Replacing employees is expensive.
The Work Institute, in its 2017 Retention Report, calculates the direct cost of voluntary turnover in the United States cost businesses $536 billion in 2016. It also found a correlation between high voluntary turnover and low company performance, which extracts significant indirect costs to the organization each time it loses an employee.
The high costs of employee turnover should motivate every business to implement a well-designed plan of effective employee retention strategies. All the strategies below should find a way into your company’s employee retention plan.
- Take exit interviews seriously. These aren’t just to collect company property and check some legal boxes. If you can’t identify patterns as to why your best people are leaving, you won’t be able to make changes that will increase retention. The Work Institute’s report interviewed 240,000 to find out why they left their jobs. Their number one reason was lack of career development opportunities (more on this in a bit). Maybe that’s your main obstacle – but maybe it’s not. Find out the reasons why people leave your company.
- Make the right hires in the first place. While the cost of losing one high performing employee is more impactful than losing one poorly performing employee, there’s a staggering cumulative cost to constantly having to replace workers who never should have been hired. Add a few more layers to your hiring process, such as conducting background checks or doing post-offer employment testing. This will help you avoid bad hires who will end up leaving the company, one way or another.
- Make employee retention part of your managers’ responsibility. While policies at a company level can go a long way to improving employee retention, it isn’t just an HR responsibility. Train managers to identify signs of an unhappy employee. Also help them improve their communication and managerial skills so their team wants to work for them. Last, include employee retention as a metric on which their own performance is judged. Leaving a job due to management behavior was the third most popular reason for quitting, according to the 2017 Retention Report.
- Provide a clear path to professional development. An employee who can’t see where their future might lie within an organization isn’t going to stay at that organization. The company should provide training opportunities, as well as provide material support (time off and/or funds) to get outside training, so people can expand their own skill set. Having a formal mentorship program is effective in showing employees the company wants them to achieve personal success, while giving them practical assistance to do so. It’s also important they see that higher-level positions are filled through promotion as often as possible, rather than by bringing in a new hire.
- Pay them well. At the very least, you have to offer competitive wages in your market. If you want a better hedge against employees jumping ship, pay them on the high end for their position. Pay competition will most likely increase as companies start spending the new corporate tax cut money.
- Create an environment they want to be in. This is both the physical and cultural environment. Leaving due to a bad environment was the second most popular reason for leaving a company, according to the 2017 Retention Report. This is especially true for millennials, for whom being able to connect to their employer’s mission is critical to their job satisfaction.
Don’t leave employee retention to chance. With low unemployment, the employees are in the driver’s seat. No company will be able to hold on to their people without a formal plan of employee retention strategies that get proactive about hiring and holding on to the best employees.