range of potential employers to evaluate and need help to retain some employees. Therefore, employers and Human Resource (HR) leaders ought to develop strategies to impact employee retention and reduce employee turnover effectively. Here is what you need to know about employee retention strategies in 2022 and beyond.
Why Does Employee Retention Matter?
Whatever type of employee turnover, voluntarily or involuntarily, always has a cost, especially when an employer loses top talent. For this reason, employee retention should be a priority for any business. Below are four reasons why employee retention matters:
1. The cost of losing an employee is huge
Losing an employee means leaving a vacant role. It takes time, money, and effort to recruit, hire and train another person to fill the position. According to Gallup’s conservative estimate, the cost of replacing an individual employee ranges between one-half to two times the employee’s annual salary. Notably, it may take a while before a new hire equals the employee’s productivity level who left. According to a survey, it typically takes eight months for newly hired employees to reach total productivity.
2. Low retention rates impact other critical aspects of a business
Low retention rates could negatively impact remaining employees’ motivation, productivity, and performance. If high employee turnover is not well managed, it could lead to further turnover.
For instance, when an employee leaves, the remaining team members must take on their roles. Some employees may feel overwhelmed by extra roles and responsibilities. Consequently, if it takes longer to hire a replacement, other employees may become less productive and efficient. Worst of it, they may opt to resign.
3. High employee turnover can negatively impact your brand
Employees serve as valuable brand ambassadors for a business. Therefore, when a company experiences a high employee turnover and a bad relationship with former employees, they’re more likely to share negative experiences, thus putting employers and consumer brands at risk.
4. High employee retention boosts employee engagement.
Employee engagement and retention are mutually dependent on each other and often profoundly determine business success. HR managers and business owners must maintain high employee retention rates to keep employees engaged. Consequently, highly engaged employees perform better.
What is a Retention Strategy?
A retention strategy is a plan created by an organization and its core leaders, such as the HR managers, to reduce employee turnover, increase employee retention, prevent attrition, and enhance employee engagement. A retention strategy can help prevent most of the turnovers in an organization. However, some turnovers are inevitable.
8 Effective Employee Retention Strategies
- Hire the right people
Employers need to ensure they hire the right people from the start. They must consider hiring talents that align with a company’s mission or culture. Why? Such candidates are more likely to stay longer in a company once they become employees. More importantly, they’re easier to work with and significantly contribute to a business’s overall success.
Hiring the right people should also be accompanied by an exceptional onboarding experience that teaches new employees about their roles, company culture, and how they can contribute and thrive in a company.
- Build employee engagement
Employee disengagement is one of the causes of high employee turnover and vice versa. Therefore, building employee engagement is one of the effective strategies for employee retention. Employee engagement gives employees a channel to influence decisions that affect their work. More importantly, it makes them happier, thus increasing their commitment to providing their best at work.
- Create and support an organizational culture that accommodates employees
Organizational culture can significantly impact employee retention. A survey found that 77% of employees consider a company culture before applying. It means cultivating a friendly organizational culture could greatly enhance employer-employee relationships. Additionally, a great culture enhances customer experience.
- Reassess employee compensation and benefits
Creating a great culture is not enough to retain great organizational talents. Employers have to pay their employees competitive compensation. Inadequately compensated employees will likely leave an organization for better pay in a different company.
Also, showing appreciation to employees through benefits could help retain talents. A 2021 Engagement and Retention Report showed that 19% of employees would stay at their organization if they offered better benefits.
- Embrace and prioritize a healthy work-life balance
Employers and managers need to assign employees with reasonable workloads and work hours. More importantly, employees need time to attend to personal and family needs. The goal is to strike a balance between the employee’s work life and personal life. It also entails embracing employee well-being to make employees feel genuinely cared for by an organization.
A healthy employee work-life balance would profoundly improve employee retention in an organization.
- Recognition and appreciation
It’s natural that human beings feel good and valued for being appreciated and recognized for their work, regardless of how small it is. Therefore, an organization’s recognition system for appreciating milestones and achievements enhances employee motivation, thus resulting in high employee retention.
- Invest in employee growth opportunities
Employees value professional growth in an organization. Therefore, sponsoring helpful educational and certification programs or professional workshops to enhance their skills could positively influence employee retention. It makes employees feel that the organization cares for them in return for their work.
- Give employees the right tools for success.
One way to increase employee morale and productivity and enhance employee retention is by providing employees with the right tools for a project or other assigned tasks. Tools mean resources, information, equipment, devices, software, IT infrastructure, etc. Such tools help the employee work effectively and remain productive. Consequently, they’re likely to stay for long in an organization.