Employee retention and keeping your best talent is always one of the biggest and most important challenges that every organisation faces. There are a whole host of reasons why it is becoming more difficult to keep hold of your talent including flexible working arrangements, well-being considerations, lack of recognition, poor leadership, inadequate perks, being overworked and limited career paths, to name a few.
So, what can be done to improve employee retention?
This guide looks at some of the most effective employee retention strategies that you can implement and why staff retention is mission-critical for the success of your organisation.
What is Employee Retention?
Employee retention — sometimes known as talent retention — is an umbrella term that refers to all the efforts an organisation takes to keep its employees from jumping ship and seeking a job elsewhere.
A high employee retention rate generally signifies that you’ve created a positive company culture. In other words, you’re running a business that other people want to be a part of.
How to Calculate Your Employee Retention Rate
Where does your company stand regarding its employee retention rate? Here’s a simple process you can use to calculate it:
- Choose a specific period (a year, a quarter, etc.)
- Identify the number of employees who stayed on during that period (this number will be “X”)
- Identify the number of employees who were present on the first day of that period (this number will be “Y”)
- Divide X by Y (the result will be “Z”)
- Multiply that number by 100
For example, let’s say that in a one-year period, your company lost 20 employees (meaning 80 stayed on). At the beginning of the year, you had 100. That means your employee retention rate is 80%, and your staff turnover rate is 20%.
What employee retention rate should companies be aiming for?
Companies should always aim for a lower turnover and a higher retention rate. For reference, in the UK, the average employee turnover rate is 15% (and the retention rate is 85%).
Why is Talent Retention Important?
Some employers might not understand at first why employee retention matters to the success of their company. Isn’t there always someone else looking for a job?
That’s often the case, but that doesn’t mean you should be comfortable with losing employees left and right. A low employee retention rate and a high turnover rate can impact your bottom line, hurt your company’s reputation, and create a hostile work environment for the remaining team members.
What are the Benefits of Staff Retention?
When you make it a priority to improve employee retention, you, your employees, and your business all benefit. Here are some specific benefits you’ll experience:
A high employee turnover rate is expensive. The recruitment costs associated with replacing an employee can easily set you back hundreds or even thousands of pounds.
For example, recruitment agencies typically charge between 20 and 30% of the position’s final salary. The average salary in the UK is £33,000, so that means you’d spend between £6,600 and £9,900 on recruitment alone should you use an agency.
Even if you advertise on job posting sites like LinkedIn, you’re likely to spend money on increasing your ad’s visibility and connecting with your target recruits faster.
When you limit the amount of recruiting you have to do each year, you avoid having to invest money in hiring new employees to replace those you’ve lost.
Improve Customer Service
Customer service is a critical part of any successful business.
When you’re running your business with a skeleton staff because you have a high turnover rate, it’s harder to take good care of your customers or clients. Poor customer service, in turn, could cause them to abandon your brand and look to your competitors instead.
On the flip side, a high employee retention rate can ensure someone is always available to help your customers and provide them with a high-quality service.
All of the teams that keep your company running — from the customer service team to the sales staff — will have an easier time completing tasks, meeting deadlines, and maintaining quality work if your business isn’t losing employees.
If you have a sufficient number of people helping you run your business, and they don’t have to waste time training and getting new team members up to speed, they can also do their jobs better and produce better results.
Increase Company Earnings
When productivity improves, your company’s earnings will naturally follow suit. If everyone is firing on all cylinders, meeting deadlines, and providing high-quality customer service, you’ll likely see an increase in sales and see the business’s revenue start to grow.
For long-term profitability and increased savings, you must prioritise employee retention and work to reduce employee turnover.
Improve Company Culture
If a business has a high employee retention rate, it’s safe to assume it also has a supportive, uplifting company culture.
After all, most people don’t want to remain loyal to a company that doesn’t make them feel appreciated, that doesn’t compensate them well for their contributions, that overworks them, etc.
When you strive to create a positive company culture and ensure your values are reflected in the way you treat your employees, you’ll be rewarded with more loyal employees and reduced turnover.
Boost Employee Morale
Similarly, among companies that prioritise employee retention, employee morale also tends to be higher.
It’s not hard to understand why this is the case. People are more likely to be happy, feel satisfied with their job, and have a positive outlook when they work for a business with a positive company culture — and an employer who cares about retaining employees.
