Introduction: How To Retain Employees
Successful businesses invest countless hours and significant resources across the company to hire and train new employees. But many companies don’t have a formal employee retention strategy; often, it is an afterthought.
This can be an expensive proposition. In addition factors such as morale and productivity, it is far cheaper to keep the talent you already have, rather than hiring and training a new employee.
In fact, recent studies have shown that it costs 21% of an employee’s salary to replace that employee. In effect, it costs over $10,000 to replace an employee with a $50,000 salary.
There are many reasons why good employees quit. We will address some of these here and offer some suggestions on how to retain employees.
What are some specific staff retention strategies? There are a number of effective ways to address this challenge, and it’s not just giving people more money.
Image source: Bigstock
There are five main areas we will explore:
• Orientation & Onboarding
• Compensation & Work-Life Balance
• Team Environment
Orientation & Onboarding
We start here because, well, this is where employers need to start. In fact, it starts with hiring the right person. Too often, companies have a vague sense of the type of person they want to fill a need, but they do not build a firm plan around how to hire that person.
This is where recruiting software such as Greenhouse can really help out. Instead of having six employees ask a candidate the same questions over and over, you can design an effective interview plan, specifically intended to gauge characteristics like level of interest, core competence and culture fit.
Once you have hired the right person, it is common, especially among small and fast-growing companies, to run an informal or detached orientation and onboarding process.
At some companies, orientation consists of signing papers with Human Resources, getting email set up, and reading a few articles on the company intranet. Then, the employee might “shadow” an existing employee or be told just to “get a feel” for the office.
In writing, it seems ridiculous that companies are run this way, but it is not at all rare. Shockingly, almost half of all companies do not even have formal welcoming procedures for new employees.
So what does an effective new employee orientation and onboarding process look like?
Well, in addition to those basics about when paychecks go out and how to sign up for health insurance, it means communicating a number of essential ideas to the new employee, including:
• Company mission statement and core values
• Organizational culture (Be explicit—don’t let culture issues “take care of themselves,” because they won’t.)
• The company’s most important products, services, customers, and unique selling proposition
• Where the company fits into its wider industry
• Assigning a mentor or explicit support system, made up of staff who will proactively engage the new employee
Most importantly, make sure to get feedback from every employee that goes through the orientation and onboarding process. Recent employees who are fresh from the process will be your best allies in improving it.
Compensation & Work-Life Balance
Increased compensation should be the most obvious way to improve talent retention. More money means people will stay, right? Well, sort of. Indeed, base pay/salary is the number one reason that people stay at a company.
But compensation means far more than just cold hard cash these days.
Not limited to base pay and bonuses, compensation now means providing additional benefits that are standard at competitive firms. Effective employee retention programs might include:
• Generous medical, dental and vision insurance
• Matching 401(k) and charity match programs
• Domestic partner benefits
• Flexible and generous maternity and paternity leave
• Work-life balance benefits, such as the ability to work from home or, in companies with more than one office, the possibility of transfer to an office in a different city
Let’s talk about money. It is important that your Human Resources team monitors your position in the marketplace and makes sure that your company is providing a fair salary for your employees.
But it is also crucial how you communicate salary and compensation to employees.
At the very least, salary should be revisited once per year. Even more importantly, employees should understand when and why salary issues will be discussed.
Make it a positive experience that benefits both the employee and the organization. Give employees a chance to prove themselves. If you run this process twice per year, you give employees a greater sense of perspective, as well as an incentive to keep pushing themselves to reach that next plateau of salary or responsibility.
Organization is key here. Develop a system for keeping track of these kinds of conversations. It’s easy to make promises about advancement and pay raises, but it takes hard work to keep them.
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Yes, employees want to be promoted and they want raises. But they also want other tangible benefits from their employers. One of the most effective employee retention ideas is to give workers the opportunity to learn and develop new skills.
Don’t let your employees get bored. Every business needs bodies to perform similar tasks day after day, but managers must ensure that employees are being challenged to advance their skill sets.
This is vital not only for employees’ own sanity and happiness; it is also important for the future leadership of the company. As the company grows, it is far cheaper and better for morale and company culture to promote from within, rather than headhunting to find someone to fit a newly-created role.
However, one trap that fast-growing startups fall into is promoting someone who has never managed before without giving him or her any management training.
It can be overwhelming to go from working on a project alone or in a small team to being responsible for the work of one or more junior employees.
Too often, it is assumed that because someone can do a job, they can also manage other people doing the same job. It’s just not true.
