Job markets across the globe are driven and ruled by employees. Loyal employees are the greatest revenue generators in terms of innovation, customer relations, sales, etc. Employee loyalty is hard to earn but, ultimately, it is the key to success for any business. As a result, leaders are persistently focusing on implementing innovative employee retention ideas and earning the trust of their employees. But, what is employee retention anyway? Let’s try understanding through this detailed employee retention guide!
What is employee retention?
Employee retention is an organizational goal that is achieved when your valuable employees decide to stay rather than opting for other opportunities. Persistent focus by management on employing innovative employee retention ideas can significantly reduce employee turnover, prevent attrition, and foster employee engagement.
Retaining valuable talent is crucial for organizations to operate successfully. Intrinsically committed employees not only increase productivity levels but also act as brand ambassadors which further adds to the credibility of the organization. And when such loyal employees decide to leave, you do not just lose talent or time, you lose the knowledge, potential, and values they represented.
So, how to increase employee retention?
With this question in mind, we have created this detailed employee retention guide that will introduce you to some of the best strategies for employee retention and how to avoid losing valuable team members.
Why does employee retention matter?
Employee retention is a huge contributing factor to building a healthy work environment. A high retention rate indicates that your organization, its core values, and its ultimate mission are trusted by employees. Whereas, a low retention rate indicates that you are dealing with a leaky bucket. No matter how many employees you hire through a well thought out talent acquisition strategy, employees keep leaving, and you keep losing money.
Such dents can be avoided by introducing long-term employee retention strategies. Management can easily combat employee turnover by adopting effective strategies for employee retention that can both attract and retain key employees. Do note, that it is more efficient to retain a quality employee than to recruit, train and replace one. Here are some common factors that contribute to job dissatisfaction:
- Zero Mutual Respect
- Uncompetitive Compensation
- Zero Trust
- No Job Security
- Zero Growth Opportunities
All in all, a high employee turnover costs:
- Loss of valuable skills, when an employee with a special skill set leaves unexpectedly.
- Loss of essential knowledge, in terms of the business operations.
- Damaged customer relationships, since customers should not be repeatedly presented with new members of staff all the time.
- Team efficiency as training new staff consumes the time of team members as well as the managers.
- Lowered staff morale as key members quitting can affect the motivation levels of the remaining workforce.
What are the main causes of employee turnover?
The hard truth is that you cannot completely put a full stop to the process of employees quitting their jobs but you can control it to a large extent. And this is possible when you understand the reason behind employee turnover and know the best solution to offer.
Below, we have listed some common reasons that trigger employee turnover in an organization.
Education continuity
Employees at many stages of their career wish to upgrade their skills for their personal development. This encourages them to take a break from their career and pursue their education.
Change in job profile
At times, many employees feel that they are not doing justice to their existing job role and want to take up a new challenge that suits their skill set and personality the best. As a result, they look for a new opportunity that will cater to their desire of changing their industry.
Have a child or care for a family member
There are times when your employees need to reset their priorities and take a break from their career to either tend to a family member or start a new phase of their family life. Many employees have to make a difficult choice by either opting for their career or family life.
Lack of growth opportunities
Another critical reason why someone may choose to leave is that there is little advancement in the role they currently hold. With fewer opportunities for advancement, what is going to keep employees motivated once they are no longer challenged in their role?
Lack of recognition
The workplace has changed considerably over the last two decades and more emphasis needs to be placed on employees being recognized for their efforts. It is not just about promotions or remuneration, but feeling valued is critical to retaining employees, the millennials in particular. They must have a feeling that they are contributing to the success of the business with their work.
Feeling culturally unfit
Lack of cultural fitment is one of the most common reasons to contribute to employee turnover. Employees may not enjoy their working environment, or disagree with the values and culture of an organization. For instance, someone highly creative would generally struggle in a very structured environment while someone from a traditional culture would find it hard to adjust to a flat table hierarchy.
Poor management
We have all had a manager with whom we just could not get along with. In many cases it can be a clash of personalities, in other cases, it can be anything from being managed badly, to the manager not having people skills. In fact, management issues are one of the main causes of low retention rates, so addressing them is very important.
Uncompetitive compensation
As employees ourselves, we have at times felt that we deserve more for our efforts in the workplace. Especially, if someone else is doing the same job and is getting paid more. The reality is that salary and benefits are often reasons employees shift employers. Understanding what the market is willing to pay for your employees and making fair compensation packages to match or better the market is essential.
