With hiring in expansion mode in every sector, managers are preparing for an all-out battle for talent. How do you lower your risk of losing top staffers to the competition? Activate a plan to cut company turnover with our six tips for improving employee retention.
But First, Understand What’s at Stake
Employee turnover is costly. SHRM, the Society for Human Resource Management, puts the direct replacement costs as high as six to nine months of an employee’s annual salary. Executive replacement can be substantially higher: Some studies estimate replacing a C-suite employee costs double their annual salary.
Why is it so expensive to lose employees? Hiring a replacement requires you to advertise the position, interview, and screen candidates. Then there is the time and expense of onboarding and training.
There are subtler costs, too. New employees take time to achieve full productivity. Morale can take a hit when a teammate jumps ship. Expertise can be lost. Customers can be dissatisfied with a new arrangement. Corporate culture can shift in unexpected ways. There is also the domino effect, which is one resignation leading to the next.
The benefit of retaining current employees is clear, but the reality of the marketplace favors the employee, who is primed to find a better position after putting off job hunting during the pandemic. SHRM reports that a turnover tsunami is gathering speed: Half of your staff is actively looking for a new job, and 87% would leave your company if the right opportunity came along, according to a LinkedIn survey.
If most of your staff already has one foot out the door, how can any company stem
the tide of turnover? Time for the Top Six Tips for retaining employees.
Tip No. 6: Adapt to a Permanent Hybrid Workplace
Job hopping is usually prompted by an employee’s desire for better pay, a promotion, professional development, or a family move. Job hopping in 2021 has the complicating factor of a workforce demanding the remote option.
Overall, 65% of employees want to continue working remotely post-pandemic, with another 33% preferring a hybrid arrangement, which involves some on-site hours and some at home. Remote work offers better work-life balance and savings in cost and time for employees. For employers, hybrid scheduling results in lower turnover, a larger and more diverse pool of potential hires, and reduced operational costs.
Still worried about your staff slacking off-site? A two-year analysis of remote work found that productivity actually improved while employees worked from home. If your
company can permanently alter its workplace configuration, it could be a big plus
for your business outcomes – especially employee retention – to keep a hybrid work
pattern for good.
Tip No. 5: Pay Employees More
Know the top three reasons your employee will accept a job elsewhere?
- Better work-life balance
- Professional development
- Higher compensation
PayScale reports that an employee who stays in a current job can expect an annual base pay increase of less than 3% or no cost-of-living increase at all. Wage stagnation or loss of bonus is often the catalyst for an employee to freshen up that online professional bio.
It’s important to recognize, though, that not every employer is pinching pennies. In an Indeed survey, 54% of employers say they’re optimistic about providing salary increases for their staff in 2021. Trust that your employees will be aware that other companies plan to pay better rates this year. Consider the merits of tweaking payroll preemptively.
If adjusting salaries upward is not within reach, find other forms of compensation
to aid in staff retention, such as paid time off, paid parental leave, extended health
benefits, and retirement plans.
Tip No. 4: Take Diversity, Equity, and Inclusion Seriously
If fairness, readiness to innovate, higher revenue, and the ability to draw on a larger talent pool does not provide ample motivation to expand your workplace’s efforts to become more inclusive, reflect on your turnover rate. When employees trust that their organization values diversity and treats its staff and customers fairly regardless of race, gender, sexual orientation, or age, they stick around. In fact, staff members in an organization committed to inclusion are 5.4 times more likely to remain an employee for the long haul.
Maintain your talented staff by hiring more broadly and taking active steps to build
an inclusive culture with fair policies and equitable resources for all.
Tip No. 3: Improve Your Onboarding Experience
Experts estimate that 20% of turnover can be traced to the first 45 days in a new position. A stressful or incomplete onboarding experience plays a big role in determining whether a new hire sticks it out. Onboarding also influences an employee’s willingness to recommend the company online and to their friends and colleagues.
How can you wow incoming employees?
- Make onboarding an ongoing experience, rather than a one-day overload of information.
- Use multiple approaches, from digital communication to get-to-know-you lunches.
- Encourage questions, especially in a virtual environment.
- Provide assignments early so new hires feel like they’re contributing and valued for their expertise.
- Connect new hires to a built-in network of half a dozen people (from managers to direct reports to clients) who can welcome them and give them useful feedback.
Another compelling statistic in support of paying closer attention to those first
45 days: Organizations that standardize their onboarding process report a 50% better
new hire retention rate than those without an onboarding strategy.
Tip No. 2: Promote from Within
Skipping over a qualified internal candidate for promotion in favor of an external applicant is a golden ticket to turnover. In fact, being passed over for an outside hire is the reason for quitting for 35% of employees. On the other hand, effective and fair promotions make employees around twice as likely to plan a long-term future with their organization. As competition for talent increases, it makes sense to consider a policy encouraging promotions within.
“Within” requires clarity, however. Don’t allow proximity bias to favor on-site employees
over those working from home. Doing everything you can to promote your remote employees
will certainly do no harm to your retention rate.
Tip No. 1: Prioritize Professional Development and Training
When employees know you are committed to helping them grow and develop professionally, it’s a powerful incentive to stay with the company. If you are not investing in continuing education, it could be reflected in your employee retention rate. Lack of career development was cited by 40% of departing employees in a Global Talent Monitor survey.
Make continuing education a mainstay of your benefits package. Also, allot time and
budget for virtual conferences, provide tuition reimbursement, or pay for leadership
or certification courses.
Add USF Training Programs to Your Employee Retention Plan
Demonstrate to your current employees and potential hires that your company values the contributions of its staff. By investing in their continuing education, you’re signaling that you expect to build a long-term relationship with them and that you have faith in their future success.
USF’s Office of Corporate Training and Professional Education provides high-impact programs to help your staff members expand their professional skills. Plus, they’re delivered
in a convenient live online format designed for your employee’s busy schedule.