The Great Resignation we recently experienced put employee retention on the radar for many companies. With 3 to 4.5 million employees voluntarily leaving their jobs every month, it is a sobering reminder that people will seek out other professional opportunities if they are not satisfied with their current positions.
High employee turnover and employee retention issues can be devastating for organizations. Gallup estimates that it costs businesses one-half to two times the employee’s annual salary to replace them due to hiring costs, training fees, and lost productivity.
Most of the reasons employees quit are things that employers can address head on. Competitive salary, job security, development opportunities, and frequent feedback are all things that managers can have a hand in to improve the overall employee experience.
Addressing these challenges also keeps employees engaged and motivated, which can dramatically improve team morale and productivity. Unsurprisingly, Gallup has reported that engaged employees are 18% more productive than their disengaged counterparts. Further, companies with a highly engaged workforce are 23% more profitable. Let's explore the importance of employee retention along with some of the main employee retention challenges companies are currently experiencing (bonus: we'll walk you through how to address them!).
Why is employee retention important?
For starters, employee retention refers to a company’s ability and effort to keep its people year-over-year and prevent them from looking for opportunities elsewhere. Employee retention is crucial to any organization's success. When members of a team start leaving an organization voluntarily, it can take a toll on productivity, increase unhealthy stress on remaining employees, and add hefty expenses. On the other hand, when employee retention rates are high, you also experience:
- Higher employee productivity: Long-term employees are more efficient in their organization. They know the company processes and have the experience necessary to do their job effectively and accurately.
- A more developed workforce: Employees who have been at a company for longer periods of time become subject matter experts and contribute to the collective wealth of knowledge. Experienced employees can attend to more creative and complex endeavors rather than spending time getting acquainted with company values and organizational goals.
- A healthier company culture: High retention rates are typically a great indicator of a thriving company culture. When employees are happy with their roles and teams, they are more likely to stick around for the long haul and contribute to an overall more positive employee experience.
Need another reason to aim for high employee retention at your company? We'll give you 10. Read more on the benefits of employee retention.
The cost of employee turnover
Earlier in this blog, we briefly touched on some of the tangible costs of employee turnover. These costs include:
- Benefit costs
- Hiring costs
- Offboarding costs
- Onboarding new hires
- Training new employees
Though the hard costs above are more obvious and immediately felt, the soft costs of employees quitting can have heavy ramifications for a company. These more subtle but equally important costs can include:
- Lower employee morale
- Added stress
- Weakened employer brand
- Decreased quality of work
- Lost knowledge
In today's tough economic climate, even the most successful of organizations can't afford to see their people leave for other job opportunities. By actively working toward improving the employee experience, employers can watch their retention rates soar.
When you know where your employee turnover rate stands, you can focus on improving things for your team. Read on to calculate employee turnover at your organization.
6 Challenges of employee retention (and how to address them)
As the landscape of the modern workplace continues to shift, HR leaders and managers are facing several challenges in retaining employees. If management can tackle these challenges swiftly and efficiently, they will be poised to improve employee retention rates and watch engagement and productivity rise with them.
Let's examine some of the most common employee retention challenges and how leaders can address them using people-first strategies.
1. Hiring the wrong candidate
Intuitive HR leaders know that hiring the right person for a position is a holistic endeavor. Not only does the candidate need to have the appropriate technical skills, but they should ideally be aligned with the company's mission, vision, and values. This is where many go wrong in the recruiting process; a candidate seems perfect on paper, but management may quickly realize that the disconnect between the company and the candidate is too strong.
Find the best fit (culturally and technically)
A canditate should always meet the minimum technical requirements for a position, but recruiters shouldn't disregard applicants with fewer years of experience just based off that criteria alone. Hard skills can be learned with time and mentorship, but finding a candidate that makes your team feel complete is easier said than done. Recruiters should always consider cultural fit when looking for the best person for any position.
2. Overlooking employee recognition
It's human nature to seek acknowdgment and recognition for our efforts, especially if we give it our all. If an employee feels like their work is going unnoticed, they may begin to disengage not only with their role, but with the organization at large, and look to take their talent elsewhere.
Make recognition a part of your company culture
Research shows that recognition can goes a long way in boosting employee motivation, improving performance, and reducing attrition. An organization can retain top talent by expressing gratitude for employee contributions and recognizing great work regardless of outcome.
✨ Check out these top tips for increasing recognition in the workplace to retain employees.
3. Setting unclear or unrealistic expectations
Team alignment can have a pretty big impact on an organization's performance and productivity. A disconnect between management and employee expectations can cause conflict and even create a rift in team dynamics. Without clear communication on collective objectives and company values, employees may find it challenging to stay engaged with their work.
Emphasize team alignment
Employees that are clear on what is expected of them are more likely to stay motivated and engaged with their work. Leaders should provide clear expectations, both for long-term and short-term goals, while providing regular feedback on the team and employees' performance. Remember, teams are at their best when they know what they're working toward and why, and can rally around shared goals.
4. Overlooking professional growth opportunities
Employees want to know that there is room for growth at their organization. A top performer may soon grow listless in their role if not given the chance to spread their wings and take on new challenges. Without professional development opportunities on the horizon, a company make experience lower employee retention rates.
Nurture employee career development
For young professionals today, opportunities for professional growth is non-negotiable. If organizations want to retain their valuable and talented employees, they must nurture their teams internally with career planning sessions, skills mapping, mentorship, and training and development programs. A great way HR leaders can help their teams grow is by having honest career development talks to explore future opportunities.
💪Empower people-first teams to map their skills, develop their talents, and accelerate their growth to create more fulfilling and productive workplaces with Talentscope.
5. Neglecting employee well-being
A sure-fire way to keep talented employees disengaged is by putting the bottom line before their well-being. According to Officevibe data, 47% of employees regularly feel overwhelmed at work. A business that pushes its people over the edge for the sake of profitability will watch their top performers walk away for better opportunities where they can enjoy a more sustainable work-life balance.
Prioritize health and wellness in the workplace
As the saying goes, health is wealth. Companies that support a sustainable work-life balance will be able to foster a much happier and more positive employee. By offering employees a more flexible workplace, they will be more engaged with their work and more likely to stick around for longer. Prioritizing well-being, offering generous benefits, and supporting mental and physical health will do wonders for retaining employees.
Employee wellness surveys can provide keen insights into what matters most to your people. Use these templates and surveys to get the conversation started.
6. Providing minimal or no feedback
With only 25% of employees feeling like the feedback they receive is frequent enough to help them understand how to improve, it's no wonder many workers feel unsteady in their roles and seek out other employers. When an employee has no clear idea of how they are progressing or how they can adapt, they may become frustrated and disengaged with their roles.
Make feedback second nature
The best way to get to the heart of what your people need is to ask them directly. Managers and HR teams can gather honest employee feedback by using anonymous feedback tools that allow people to express their concerns openly. But if you ask for feedback, it's imperative that you act on it and respond to it. Keep retention rates on your team high by creating strategies backed by employee feedback.
How employee engagement solutions help with retention
Employee retention is about meeting employee needs in a longterm and sustainable way. This means having clear lines of communication between the organization and its people to reach collective company goals. If employees feel valued and find their work engaging, they are more likely to stick around for the longhaul.
Employee engagement tools like Officevibe offer organizations a plethora of resources dedicated to improving the employee experience by boosting retention, engagement and productivity. By leaning into what matters most to your people, you can actively work toward fostering a healthy and positive work environment.