Employee boredom and employee burnout
It has become a lot easier to understand employee burnout in recent years. Due to certain factors such as insufficient resources, unclear job expectations, lack of control, and more, employees are constantly connected to their devices and working longer hours than ever before. The lack of support given to staff to reduce workload or help manage it is causing people to search for less stressful jobs.
What are employee retention best practices to increase retention rate?
Often, business leaders and HRs are in a fix on how to achieve a high employee retention rate and stop valuable employees from leaving.
How to stop your valuable employees from leaving? The answer lies in some of the most popular employee engagement retention ideas that you might have right in your bucket, but you have not been able to match them to the appropriate problem.
After you have gained an understanding of what is causing employee turnover in your organization, it is also important to learn and adopt the best practices that avoid them from occurring.
Below is a list of the employee retention best practices that you must adopt to give your retention rates a boost:
Offer learning and development programs
One of the most effective employee retention ideas to retain employees who wish to continue learning new skills is by helping them learn and develop within the organization. When you invest in your employee’s careers, they will invest in you. Learning new and valuable skills allows employees to feel empowered in what they do and helps keep them motivated and engaged. Businesses that reported high training rates saw a 53% reduction in employee turnover.
Hire the right people and provide internal mobility
To start with, hire the right people for the right job roles. Understanding how engaged a potential employee is in their existing job profile is very significant. Additionally, a well-rounded hiring process can save you money and help you find the most fitting employees. In cases where the skill of an employee is most suited for some other job role, the organization must provide the opportunity for internal mobility to retain the talent.
Flexible (and remote) work options
When organizations show loyalty to their employees, they receive the same in abundance. Employees now want to be able to work from home if not all of the time, at least some of the time. Being able to have mornings taking their children to school or getting away earlier for social events when required. But it’s also things like parental leave, maternity, and duvet days that are part of this new working world that organizations need to be aware of.
By providing flexible working hours and work-from-home opportunities whenever the situation demands, you can build a workforce that reverts with loyalty to your business and values.
LEARN MORE: Benefits of Encouraging Employee Mental Health at Workplaces
Read Now!Offer continuous learning and development opportunities and internal mobility
According to LinkedIn’s 2021 Workforce Learning Report, employees at companies with internal mobility stay almost two times longer. While companies with low mobility saw a median tenure of just 2.9 years, high-mobility businesses were able to keep talent for a median of 5.4 years. Unsurprisingly, if an individual doesn’t think they can learn and grow at your organization or feel your company is invested in their career path, odds are these top performers will take their talents elsewhere.
Invest in grand and small-scale employee recognition
Ensuring that your employees feel valued at work can help improve engagement, and ultimately, retention. It’s crucial to praise employees for a job well done. Employee recognition can take varied forms, like a wall of fame, an internal newsletter with kudos, or a bonus for achieving monthly goals.
Implementing recognition programs frequently is one of the key employee retention strategies. Even small gestures like giving employees handwritten notes or a shout-out in a meeting to acknowledge a win on a regular basis can help your team feel recognized and appreciated.
Introduce diversity, equity, and inclusion initiatives
Every organization should have its motto, people first! Multiple studies suggest that diversity, equity, and inclusion are key drivers of employee engagement. The very first step HRs can take is to build DEI into its core values.
Managing metrics and trends to ensure equal treatment of employees in pay and opportunity helps significantly in employee engagement and retention. Creating a safe and comfortable work environment is really important. Organizational leaders should also ensure that women and other underrepresented groups are treated with respect and that they know their contributions are valued.
Gender-diverse companies are 21% more likely to experience above-average profitability and 27% more likely to create longer-term value than those that are not gender-diverse, according to McKinsey.
Conduct stay interviews and engagement surveys
Stay interviews are a great way of discovering the reasons that employees continue to work for you, but these interviews also reveal employees’ insights on areas that could be improved. Such in-depth insights about employees’ current sentiments can be drawn with the help of employee engagement surveys.
Conducting stay interviews in the form of confidential engagement surveys can also help employees express their concerns more openly. These surveys when backed by artificial intelligence help HRs dive deep into issues that usually get overlooked and flag any signs of employee attrition.
Offer employee recognition and competitive compensation
Intangible rewards help show recognition in a more meaningful way. Words of praise publicly or privately can mean a great deal to an employee. Promotion raises and internal hiring can develop the recognition that employees seek. In addition to employee recognition, paying fair compensation to your employees makes for the best employee retention idea.
