Keeping talent happy: Strategies and plans for effectively retaining employees

What is employee retention?

Employee retention is top of mind for many business leaders. In fact, retaining talent and recruiting are often their number one priority since employees are an organization’s greatest asset.

Employee retention is an organization’s ability to maintain its current workforce and reduce turnover. This often encompasses a combination of employee retention strategies and programs, several of which are outlined below. Retention is closely tied to employee experience since it either positively or negatively impacts an employee’s intention to stay with an employer.

Why is employee retention important?

The ability to retain employees and prevent turnover is a defining characteristic of every organization. Retention rates are typically measured as a percentage and a rating of 90 percent or higher is a favorable rate. A high retention rating is a sign of a strong company culture. Conversely, high turnover is usually a negative signal about the health of a company.

Retaining employees is important to organizations for several reasons. One of the most important is how it impacts the bottom line. The cost of replacing employees who leave voluntarily is significant—with estimates totaling six to nine months of a departing employee’s salary. An effective employee retention program can save organizations from productivity losses resulting from turnover.

Additional reasons why retaining employees is important include:

Team building. Retention benefits team building by allowing time for team members to build trust.
Cohesion. Retention also impacts cohesion since maintaining employees keeps managers and teams together.
Trust. Employees who trust their leaders are more likely to stay long-term and withstand any challenging times.
Productivity. Productivity losses can add up quickly when employees leave the company.
Institutional knowledge. The loss of institutional knowledge might not be the first thing that’s considered when employees leave, but it’s becoming increasingly important.
Costs of replacing/training new workers. Onboarding and training costs for new hires can be significant.
Customer impact. Employee turnover will negatively impact customer experience.

What are the benefits of employee retention?

Employee retention comes with many benefits. For one, it’s an effective way to enhance recruitment since a high retention rate is a positive sign for new hires. Plus, talent retention boosts employee morale, and helps build teamwork and cohesion.

Effective employee retention maintains efficiency and productivity levels since roles stay filled and projects move forward. Another important benefit is the competitive advantage that comes with retaining your top talent.

Other benefits of employee retention include:

Efficiency. Longer-term employees know company processes and can provide customers with efficient services and support.
Productivity. Experienced employees tend to be more efficient at their jobs.
Employee morale. Employees who have a sense of belonging typically have higher morale and take more pride in their work.
Reduced staffing costs. Retaining employees is the most cost-effective way to curb recruitment and training expenses.
Better customer experience. Customers or clients like building relationships with employees so maintaining low turnover contributes to consistency.
Higher revenue and return on investment. Studies show a correlation between increased revenue and lower employee turnover.

Reasons for employee turnover

There are many reasons for employee turnover. One of the most cited reasons is low or inadequate salary. Studies and surveys of employees consistently point to compensation as the top reason for why they leave a job. Following closely behind is insufficient benefits and rewards.

Lack of career growth is also emerging as a top reason employees leave jobs. According to a September 2022 Microsoft Work Trend Index Special Report, if employees can’t learn and grow, they’ll eventually move on.

The new world of remote or hybrid work means employees are also prioritizing work-life balance and emphasizing doing more meaningful work. That’s why an increasing number of employees cite burnout, stress, and other wellness-related reasons for why they change jobs.

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Some of the reasons for employee turnover include:

Pay/benefits.
Burnout.
Feeling undervalued.
Poor work-life balance.
Lack of flexibility.
Lack of company culture.
Non-flexible work arrangement.
Lack of recognition.
Poor management.
Concerns about the company’s health.

Employee retention strategies

Companies are emphasizing employee retention strategies in different ways. One of the more effective strategies begins with successful employee onboarding and training. By hiring employees who fit their culture, employers bypass the added costs associated with employee turnover.

Another important strategy for talent retention is ensuring that compensation packages are competitive. Benefits also play a key role in employee satisfaction and retention because they’re designed to support and engage employees.

Employee retention plans can play a pivotal role in helping attract and retain employees, and in turn, they help reduce turnover and its related costs.

When an employee retention program works, it often boosts productivity and promotes higher levels of engagement. The ripple effect is that it improves revenue also.

Additional employee retention strategies include:

Onboarding. Proper training and orientation play a pivotal role in onboarding new hires.
Recognition programs. Formal rewards systems and recognition programs show employees they are valued.
Compensation. Competitive compensation means employers should evaluate and adjust salaries regularly.
Continuous feedback cycles. Instead of annual performance reviews, companies are opting for more frequent meetings with employees to deliver feedback and discuss advancement opportunities.
Benefits. Providing robust benefit options contributes to employee satisfaction levels.
Training/career development. Investing in workers’ professional development opens doors for further advancement within the company.
Perks. Beyond benefits, perks such as flexible schedules and home office stipends are attractive to new hires.
Mentorship. Formal mentorship programs are beneficial to both new and existing employees.
Employee experience tools and platforms. Investing in technology to enhance your employee experience often pays dividends.
Wellness offerings. Prioritize employee wellbeing by offering programs like stress management, retirement planning, and fitness class reimbursement.

Employee retention metrics and measurement tools

As companies look to boost retention, they’re turning to employee retention measurement tools and metrics. But knowing how to retain employees depends on learning what motivates them to stay. This is typically an on-going process that involves collecting feedback through surveys.

Prioritizing talent retention means employers are using tools like employee engagement platforms and applications to measure and increase job satisfaction. Another tool built for employee retention is human resources software designed to organize and streamline processes such as managing employee information.

Tools like corporate wellness software give organizations the ability to organize, manage, and oversee programs promoting healthy lifestyle choices. While this might not rank as high as other benefits and perks, supporting workers with wellness tools typically improves talent retention.

Companies who support volunteer programs can also boost their employee retention metrics. Volunteer programs could improve an organization’s image, which may in turn enhance retention and recruitment.

Conclusion

With employee retention a top priority for business leaders, it’s important to foster a culture of care and trust. Meeting the needs of a more digitally connected, distributed staff requires closing the feedback loop by collecting their input regularly. But it’s not enough to listen, that feedback must be used to drive change. This has become a key factor in retaining talent. Which makes the tools and platforms for collecting feedback increasingly imperative, and also fundamental to gaining and maintaining a competitive edge with new and existing employees.

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Business Insights and Ideas does not constitute professional tax or financial advice. You should contact your own tax or financial professional to discuss your situation.