Last but not least, employee retention matters because it can improve your recruitment efforts. Although you’ll find yourself recruiting less when you improve employee retention rates, you’ll still run into situations when you need to hire someone new.
If your company is known for providing a positive work environment and having a low turnover rate, job seekers will be more interested in working for you. You’ll have access to a larger pool of talented candidates, meaning you’ll have plenty of top-tier workers to choose from.
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20 Strategies for Improving Employee Retention
To experience the benefits listed above, you need to have a clear plan to improve staff retention. Here are some practical strategies you can start implementing today:
1. Improve Employee Engagement
The UK generally has low employee engagement numbers. Just 9% say they feel enthused by their work and workplace!
If you can help your employees feel more engaged in their work, they’ll be more inclined to commit to your company and stay loyal.
One effective tactic for improving retention is encouraging employees to set goals, whether they want to develop a new skill or work toward a promotion. Each of your employees should have a personal development plan that they are working to that highlights their unique goals. Check in with individuals regularly to see how they’re progressing, and offer support to help them achieve their goals. We’ve got 100 employee engagement ideas that can help you.
2. Offer Recognition and Rewards
You can also boost engagement and improve morale by offering more employee recognition. For example, offer shout-outs to the employees who go the extra mile or accomplish a challenging task.
By rewarding people for their efforts, people will feel incentivised and interested in working hard and being more productive.
Rewards don’t have to be expensive, either. Simple things like an extended lunch break, a gift card to a local restaurant, or the option to work from home can all be powerful motivators.
3. Improve Your Hiring Process
Sometimes, a high employee turnover rate is the result of a flawed hiring and talent management process.
If you aren’t careful about choosing the right people when recruiting, you might end up with employees who aren’t a good fit for the company. As a result, they may struggle to be productive, meet expectations, and collaborate well with other team members.
Take your time during the hiring process to evaluate applicants, choose the best candidates, and consider how well they’ll fit into your company culture.
4. Upgrade the Onboarding Process
Improving your onboarding strategy can also increase the likelihood that you’ll retain employees long-term.
During the onboarding process, you should set clear expectations for your employees, provide them with the resources they need to do their job well, and connect them with more seasoned team members who can show them the ropes.
When you simplify the transition process for new hires, you help them settle in faster and start being productive sooner.
5. Offer Professional Development Opportunities
Employees are more likely to stay loyal to an employer if that employer has shown an interest in helping them grow. In other words, if you invest in your employees’ professional development, they’ll be less likely to quit for a different job with more opportunities.
Providing regular training opportunities, such as online training courses, access to an online learning platform or the chance to attend industry conferences and conventions, your employees will know you value them and want them to succeed. They’ll repay you by staying with your company and using the new skills they’ve learned to make the business better.
6. Enhance Leadership Training
Pay special attention to the training options you offer to your managers and team leaders. One survey showed that 43% of UK workers had left a job because of poor management.
When looking for employees to promote to leadership roles, keep an eye out for people who have good leadership and communication skills. They should be empathetic and open to feedback too.
7. Focus on Employee Wellness
If you want your employees to be happy and productive, you must also make sure they’re healthy.
Employee well-being training and initiatives show your employees that you care about their well-being and want them to take care of themselves. They can also improve focus, reduce stress, and reduce the number of sick days your employees take each year.
From providing easy access to healthy meals and snacks to paying for employees’ gym memberships, there are lots of ways you can make employee wellness more of a priority. Talk to your team to see what kinds of initiatives would be the most valuable to them.
8. Create Mentorship Programs
In addition to providing access to training courses and other skills development resources, you can also help employees grow by offering mentorship programs. Pair new hires (or junior employees looking to level up) with senior-level employees so they can learn the ropes from someone who has been with the company for a while.
This arrangement helps the new or less experienced employee get acclimatised faster. It also gives the experienced employee a chance to test their own knowledge and enjoy the rewards that come with teaching someone else.
9. Reconsider Employee Compensation Plans
Even if you offer a positive work environment, you might lose employees more frequently than you’d like if your competitors are offering significantly higher salaries or wages.
If you’re worried about the cost of increasing employee compensation, compare those expenses to the cost of recruiting and training new employees. It might be more cost-effective to offer raises, bonuses, or adjust your company salaries to ensure they are competitive or in line with the average in the industry.