If your organization pays under the market rate, your employees might be tempted to accept a more competitive offer. To keep your employees loyal to your company, you’ll want to make sure you are offering competitive pay and benefits. Things like a competitive salary, wellness programs, healthy work-life balance, time off, telecommuting, and health benefits can help improve employee engagement and retention remarkably.
Prioritize employee engagement actions
Employee burnout leads to employee disengagement which breeds high turnover. When employees are unhappy at work for whatever reason, they start to look at new employment opportunities. The worst part is unless you detect the reason behind their unhappiness before they leave, there’s nothing you can do to prevent them from leaving.
Beyond employee retention, many studies have shown that engaged employees are often higher performers, and are healthier and more productive than disengaged employees. In your organization, there are likely areas of disengagement that you are not aware of. By initiating some employee engagement and retention strategies, such as conducting employee surveys and requesting feedback, you can uncover areas where you could improve, and potentially prevent turnover.
How to create an effective plan for employee retention?
By now you might have understood that only providing competitive compensation is not the key to reducing turnover. Most employees today want more than money. They also want opportunities to improve their skills, advance in their careers, and enjoy a healthy work-life balance, among other things. You need a well-rounded employee retention plan that will help your employees want to stick around.
Here’s what this employee retention guide recommends for creating an effective plan for employee retention:
Measure turnover
In order to improve employee retention at your company, you need to begin by assessing how many employees leave your company in a given time period. While there are a few different types of turnover — voluntary, involuntary, internal transfers, and new hire turnover, to name a few — you will want to primarily focus on voluntary turnover or the number of people who willingly left your organization.
Survey your employees
To better understand what underlying organizational issues could be encouraging the top talent to leave, you will want to go straight to your employees. Regular employee engagement and satisfaction surveys enable you to collect anonymous feedback on all areas of the employee experience, like salary, benefits, management, and work-life balance. This can help you identify specific areas of your organization that need to be improved.
Analyze data and recognize the reasons
What are the reasons behind employees leaving? What stands out more than any other reason? Taking the time to understand what creates the biggest reasons for leaving, you can create strategies in your business to deal with them. If you continue to ignore these issues which can be fixed, then you’ll spend more money, time, and resources on continually recruiting new staff. Addressing the issues is, therefore, a business necessity if you plan on winning the long haul.
Conduct exit interviews
Conducting exit and stay interviews can help you collect more in-depth data from your employees. Exit interviews are when you interview employees who have already handed in their resignations and are headed out the door. While it is too late to change an employee’s mind at that point, these conversations are a useful way to understand why they are leaving, and what elements of their employee experience they think could be improved.
Usually, departing employees are more open to sharing candid feedback in these conversations because, in fact, they no longer fear any potential negative repercussions for giving honest feedback. This makes exit and offboarding interviews an effective employee retention idea. Also, you can learn how to improve the employee experience for your workforce.
Create employee focus groups
Once you have identified your organization’s key areas for improvement, you will then want to discuss your proposed solutions with a panel of employees from across the organization. Small focus groups can allow you to run your ideas by the very people your initiatives will impact so you can hear their feedback and opinions and further refine your strategy. Getting their feedback will also help you roll out any new programs and initiatives.
Formula to Calculate Employee Retention
Calculate your organization‘s retention rate by dividing the number of employees that stayed with your company through the entire time period by the number of employees you started with on day one. Then, multiply that number by 100 to get your employee retention rate.
What are the benefits of high employee retention rates?
There is no doubt that when the best talent in your organization decides to stay, performances across varied key metrics begin to improve. Increased employee retention rates translates to the following:
- Increased levels of employee productivity
- Reduced hiring and onboarding costs
- Better employee experience
- Elevated employee engagement and motivation levels
- Fostering a healthier work culture
- Increased revenue numbers and better ROI
- Creation of a highly experienced workforce
- Improved client-customer relationship.
Why should you leverage technology to increase employee retention?
Flight-risk analytics
Flight risk models help identify what types of employee profiles are most likely to leave the company, enabling HRs to make strategic decisions about whom to target for retention and where to invest in development opportunities. These flight risk models survey data as their information source and implement artificial intelligence and machine learning to predict patterns.
Employee engagement survey platforms
If you want to put the voice of your employee at the forefront, it’s necessary to understand their pulse. Setting your organization up for success means giving employees a clear voice with the right tools. By tuning into employee sentiments, your company can prevent unwanted turnover. And most importantly, keep the talent your business needs to thrive.
Interactive employee engagement survey tools can help remarkably. These tools offer questions that are pre-set to measure critical areas of engagement. They also offer detailed reporting features. In short, the application builds dashboards and interprets the data, so you can solely focus on building an impactful action plan.
