You may think that you have a happy and motivated team, but then one day, your star performers hand in their resignations, citing unhappiness for months before seeking new opportunities.
According to Officevibe’s 2022 data report, a jarring 53% of survey respondents admitted to having searched for new professional opportunities in the last year.
With record-high resignation numbers and leaders and managers starting to feel the stress of high employee turnover, understanding why employees leave is more important than ever. It has become clear that retaining employees requires more than just offering a livable paycheck, but modern executives still find themselves scratching their heads over how to improve employee retention.
Why you should improve employee retention
Employee turnover is expensive. According to a 2019 Gallup study, employee turnover costs American companies up to $1 trillion per year. The same study estimates that replacing a single team member can cost up to twice the exiting employee’s annual salary. Investing in employee retention efforts can help mitigate costs and save your company expenses in the long run.
Not only does turnover have a tremendous impact on costs, but it also has a significant impact on team performance and employee morale. It can take some time for a new hire to build up the skills necessary to feel comfortable in their position and keep up with existing workloads, which can lead to frustration and conflict within a team.
Top reasons why employees leave
Understanding why employees leave is crucial for creating a workplace with strong employee retention. That's why exit interviews are super important — getting to the bottom of what is causing employee turnover can help you improve employee satisfaction.
Some common reasons why employees might decide to move on include:
1. Lack of career growth opportunities
When employees feel stuck in their roles without a clear path for advancement, they may start looking elsewhere for opportunities that align with their aspirations. Offering development programs, mentorship, and regular performance reviews can help address this concern.
2. Poor management or leadership
A bad boss can be a deal-breaker. Managers play a pivotal role in shaping employees' experiences. If employees feel unsupported, micromanaged, or undervalued by their supervisors, they might consider seeking a healthier work environment.
3. Inadequate work-life balance
When employees constantly feel overwhelmed by excessive work demands and unrealistic expectations, it can lead to burnout. Implementing flexible work arrangements and promoting a healthy work-life balance can go a long way in employee retention.
4. Lack of recognition and rewards
Feeling appreciated and recognized is a fundamental human need. When employees believe their efforts go unnoticed, they might lose motivation. Recognizing and rewarding achievements, both big and small, can boost morale and foster a culture of appreciation.
5. Ineffective communication
When employees are left in the dark about company updates, changes, or their own performance, they can become disengaged. Encouraging open communication channels and regular feedback sessions can bridge this gap.
6. Cultural issues within the organization
If there's a lack of trust, respect, or inclusivity, employees may seek out companies that align with their values. Nurturing a positive and inclusive culture where diversity is celebrated can make a big difference.
Understanding the reasons for employees leaving can guide your efforts in crafting strategies that promote employee retention. You can create an environment where employees feel valued, supported, and motivated to stay.
10 Effective employee retention strategies
The link between employee engagement and employee retention is clear. According to Gallup, low-engagement teams suffer significantly higher turnover rates (between 18% and 43% higher) than their happier and more highly engaged counterparts.
From a practical standpoint, managers should combine their employee retention strategies with efforts to increase employee engagement. High engagement reduces turnover, boosts productivity and overall work performance. In many cases, employee engagement is the key to your company’s success.
Here are some of the best strategies on how to keep employees engaged, improve employee retention, and boost productivity and morale.
1. Build a positive company culture
Investing in a positive company culture fuels employee engagement and retention. When employees feel a strong connection to their company's values, they're more likely to invest their time and energy into their roles. Here's how you can foster a positive culture:
- Define a sense of purpose and align values: Define your company's core values as guiding principles. When employees resonate with these values, they feel a sense of belonging and shared purpose.
Discussing the company's values during team meetings and incorporating them into performance reviews is a great way to highlight how employees' actions align with these values, reinforcing the importance of shared principles.
- Promote diversity and inclusion: Embrace diversity and promote inclusivity within your organization to create an environment where everyone's perspectives are valued. This not only enhances creativity but also shows employees that they are appreciated for who they are.
Hosting workshops that celebrate different cultures or sessions that address unconscious bias sends a message that the company values diversity and creates an open space for learning and understanding.
- Establish a supportive and respectful environment: Encourage an environment where employees support one another and treat each other with respect. Bullying or negativity can erode morale and drive employees away, while a respectful atmosphere promotes trust, collaboration, and job satisfaction.
A good way to do this is by implementing psychological safety practices, where employees are encouraged to share ideas without fear of criticism. As a manager, you can lead by example, admitting mistakes and asking for input to cultivate a culture of mutual respect.
- Encourage strong relationships: When employees feel connected, they're more likely to stay. Host team-building activities, encourage cross-functional collaboration, and provide opportunities for employees to interact outside of work tasks.
Try organizing "lunch and learn" sessions where employees from different departments can interact and share insights.
By building a human-generated culture, you're not only enhancing employee engagement and retention but also fostering an environment where individuals thrive and contribute their best.