10. Prioritise Quality Communication
How easy is it for your employees to communicate with each other and collaborate on projects? Try utilising multiple communication methods — team meetings, one-on-one meetings, email, video conferencing, group chats, etc.
Varying your communication options and making it easier for employees to stay connected will help to improve employee engagement, increase transparency, and boost productivity.
11. Provide Ongoing Feedback
When you provide your employees with consistent, quality (i.e., constructive) feedback, you create a better work environment. You show them that you care about their professional development and want them to succeed. You also encourage them to continue improving and working toward achieving their goals.
12. Encourage Feedback from Employees
It’s great to give feedback as a leader. However, you must also be willing to accept input from others.
A critical part of improving communication and engagement throughout the company is creating a safe place where people feel comfortable and encouraged to offer feedback.
Let your team know that you want to hear from them and are open to suggestions for how you can make the business better.
13. Offer More Flexibility
Over five million UK residents currently work from home, including 28% of young workers (aged 16-29).
Since the COVID-19 pandemic ravaged the world, the number of employees working remotely at least part-time has increased dramatically — and many people are not eager to go back to working full-time in the office.
Offering your employees more flexibility is an effective way to improve retention rates and encourage people to stick with your company. Those who value flexibility and the option to work from home might be more willing to remain loyal to you even if they could get a raise somewhere else.
14. Acknowledge Milestones of All Sizes
Offering more recognition and rewards is an excellent way to boost employee engagement and increase retention rates. However, make sure you’re celebrating milestones of all sizes.
Don’t reserve your recognition for ground-breaking accomplishments. Praise those who have completed their first year at the company, those who have made significant progress toward completing a task, those who have improved in an area they once struggled, etc.
This approach helps to improve morale across the board.
15. Contribute to the Community
Many workers want to feel that they’re making a difference in the world — or at least in their communities. However, they don’t have a lot of time for volunteering at the end of their busy work weeks. You can help your employees make a difference (and improve your company’s reputation) by regularly contributing to the community.
There are lots of ways for you and your team to make a difference. For example, you can host food drives, volunteer at local events, or donate to a cause that your employees choose.
16. Encourage Work-Life Balance
If you demand that your employees dedicate their entire lives to your company, you’ll likely find that they burn out faster and are more inclined to leave for a different job as soon as one becomes available.
Instead of overworking your employees to the point that they feel compelled to quit, encourage them to set boundaries and maintain a good sense of work-life balance. For example, don’t send emails on the weekends or demand that employees consistently work late.
17. Get to Know Employees Better
How well do you really know your employees? You may have worked with someone for years or even decades, but what do you know about their hobbies, interests, and life outside the office?
Building stronger relationships with your employees can encourage more company loyalty and improve office-wide morale.
18. Conduct Exit Interviews
When someone does leave, conduct an exit interview and find out why. Ask them what they liked and disliked about working for your company, and encourage them to share what aspects they would like to see changed in the future.
19. Improve Diversity and Inclusion Efforts
Is your company an inviting and accepting place for people of all ages, genders, races, ethnicities, and abilities? Do you look around and only see people who look like you?
If the latter is true, a lack of diversity and inclusion could be harming your employee retention rate. Strive to diversify your company and implement programs that help all kinds of people feel accepted and included. Not only can this improve retention, but it can also boost morale, engagement, and employee productivity as well.
20. Encourage Creativity and Innovation
Finally, encourage your employees to think outside the box. Let them know that you value innovation and creativity — and are open to suggestions for how you can improve workflows or make your company processes better. If you make your office a safe space for creativity, you’ll likely see more engagement among your team and improved outcomes.
When you prioritise employee retention and utilise the most effective staff retention strategies, you create a better work environment — one that naturally lends itself to increased productivity and better results.
Try one (or more) of the strategies discussed in this guide so you can improve your workplace, provide your employees with better experiences, and encourage them to stick with you long-term.
Of all the employee retention techniques mentioned above, one of the best is to invest in employee development and leadership training. Skillshub offers various off-the-shelf eLearning courses on management, leadership, and more that you can use to help your team level up and expand their skill sets. We also offer an eLearning platform for companies to utilise and host your employee training online.
Get in touch today for more information.
Sean is the CEO of Skillshub. He’s a published author and has been featured on CNN, BBC and ITV as a leading authority in the learning and development industry. Sean is responsible for the vision and strategy at Skillshub, helping to ensure innovation within the company.