Employee assistants
Employee Assistance Platform (EAP) is designed as an intervention program that serves to identify and help employees with resolving any number of personal, financial, emotional, or work-related issues that they may be going through. These are problems that generally interfere with the employee’s ability to perform their work to the best of their abilities.
Even if you offer an EAP, make sure you communicate this with your employees. The more resources they have to manage their work and personal lives, the better employees they can be for your organization.
Learning experience platforms
We know that growth and development are major drivers of employee retention. It’s no coincidence that there is a lot of change in technology in learning and development areas. As we adapt to the way that employees need and want to learn, we are seeing more self-directed, on-demand, and bite-sized options.
A learning experience platform is different from the traditional learning management system. It offers a more diverse and robust learning environment. It creates more personalized learning experiences and helps users discover new learning opportunities. By combining learning contents from varied sources, recommending and delivering them to users with the support of Artificial Intelligence, across multiple digital touch points, e.g. desktop application, mobile learning app and others.
What are the features to look for in your employee retention software?
HR leaders are now being tasked with multiple responsibilities for engaging and retaining their top talent. From enhancing employee experience and driving talent retention to creating a productive and healthy workplace, the list of responsibilities only seems to increase. But, thanks to new-age technology you will not have to hire a new team altogether. An intelligent employee retention platform can take care of the entire job and automate the complete process for your HR team.
Here’s what you must look for in your employee retention tool:
- Predictive analytics to alert the HR team about employees at higher risk of attrition.
- Encouraging open feedback through interactive and employee-friendly engagement surveys.
- Natural language processing (NLP) technology to identify employee sentiments.
- Accurate and intelligent algorithms to analyze feedback and turn it into actionable insights.
- Impeccable data privacy, security, and global compliance.
- Extremely user-friendly and simple-to-use software.
- Easy integration with communication channels, HRIS/HRMS.
Leena AI: Your ideal partner in boosting employee engagement and retention
Leena AI offers a conversational employee engagement survey platform that allows HRs to listen to their employees by receiving unintrusive employee feedback anywhere, anytime. Leena AI’s engagement surveys are simple, intuitive, employee-friendly, and tailored to ensure maximum participation rate through its conversational AI-backed interface.
The simple conversational surveys help you find the key engagement drivers at every level of the organization and allow you to build an employee retention plan accordingly.
Leena AI’s intelligent employee engagement surveys platform can help you implement employee retention strategies in the most effective manner.
Let’s take a look at what Leena AI offers:
- A suite of employee experience solutions
- Global support as Leena AI works in 30+ languages
- Accommodates enterprises of all sizes
- An extremely user-friendly interface
- Easy integration with 100+ popular channels like Slack, WhatsApp, MS Teams, and more
- Impeccable security standards and GDPR compliance
- Customizable questions for every stage of the employee lifecycle
- Real-time actionable insights
- Efficient action planning
- Employee feedback analysis through natural language processing and machine learning
- Reduction in unwanted attrition
Book a free demo today to find out why Leena AI should be a part of your HR strategies for employee retention.
Discover Leena AI's Intelligent Engagement Solutions
Explore NowFrequently Asked Questions
Why does employee retention matter?
A high employee retention rate indicates that the organization has a positive impact on the morale of its employees. Encouraging employee retention in your organization directly leads to high productivity levels, reduced employee turnover, and a healthy work environment.
What is the employee retention rate?
Employee retention rate is indicated by the number of employees that decide to stay with your organization for a long time period. You can calculate your organization’s retention rate by dividing the number of employees that stayed with your company through the entire time period by the number of employees you started with on day one. Then, multiply that number by 100 to get your employee retention rate.
What are the 5 main drivers of employee retention?
The five key drivers of employee retention are:
- Workplace flexibility
- Employee Benefits
- Career Development
- Employe-manager Relationship
- Long Term Benefits
What are key employee retention strategies?
The key strategies for improving employee retention are:
- Prioritize employee engagement actions
- Employee recognition
- Competitive compensation
- Additional perks & benefits
- Stay interviews
- Employee engagement surveys
- Diversity, equity, and inclusion initiatives
- Learning and development opportunities
- Internal mobility
- Flexible (and remote) work options
You may like reading: How to build an engagement strategy for hybrid workplace
Read now!What is a good percentage for employee retention?
90 percent or higher is generally considered a good employee retention rate. A high employee retention rate can be achieved by implementing thoughtful employee retention strategies and by adopting new-age employee retention tools for smoother execution.