2. Ask employees what they need
Disengaged employees are readily apparent in companies where managers don’t ask their employees for feedback — and it’s this disconnect that results in managers getting blindsided by top employees leaving.
The best way to know what your employees need is to create feedback channels for employees. They help managers become better listeners and be proactive with issues. Employee feedback can encompass everything from the work environment to management styles and goal setting — and can impact everything from performance to retention.
A great way to get honest feedback from employees is to use anonymous feedback tools like surveys. Surveys can range from five-question pulse surveys to long-form questionnaires that cover the four corners of the employee experience.
Establishing a positive feedback culture in a company can help managers build relationships with their staff members, leading to higher engagement and improved employee retention.
Weekly feedback box
Old school, but it works! Place a physical or virtual feedback box in common areas where employees can drop in suggestions, concerns, or ideas anonymously. Managers review and address submissions in a weekly meeting, showing that they value employee input and are responsive to their needs.
3. Follow through on employee feedback
If you’ve asked employees for feedback, make sure to follow through. There’s nothing worse than asking employees for feedback and then ignoring it completely. This can tank morale as it becomes clear that you’re just paying lip service to employee engagement.
For example, establish a Feedback Action Board, whether physical or virtual, showcasing recent employee feedback and the resulting actions taken? Complement this with a Monthly Feedback Roundup to discuss feedback themes and proposed solutions. This ensures transparency, demonstrates the seriousness of feedback implementation, AND reinforces a culture of open communication and accountability.
By taking feedback seriously, you show employees that you value their input and are willing to put in the time and effort. Listening to them can help your team achieve its business goals faster and more effectively.
Shift from sporadic feedback to a structured continuous feedback loop. By engaging employees in ongoing conversations, you create a workplace culture where their voices are consistently heard and valued. It's a great feedback system that easily feeds into other human resource management activities like performance reviews.
4. Set clear expectations
Setting clear expectations is foundational for a positive work experience. Employees that have clear objectives and know how to achieve them are usually more motivated and productive.
Here are some general guidelines to help you set expectations that get everyone on the same page:
- Develop goals collaboratively.
- Make expectations as clear as possible and confirm understanding with all involved parties.
- Foster excellence by encouraging creativity and asking for more than the bare minimum.
- Individualize expectations according to employee strengths.
5. Celebrate successes
Almost two-thirds of employees feel that they don’t get enough recognition at work. Even worse, employees who don’t feel appreciated are twice as likely to quit.
Implementing employee recognition programs may lead to gains in employee engagement and employee retention. Some tips on celebrating success in the workplace include:
- Taking time to thank team members for their contributions and providing a platform for their peers to do the same
- Tailoring rewards for important milestones to the individual or team
- Highlighting successes during performance reviews and other formal occasions
Recognize employee success and make it genuine. Trying to encourage employees with traditional and potentially outdated rewards such as gift cards or “employee of the week” posters often feels more condescending than motivating.
6. Focus on professional development
The key to strong employee retention is to focus on their development. High-performing employees may become bored with their work, especially if they aren’t feeling challenged or don’t see a path forward in the company.
It’s vital to talk about professional development during one-on-ones. Find out what the employee wants from their job as well as their future goals. Some employees may need leadership development opportunities that will transform them into successful business leaders. Others may benefit more from mentorship programs or formal training that fosters professional growth and expertise.
Continuous development ensures that employees stay motivated and engaged with their work and are ready to meet any new challenges.
The role of performance management in professional development
Performance management practices play a pivotal role in fostering employee development. There are many ways to ensure your performance management process is as effective as it can be. We suggest starting by building a strong performance management plan.
It's essential to remember that regular performance evaluations offer a structured platform for managers and employees to assess progress, identify strengths, and pinpoint areas for growth. Frequent constructive feedback aligns with that, and fuels improvement by addressing specific behaviors and providing guidance. Clear goals that are re-established at need give employees the direction they need to feel motivated and achieve tangible outcomes.
Setting SMARTER goals: You should always collaborate with employees to set SMART goals. Collaboration on this foundational element gives employees clarity on expectations and empowers them to track their achievements and growth, with a view on milestones across a timeline, even more.
Ultimately, these should all help create individualized and adaptable career development plans to empower employees to align their aspirations with organizational goals, paving the way for continuous growth and advancement.
7. Support a healthy work-life balance to reduce employee turnover
Company culture that encourages employees to devote 100% of their attention to their work at all times, even requiring working outside of office hours, risk creating a burnout culture that will ultimately result in an unhappy workforce and higher turnover rates.
It's vital to prioritize your employees' overall well-being and provide support beyond work tasks. So how do you, as a manager, promote a productive work-life balance, especially as 47% of people say they regularly feel overwhelmed at work?
Here are some of our top tips to help your employees find a comfortable work-life balance:
- Offer flexible schedules and remote work options
- Use one-on-one meetings to review workloads
- Lead by example; don’t email employees outside of work hours
- Make sure employees take mandatory time off
- Increase parental support for both mothers and fathers
In 2023, work-life balance also translates in promoting well-being, to support employees in their physical and mental health.
