As I’ll explain in this post, staff and employee retention is a critical issue if you are looking to manage an effective and happy team and workforce, and greatly reduce hiring and training costs.
You want employees who are motivated, who enjoy their work, and who are highly skilled, all factors you tend to more often find in a workplace where staff retention rates are high.
Why Is Staff Retention So Important?
So why exactly is staff and employee retention so vital in a company?
1. Costs of Retraining and Rehiring
Onboarding and retraining new employees is an extremely time-consuming and costly process, a cost that you could certainly do without.
Imagine if that same money and time instead were, for example, used to reward your most productive staff and to give existing employees more advanced training?
2. Continuity and Productivity
When employees are constantly leaving and positions have to be refilled, it not only disrupts the team in terms of having to help the new employee/s get up to scratch, but it also results in lost productivity while the new employee is learning the ropes.
A team that sees staff often being replaced will find it much harder to be an efficient team!
3. Maintaining Company Culture
A company’s culture, code of ethics, and general way of working is much smoother and works much better when there is consistency in the workforce.
In companies with high rates of employee turnover, this appreciation and understanding of the company culture can be partly lost.
4. Customer Relations
As you might have experienced in the past as a customer when dealing with customer service, if an employee is new and still learning about the products and services, their service skills tend to be lower than those of an employee with many more years of experience. In other words, the quality of customer relations can be less.
Furthermore, with high staff turnover, it becomes harder for employees to develop meaningful relationships with clients and customers.
5. Employer Reputation
Many companies with a high turnover and unhappy staff soon gain a reputation as an employer to be avoided.
The great downside of this is that it becomes harder to attract top talent and the best potential employees for your business.
6. Employee Engagement
There can be a rollover type effect whereby employees who get to make new friends when new colleagues come on board, and then see these new employees leaving, can often feel as though it is time themselves also to move on.
Furthermore, having to continually work and use up more time retraining and helping a new colleague can decrease the morale overtime for existing employees.
7. Innovative Employees
Employees who stay with the company and feel valued tend to be more invested in the business and, as a result, are more likely to be innovative and provide better solutions.
Overall, staff retention contributes to a stable, efficient, and positive work environment. It allows companies to build a stronger, more cohesive team focused on achieving common goals.
What Are the Most Common Reasons Why Employees Leave for Another Company?
Understanding why employees leave your company in the first place is also useful in understanding employee retention.
Consider, for example, that it can take up to 1 to 2 years for a new employee to get to the productivity level of an existing employee, or that it is said that over 50% of companies have issues with employee retention.
Furthermore, a study by Gallup showed that over 50% of workers are either actively seeking a new job or keeping an eye out for new opportunities. In other words, a high percentage of staff are unhappy in their existing role.
So why do employees tend to leave? Some common reasons include:
1. For Better Opportunities: The chance to get a wage increase or training opportunities and career advancement is a powerful attraction for many, especially when hearing friends boast of how well they get treated in their roles.
2. Poor Management: Having to deal with an unfair manager or a manager who fails to create a positive and inclusive workplace. Poor management can push employees towards leaving.
3. Lack of Recognition: Management who show no appreciation for your work and effort is a sure way to drive employees away. We all need to feel that we are accepted and wanted, including in the workplace.
4. Work-Life Balance: A lack of flexibility in work hours or excessive workload without proper support can lead to burnout and prompt employees to look for a better balance elsewhere.
5. Company Culture Mismatch: If an employee does not align with the company’s values, ethics, or work environment, they might feel disconnected and opt to leave.
6. Limited Growth Opportunities: When there is no clear path for career progression or inadequate training and development programs, employees may seek growth elsewhere.
7. Compensation and Benefits: Lower-than-market salaries or uncompetitive benefits can drive employees to explore better-paying options.
8. Conflict or Unhappiness at Work: Workplace conflicts, toxic environments, or a lack of job satisfaction can significantly influence an employee’s decision to leave.
9. Geographical or Personal Reasons: Life changes, such as relocating to a different city or personal/family commitments, might lead to an employee leaving.
10. Feeling Underutilized: Employees who believe their skills are not being fully utilized might seek opportunities where they can better apply their talents.
Recognizing and addressing these factors within the company can help in improving retention rates by creating a more supportive and engaging workplace environment.
15 Tips to Retain Employees or Staff
So, what can we do as a company, as a manager or business owner to retain employees? Here are some ideas:
1. Offer Career Development Opportunities
Providing a clear path through the company and/or training that matches the long-term goals of the employee (as long as it also matches the company’s goals) is a great way to incentivize staff to feel and help them feel that it is worth sticking with your company.
2. Provide an Inclusive and Positive Working Environment
It is so important to ensure that each employee feels included in the company and if necessary I suggest providing managers with training in Inclusive Management.
