Why Employee Retention is Important to Your Business
Focusing on employee retention makes a huge impact to your bottom line.
Retaining Your Most Valuable Employees
When an employee chooses to leave, it is costly for your company in a multitude of ways. Studies show the monetary cost your company incurs begins around $3000, but may easily climb to over twice the salary that employee had been earning, as you look to hire a replacement. Think about the resources it takes as your company moves through the process of recruiting, selecting, and training a new hire. Monetary costs start adding up the moment the employee gives notice, but costs to the company far exceed being simply monetary.
All the knowledge and skills that the employee contributed on a daily basis are gone, thus weakening the overall effectiveness of the company. There is also an immediate cultural impact on the company as other employees are often directly affected by the loss. Risks include overall reduction in morale, lowered productivity, and decreased engagement, as remaining employees are often called upon to complete projects or cover shifts left by the lost employee. There is always the risk that they will then feel over-worked or underappreciated, which may lead to them deciding to seek “greener pastures” as well, creating a snowball effect in the area of employee turnover.
Your company can work to lower that turnover and the costs that it creates by shifting the focus to employee retention. There are a ton of theories out there about how companies can best create an environment that is conducive to retaining valuable employees, so we have narrowed that field and included what we feel are critical points to focus on regarding employee retention.
Step Up Your Selection Process
When you select employees, look far beyond their skill set and how they perform during the interview process. Take the extra steps to make sure they are a good fit with the entire company and, in particular, managers and co-workers they will work closely with on a daily basis.
Always be looking for candidates whose resume shows a history of longevity with former employers, as they already have a good track record of company loyalty. Give yourself time to take an in-depth look at your candidates and you will save yourself time in the long run by reducing the likelihood that you will eventually lose them. Select only the candidates in which you see a high potential to grow within the company.
Regardless of your interest in the candidate, they may not be interested in working for your company if you are not offering a competitive salary and benefits package. Depending on the size of the company, this package may include health/life/dental insurance, retirement plans, vacation/personal/flex time, stock options, bonuses, and other perks/incentives.
Offer the best package you can in order to be competitive within your company’s sector of industry and geographical location. Be as transparent as possible regarding what you can offer and what level of performance you feel is necessary for the type of package you would provide.
Have a Good Core Team in Place
We’ve all heard the old saying that people tend to quit managers, rather than jobs. No one ever seems to debate that point, so good management and a solid team is a top priority to help retain valuable employees. Make sure your management team is well-trained and supported, as they are who employees deal with daily and must be a positive representation of the company.
A good Human Resources department is also a key to providing employees with any support and assistance they may need. HR is generally the first impression a prospective employee has of you company, and it should be a stellar one.
Be Clear and Attentive
Conduct reviews or evaluations as often as possible so the entire company remains on the same page. Many companies utilize a yearly review for each employee, but those tend to be focused on pay raises and have the potential to turn negative, as performance is addressed. Twice a year would be adequate for these evaluations to be useful for the purpose of employee retention, and monthly would be the maximum necessary.
Take time to understand what employees like about the company and why they choose to work there, while gathering feedback about what areas may need some attention in order to keep employee satisfaction levels high. Be clear about and prioritize your goals for the company and for each employee. Explain how you plan to achieve these goals while encouraging honest opinions and ideas from all employees. Be sure to make it a positive conversation, with an added element of coaching, or an informal meeting.
When you keep a reasonable “open door” policy, employees feel empowered to discuss concerns as they arise with HR or management, which enables the company to resolve issues before any escalation.
Provide Training and Facilitate Advancement
Allow for employees to have room to grow within the company. Not every employee strives to become a manager, so provide a plan for advancement in which management is not the final goal. Providing up to date training for positions held and cross-training for other positions is a winning proposition for your company and is a way for your employees to easily expand their skill sets.
Allowing time for outside training programs, classes, and lectures is also a good way for employees to gain fresh perspectives and new ideas to utilize within the company. Of course, promoting from within the company is always a great way to show employees that they are valued and respected members of the team.
Make it clear that achievements will always be acknowledged and often rewarded. Bonuses for productivity are a strong motivator for employees, and contests with prizes are a way to inject some fun into the usual “daily grind”.
Keep in mind that everything doesn’t always have to revolve around money and recognition of a strong performance in any way is generally an appreciated and motivational gesture.
Keep a Safe and Comfortable Workplace
It seems so simple that it is often overlooked but providing a workplace that is conducive to productivity is good for everyone. Make sure to keep work areas clean, at a proper temperature, and well-lit. (Check out our blog Creating a Functional Workspace for more ideas.)
Additionally, keep all equipment maintained and all necessary supplies on hand. Seemingly minor things like a non-working light or a climate control issue can make an employee chronically uncomfortable. When issues are left unaddressed, those minor distractions can turn into big problems for employees over time and lower company productivity and morale.
Try to invest in the safety of both your company and your employees however possible. Having a safety manager is ideal, but that may not be feasible for your company, so a good security system, well-lit exterior, and strong set of safety rules are good ways to prevent crime and accidents on the premises. (To learn about protecting your company from a tech standpoint, please read our blog on the Top 7 Cyber Security Tips for Your Business.)