Talent shortages have plagued the business world for a while now and are only getting worse by the year. In fact, talent shortages have tripled over the past ten years. Attracting and retaining employees has become one of the biggest challenges for employers to overcome. According to Forbes, we’re experiencing a decade-high talent shortage as more than half (54%) of businesses worldwide report their struggle.
In the United States specifically, research isn’t looking any better. A ManpowerGroup survey revealed that as many as 69% of employers in the U.S. are having a hard time filling positions. This means skilled workers are in control, and retention of top performers is even more critical than before.
Companies will not retain their best talent if they don’t understand the essential elements of an employee retention plan. Here’s everything you need to know, from why it’s important to how you can incorporate a retention plan into your HR best practices.
Why is employee retention important?
Simply put, employee retention is crucial because you need highly skilled and qualified talent to run your business. Acquiring new talent is always an option, but it’s much more expensive, and it requires a lot more time for new hires to get to the level of existing hires. There’s a noticeable talent shortage which means there’s no guarantee you will even find the quality candidates you need to fill the position when employees leave.
The benefits of employee retention are that you don’t have to spend more money to attract new hires, and there’s no disruption in production during the replacement process.
Retention strongly relates to turnover rates (the rate at which employees leave a company). For this reason, it can be useful to determine the cost of not improving employee retention by exploring the costs of having a high turnover.
BuiltIn found that the cost of turnovers can reach 1.5 to 2 times the original employee’s salary, with specific costs fluctuating more dramatically by seniority and skill.
Which two factors drive employee retention?
There are two employee retention factors you must know about that impact employee retention. These are employee engagement and job satisfaction.
Employee engagement refers to the relationship between your organization and your employees. The stronger that relationship is, the better your employee retention will be.
For instance, an employee motivated to go to their job every day is more likely to stay with their current employer.
On the other hand, job satisfaction refers to an employee’s satisfaction with their role in the company, the people they work alongside, and the leaders that manage them throughout their workday. This is different from employee engagement because it’s more about the work environment and how much they enjoy their job rather than how committed they are to a particular company.
In other words, just because an employee is satisfied with their job does not mean they are engaged. Satisfaction is essential because an employee who enjoys working every day is much less likely to look for a new job.
What are the essential elements of employee retention?
There are several components of employee retention you’ll want to consider. Not only do you always want to keep improving employee satisfaction and engagement for employee retention success, but you also want to attract the right employees to your business to ensure they’ll be happy with your company.
Hire for Cultural Fit with Diversity
Alignment between an individual’s and the organization’s values is crucial to determining which candidates will be happy in your available position and alongside coworkers. This shouldn’t be confused with bias, such as how well personal characteristics (gender, age, etc.) align with the current workforce since that is not only discriminatory and illegal but limits your opportunities to hire incredibly diverse, qualified, and talented workers.
Develop an Extended Onboarding Plan
You need to be intimately familiar with onboarding best practices. Bad onboarding can lead to lower retention for new employees. A negative experience can become a foundation for a negative association with your company over time or even lead to their abrupt exit sooner than you expect. New hires need the proper training and guidance to fill the position and set them up for success. Saving costs by training in fewer hours will only hurt your new hires.
Train Managers in Employee Retention Strategies
When it comes down to it — employees leave managers, not companies. More than half (57%) of employees surveyed recently say that they have left a job because of their manager. To avoid the same problems in your organization, managers must know all the best practices around cultivating engagement and job satisfaction.
Invest in Professional Development
A LinkedIn report conducted in 2019 found that a staggering 96% of employees say they would stay at the company they’re at longer if it offered more opportunities for professional development. Your employees will not only appreciate the chance to learn and grow but will be more actively engaged if they know they are working towards something more in their career.
Recognize and Reward
You can keep your employees happy by showing they are valued through compensation, benefits, bonuses, and employee recognition programs. Even attempts as small as office treats show your appreciation, and employees love it. According to HuffPost, 46% of employees would feel more appreciated if their boss gave them an unexpected treat like snacks, lunches, dinners, or thank you notes. The report also found that 24% would enjoy a company-sponsored social event, such as a holiday party or happy hour, as a sign of appreciation.
Improve the Employee Experience
Employee experience refers to the experience your workers encounter throughout their time at your organization. For instance, how they were able to help and be helped by coworkers, the meaningful support and collaboration in the workplace, and other components that make someone’s job easier and more productive. According to HR Dive, 96% of talent leaders say that improving the employee experience is becoming more critical to retaining talent and growing your bottom line.
Communicate Growth Opportunities
If employees think their career progress has stagnated, they are more likely to look for a new job. To prevent this from happening, make sure you are highlighting the growth opportunities your organization offers. More often than not, employees like their job and the employers they work for but feel they need to look elsewhere if they want to move up.
Offer Competitive Employee Benefits
Great employee benefits are another component of employee retention you don’t want to slack on, or you risk losing more people. As the competition gets more desperate to fill postilions and more employees become aware of the shortage, you could lose employees who learn that other jobs have much better benefits than you. Competitive employee benefits that workers often prioritize include work-life balance, remote work, and flexible work schedules. Employees also want great rates for group health insurance and similar benefits.
Foster a Healthy Company Culture
Like you must ensure new hires are compatible with your company culture, you must also ensure your company culture is positive, diverse, and inclusive. Toxic work culture drastically lowers retention. Research shows that at least one in five employees has left a job due to toxic workplace culture in the past five years. Create a healthy culture by setting an example for your employees of how you’d like them to interact with each other
Employee Retention is Essential
With the help of a solid staff retention strategy, your company will be better prepared and able to navigate the talent shortage with fewer challenges and less stress. It can also reduce the severity of the challenge in your establishment as more existing talent remains loyal to your company and its success during the storm. You may even find that happy and engaged employees are great for talent recommendations and referrals as well.