This can come alive through initiatives like wellness programs, offering resources for managing stress and workload, and fostering an environment where employees feel safe seeking help when needed.
These actions can create a workplace where people are not just productive but also truly thriving — and link back into building a positive work culture!
Host stress management workshops: With the help of HR experts, organize workshops on stress management techniques, time management, and resilience-building. As a manager, you can encourage participation and set the tone by attending.
8. Implement effective leadership and management practices
Good leaders aren't just bosses — they're the coaches who always have their employees' backs. They cheer them on in their successes, and help them surmount performance struggles.
As a manager, you'll figure out what your management style is over time. Just remember that when leaders communicate clearly, offer regular feedback, set realistic expectations, empower their teams, and proactively address challenges, it creates an environment where employees are valued and feel motivated to stay.
Great managers regularly engage in open dialogue with their teams. This can include weekly check-ins to discuss progress, concerns, and successes, fostering an environment of transparency and engagement. Showing you are available to talk is also crucial. You've probably heard of the open-door culture. When employees know their leaders are accessible, this also builds trust and confidence.
Conflict resolution is also an important skill to hone because difficult conversations don't have to be difficult. Effective leaders should create a safe space for employees to express concerns, mediate conflicts, and find solutions collaboratively.
9. Have a clear onboarding process
A haphazard onboarding process can drive a new employee away from your company. According to SHRM, your company can lose up to one in six new hires due to poor onboarding within the first three months.
A good onboarding strategy should:
- Create and reinforce a good first impression
- Set clear guidelines for the first week
- Establish expectations for the first month as well as for the new employee’s future in the company
- Connect new employees with their team and mentors and foster strong relationships
- Provide opportunities for feedback on their new employment, company culture, policies and procedures, and even the onboarding itself
Creating an engaging onboarding journey with softstart
Onboarding is like the first level of a game — you want new players to feel excited, not lost. A well-structured onboarding process lays the foundation for a long-lasting relationship between the employee and the company.
A tool like Workleap Onboarding can help supercharge your onboarding process by automating tasks that are easily forgotten and making onboarding activities more interactive. The software can help you elevate onboarding fundamentals, like:
- Warm welcomes via video to make day one memorable, even remotely. Being greeted by the team the team with personalized messages helps employees be made to feel special and considered.
- Having a pre-set buddy system so new recruits have somebody to show them the ropes. It's like having a co-op player to help them navigate the game.
- Prioritizing feedback by regularly asking for their input on their onboarding experience. Softstart sets up automatic 1:1s and pulse surveys so that feedback is never deprioritized.
10. Pay a fair salary
Paying employees fairly isn't just about numbers — it's about showing that you value their hard work.
How to ensure you're paying your employees a fair salary:
- Stay up to date: Regularly review industry standards and salary surveys to make sure your compensation aligns with the market.
- Transparency matters: When employees understand how their pay is determined, it builds trust. So, demystify the process and show how their salary is calculated.
- Performance bonuses: Link bonuses to achievements and performance. It's like getting extra points for acing a level in a game!
- Benefits package: Offer a robust benefits package that includes perks like health insurance, retirement plans, and wellness programs.
- Regular reviews: Conduct periodic salary reviews. It's like leveling up — an acknowledgment of growth and dedication.
Competitive wages are essential in the recruitment process, especially for new employees seeking out financial stability. But what about long-term employee retention?
Interestingly, increasing pay has diminishing returns as an employee retention strategy. Once you’ve reached a point where employees can be financially stable, extra benefits and pay do little to alleviate other factors that affect employee retention.
Simply increasing pay is like putting a plaster over an open wound: it may stop some of the bleeding, but it’s much better to address the underlying causes of employee turnover.
Monitor and measure employee engagement for successful employee retention strategies
Employee engagement is like the heart of a solid retention strategy. And for that, the best managers have a trick up their sleeves — engagement surveys and collecting important metrics to help them understand how engaged their team is and how to improve engagement even more.
Tools like Pulse Surveys help peek into how employees are doing. They reveal all the good stuff and any hiccups too. Armed with these insights, managers can adjust their plans to keep everyone happy and excited to stay in the team.
We have to agreed that employee engagement is hard to quantify, as there are so many different layers that can impact employees, and each experience is unique. But there are a key metrics you can look at, including peer relationships and employee wellness, which are the pillars of employee retention.
Work smarter, not harder with the right employee engagement tools
Higher engagement can reduce employee turnover and boost your employee retention rate, but it requires a lot of work and buy-in from all levels of the company.
Having an employee engagement solution like Officevibe will make it easier for managers to connect to their employees, collect honest feedback on company issues and employee concerns and get the most out of their employee retention strategies.
With Pulse Surveys, anonymous feedback tools, and one-on-one meeting features, Officevibe helps develop relationships, improve employee retention and engagement, and streamline the implementation of employee retention strategies. Make the move to a feedback-focused workplace today!