Some employees might not believe they have the personality to be a manager, or they don’t have the confidence to think they can do the job.
Consider offering management training to make them feel more comfortable and confident in their own abilities.
This type of management can help to get more “buy-in” from employees and create greater company loyalty. Increased ownership at lower levels also helps senior managers to focus on big picture strategy, as they are not spending time micromanaging their direct reports.
Image source: Bigstock
According to a recent study, “trust/confidence in senior management” is the #3 factor affecting whether employees stay at or leave a company. But most employers don’t see it the same way. For employers, “trust/confidence in senior management” doesn’t even figure into their top seven employee retention factors.
The key behind building that trust and confidence? Communication.
Many companies will take care of this by telling employees that managers have an “open door policy.” Think about what that really says, though: it puts the responsibility for any workplace issues on the shoulders of the employee.
Yes, it is important to be available for employees, but it is even better to pro-actively show that you care about your employees’ careers, their futures and their mental and physical health.
Employees crave feedback. Regular positive reinforcement for a job well done is par for the course and should not be discounted.
This can come in the form of verbal or written feedback or in recognizing an employee’s contributions to the rest of the team, whether in formal or informal circumstances.
Web applications like 15Five can help busy managers engage with their employees and give and receive feedback without creating a time suck.
Regular employee communication becomes all the more critical when discussing unsatisfactory performance. If an employee feels that they have been recognized in the past for their successes, they will not feel attacked when their manager provides constructive criticism.
Just as important as managerial feedback is the ability for employees to measure and monitor their own productivity. If a member of the team can look at a report and see that they are moving 10% more widgets every week, or have increased sales by 25% over last year, it allows the employee to internalize those numbers and feel a pride for their job that can be even more motivating than a pat on the back from the boss.
Another great, and increasingly popular, way to facilitate communication between layers of management is to institute a 360-degree review system.
Instead of managers telling their employees what they did right and wrong over the previous year, 360-degree reviews allow employees to offer feedback to their managers.
Take this feedback seriously. Again, if you offer this opportunity, but then do nothing to act on employees’ suggestions, you may as well not even bother.
Fostering a Positive, Team-Centered Environment
How many times have you heard someone say, “I hate my job, but I love the people”?
Obviously, one would prefer that employees love the job and the people, but this common sentiment illustrates the power of fostering a good rapport among co-workers.
To that end, a team environment can be beneficial for increased productivity and morale, but can also be one of the most effective employee retention strategies.
What are some ways to create a team environment?
Clearly communicate the company’s vision to all employees—everyone needs to know the common goals they should be pulling toward. This vision should be evident at every phase of the interview and hiring process and should also be the backbone of any formal event that the company puts on.
It also helps to explicitly discuss the role of each team within an organization. If the Customer Success team understands the importance of the Sales Development process, there will be an increased respect and collaboration between those teams.
As a manager, emphasize the way in which each team fits into the entire organizational structure. Show how success or failure in any one department affects everyone at the company.
Explicitly ask that people keep an open mind when thinking about other teams within the company.
It is crucial not only to hire people of different backgrounds and different personalities, but also to explain how diversity benefits the company overall.
Team-building: it’s not just about holiday parties and happy hours. Though it seems cheesy, real team-building exercises can really help build a team ethic. When people feel like part of a team, they not only enjoy coming to work and working towars a goal, they also won’t want to leave their friends and fellow teammates for another workplace.
Aside from full-day team-building outings, you can also build a team ethic around mandatory charity days, where members of different teams come together to perform charity service, or with such simple in-the-office ideas as special costume days, amended dress code days, or team-based bake-off contests.
While some of these ideas are indeed very cheesy, they are ways for employees to bond, even if they’re just complaining about how cheesy the event is.
In the modern workplace, it is essential to develop and train skilled employees. With the increasingly competitive business landscape, retaining employees can be even more critical in order to avoid losing your best talent to your fiercest competitors.
According to some reports, up to half of all companies don’t have a formal employee retention program.
By merely thinking about the concept of talent retention, you are ahead of the game. If your company is able to pick out and implement some of these strategies, you will be well on your way to improving your employee retention rate and reducing the cost of employee turnover.
One final thought: don’t just pay lip service to these ideals. It means something when managers insist that an employee take vacation, and when they don’t bother them on their maternity/paternity leave.
Things like this might seem minor at the time, like in the face of a new product launch or a customer meltdown. But these moments are exactly what stick in employees’ minds when an opportunity at another company comes along.
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