Did you know that 79% of business leaders believe they have a serious problem with retention and engagement, according to a recent Gallup survey?
“Companies that don’t think about employee retention, that basically rest on their laurels and think ‘the economy will take care of us, where are they going to go?’ Those are the companies that, as soon as the labor market picks back up, their turnover rates are going to go from five percent to 50 percent and it will happen overnight” (Mark Murphy, author of The Deadly Sins of Employee Retention & CEO of Leadership IQ, a DC based executive education firm).With the economy gaining momentum, employee retention is a huge issue for companies in the United States and around the world. People want to attain more career growth, employees look for work environments that are adjusting to the world around them, and sometimes management simply does not know how to keep their workforce motivated (Josh Bersin, Principal & Founder, Bersin by Deloitte, via LinkedIn). These are all factors contributing to high turnover problems as of late.
The costs associated with losing an employee can be crippling, depending on the salary of the employee and their specific job duties. Although there may not be a direct cost related to employee turnover, there are many factors that cost businesses when they lose someone:
- Posting the position on a job board or the cost of a headhunter
- Lessened productivity: who is fulfilling the duties of the open job? Important tasks will be completed but is there a task that is left by the wayside?
- Staff that take over the role of the other position become overworked, causing their own work to suffer
- Costs of onboarding and training a new employee
The Society for Human Resource Management (SHRM) estimates that in order to replace an $8/hour employee costs $3,500, when considering all costs (recruiting, hiring, interviewing, training, etc.). This estimate is one of the lowest from other well-known companies and when hiring salary paid employees, companies can expect that cost to be significantly higher.
Gallup research also found that only 13% of employees are actively engaged in their jobs and two times that many are disengaged and spread their negativity onto other employees (Forbes).
“A company is an organic entity in many ways made up of various parts which need to work in harmony to be successful. If the entity isn't ‘well,’ it couldn't prosper to its maximum. The energy of keeping a company growing and successful must be a two way street where the company gives back to those who contribute to its success.” – David Gellman
So what can employers do to increase employee retention?
- Ensure that you are ultimately hiring the right people from the get go. You want to retain the people who are valuable to your organization. Some turnover is expected but when you start the process of grooming an employee from day one to be an integral player in the company, they are more likely to stay with the company for a longer period of time (Small Business Chronicle).
- The work environment matters and should be filled with recognition, notable leadership and knowledgeable management. It should also be positive and engaging (Josh Bersin, Principal & Founder, Bersin by Deloitte via LinkedIn). If there is a lot of negativity in the company, then those negative attitudes and feelings will rub off on others and decrease the morale and productivity of employees.
- Keep in touch with employees on a regular basis (Josh Spiro, Inc.). Set up times to discuss what motivates them and areas of their work or the environment that are not motivating.
- Utilize feedback from Stay Interviews and Exit Interviews. It can tell you a lot about why employees continue to work for a company and also, why they decided to depart from the company.
- Offer morale boosters to all employees! Have team building exercises and get involved in the community (Small Business Chronicle). This not only builds an engaging workplace culture, but it also gives employees a sense of pride in their efforts to the team and as a leader in the community.
These will all assist in your organization's employee retention strategies. However, keep in mind that compensation does matter, but it does not mean everything (Josh Bersin, Principal & Founder, Bersin by Deloitte, via LinkedIn). If you are underpaying an employee they may consider leaving, but do not think that over compensating an employee will rid of the problems they see with leadership, the environment or whatever their concerns may be.
Remember the costs associated with high turnover and work to keep employees satisfied, engaged and motivated. Your organization must have an employee retention strategy in place to retain its employees. Start with a quality candidate and create a memorable first meeting with them. Give them a great experience during onboarding and act as a mentor to them as they learn and grow with the company and then remember to continue that support. As the saying goes “‘it takes a village to raise a child’ and in a sense, it takes a good organization to train and retain a good employee” (Isaac Peterson).