No employee should feel left out, and every employee should feel that they can give input and ideas openly, and feel that they are provided with the same opportunities as their colleagues.
3. Wellness and Work to Life Balance
The understanding of mental illness and employee wellbeing is much more transparent these days and in this respect, it is worth remembering that your employees are your business. They are an invaluable asset.
Consider offering things such as flexible hours, the chance to work partly from home (if appropriate), and wellness-related workshops and programs.
4. Perks and Benefits
Offering perks and benefits such as access to childcare support, or access to company facilities such as a gym or recreational areas, without question helps to provide value and reasons to stay in a company. Likewise, wellness and wellbeing workshops and training as mentioned in the previous point can be worth providing.
It is course not always possible in terms of available budget, but do consider the alternative costs that you will incur as a result of losing employees and the costs associated with rehiring and retraining new staff.
Might it be far more affordable to release some funds for perks and benefits for existing employees to retain them?
5. Promote Work Relationships
Encourage social interactions and team-building activities. Strong relationships among coworkers often lead to higher job satisfaction and willingness to stay.
(If you are looking to hold some team-building sessions in-house, you can find some free team-building exercises here).
6. Give Recognition
Giving recognition sometimes can be something so simple as saying thank you to an employee or simply congratulating them on doing a great job.
Employees very often just need their efforts acknowledged and most often it is about being a manager who understands how to have emotional intelligence in terms of how you deal with those you manage.
You can, of course, also provide bonuses and awards but, if doing so, just be sure that for every person you reward, you are not then alienating another person (i.e. the person who doesn’t get rewarded).
7. Use Feedback Effectively
You want feedback to be something that employees feel that they can comfortably give to their manager, in addition to it being something that managers are skilled in using to provide guidance and support to those they manage.
Used correctly, feedback is a powerful tool for helping to retain employees because good feedback:
- Helps employees better fulfill and manage their role
- Gives the employee an avenue to make you aware of any issues
- Provides staff with an opportunity to give you their creative ideas and suggestions (many of the best ideas come from staff who know your product and services the best)
8. Supportive Management
Being an empathetic leader and understanding how and when to listen to your employees is an essential skill.
If you are an HR Manager, consider providing active listening skills training to your managers and team leaders.
A good manager should be able to nurture the talent and skills of those s/he manages and do so in an empathetic and supportive manner.
9. Regular Meetings
Only by holding regular meetings with each employee you manage, can you realistically have the opportunity to ensure that you find out about any issues the employee is having, anything they need, and how they are doing.
Having a one-to-one meeting once a month is ideal but even every 3 months or, if need be, once a year, is far better than never at all.
10. Exit Interviews
Exit (offboarding) interviews are extremely useful as they provide you with the opportunity to find out a lot of invaluable information; information that can help you to avoid the pitfalls that have been the cause for employees already to be leaving. This post on Why exit interview matter is worth reading:
11. Clear Communication
When there is a lack of clear and good communication in a company, misinformation can so easily and quickly permeate the business.
This misformation can be the cause of rumors (often untrue ones) and cause employees to be unsettled.
As a manager, you need to ensure that the following are communicated well:
- What you expect of someone workwise and what the goals are
- The company’s goals and strategy
- Clarify anything that comes up such as rumors of potential job losses or a take-over.
Even when information is scarce (such as for a potential take-over), you can at least inform your team or what little you know to at least show that you are being transparent and will keep them informed at the first opportunity or any news or information.
Employees tend to trust you more as a manager or company when they feel that the communication channel is open and honest.
12. Empowering Employees and Helping Them Build Confidence
Feeling a lack of autonomy and authority is a common reason why employees start to look for other job opportunities externally.
Try to empower your employees by showing them trust and also by helping them develop their confidence.
13. Have a Good Induction (Onboarding) Program
We already mentioned having exit interviews (offboarding) to learn about why the employee is leaving.
Equally important is the onboarding that you provide. It is shown that staff retention rates can be as high as 45% higher when a solid onboarding program is provided to new employees.
This onboarding will include ensuring that new staff:
- have a clear understanding of how to get started with their job role
- are introduced to key players they’ll need to know
- are given the correct training they’ll need
- and are brought up to speed on the company’s goals and strategy.
A good onboarding process helps staff retention because onboarding helps the employee to settle and feel more integrated into the company, and more quickly and more easily than without onboarding.
14. Promote a Sense of Purpose
When an employee understands how their role contributed to the team and the company, it is much easier for them to feel more committed and a valued member of the team.
15. Regular Training and Development
Employees need to develop and progress over time and, if their growth within the company and their role is stumped, expect them to begin seeking other opportunities outside of the company.
It is important to note that providing training to employees will not only aid their development and job satisfaction, but if the right training is provided, you as a company stand to benefit through having more highly skilled employees.
This post might be useful if you are wondering what types of employee training you can provide.
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