Employee Retention in the New Normal
Employee retention is make-or-break for every growing business.
With bad hires costing up to $240K in recruitment, compensation and retention expenses, it’s no surprise hiring managers and HR pros have clocked onto the importance of keeping your best talent with you.
But with the ever-shifting demands of today’s workforce, it’s getting harder and harder to hang onto your best people.
To retain quality talent, companies need to focus on satisfying employee needs from the moment they apply as a new job candidate.
The good news is, despite the increased pressure on today’s employers, there are some proven (and relatively simple) ways to boost employee retention and keep your key players around longer. In this in-depth guide, we’ll show you exactly how to build an employee retention strategy that keeps your top talent more loyal than ever.
Before we get into it, let’s have a quick refresher on exactly what employee retention is and where it intersects with your other important people ops goals like providing an awesome candidate experience and nailing that ever-elusive employee engagement strategy.
Employee retention definition: Employee retention is engaging, nurturing and retaining your employees so that they stay with your company longer. An employee retention strategy can involve perks, benefits, employee-friendly policies and of course, competitive compensation plans. 👌🏼
The thing most organizations overlook, is that the path to stellar employee retention begins the second a candidate submits their application. From that moment on, your job is to make sure your top-candidate-turned-new-hire has everything they need to stay happy, productive and committed to the role.
In other words, the success of your employee retention strategy is directly correlated to your ability to keep your employees engaged long-term.
It’s not rocket science but it does take effort—and a clear strategy to come back to when the going gets tough.
No matter how resilient your company culture, there will be times when it gets tough for employees to stay motivated. That’s why the first thing to knuckle down on is a solid employee retention strategy.
Think of your employee retention strategy as the life preserver that will keep you afloat when shoulders are slumped and teams are demoralized: Did you hear through the grapevine that your top performer is thinking of leaving? Refer to your strategy. Notice your turnover rate has shot up since last quarter? See strategy doc.
Of course, it’s important to remember that employee turnover is part of the natural ebb and flow of any ambitious business. But that doesn’t mean we shouldn’t be prepared to roll up our sleeves and fight to keep our best people from leaving.
Right? Right. 💪🏻
Ready to start the journey to impressive employee retention rates?
Here’s how to do it, step by step.
Consider this scenario:
You notice that more than a few employees have left in recent months, but you can’t put your finger on exactly what that means or how it’s impacted your business. You’ve got some employee retention ideas up your sleeve, but they all require extra budget. You gotta have something concrete to convince the C-suite, but what?
Unfortunately, most businesses reactively firefight employee turnover rather than proactively preventing it—simply because they don’t know their numbers.
But there is another way.
These two simple formulas can help you figure out exactly where your employee retention rates stand, the points at which employees are dropping off, and how much it’s costing your company.
The best part? Once the leadership team sees what’s really at risk, they’ll be more than ready to spend a little extra money (in order to save a whole lot more).
This simple calculation gives you a KPI to work against year-on-year (or month-on-month, quarter-on-quarter... you get the idea).
Number of Regrettable Departures / Total Number of Employees x 100 = Employee Turnover %
For the sake of simple math, say you have 100 employees, and 10 leave in one year. Your formula would look like this:
10 / 100 * 100 = 10%
Understanding your employee turnover rate in dollars and cents is key to working smarter, not harder.
Here are the hard sums to get you started:
Number of Regrettable Departures (ND) x Average Cost of Departures (C) = Annual Cost of Turnover
Let’s say you have 100 employees and a 10% annual turnover, so ND = 10.
The average cost of those departures (C) is $70K, spent on hiring, onboarding, learning and development, and lost productivity when refilling a role.
10 x 70,000 = $700,000
✔️ Pro tip: Create a simple HR or People Ops report to consistently wow the pants off your leadership team with all the latest and greatest recruitment analytics.
Most businesses reactively firefight employee turnover rather than proactively preventing it.
Everyone wants to feel welcome when they start a new job, yet so many employers drop the ball on day one.
With the right onboarding process, you can improve retention by a whopping 82%. But with only 12% of employees strongly agreeing their organization does a great job of onboarding new employees, it’s clear most companies have plenty of room for improvement.
Ready to uplevel your employee onboarding and show new hires you care?
✔️ Pro tip: An onboarding team of two or more people is a great way to keep your process inclusive and make sure every new hire feels welcome.
Our first impressions are the ground floor from which the culture of our company rises, and the onboarding process plays a large role. — Stacey Gordon, CEO, Rework Work
There’s one thing to remember above all else with this one—employee engagement is a two-way street.
Not only do you need to communicate effectively with employees, you also need to offer them opportunities to provide their feedback.
Here’s how to build high-value communication channels and make sure your employees are engaged:
✔️ Pro tip: If a top-performing employee submits their notice, consider asking them for a stay interview to find out what’s wrong and, if possible, fix it. Not sure what to ask in your stay interview? Start with the Gallup Q12 survey and adapt from there.
Employee engagement is a two-way street.]
Alright, you know your month-over-month retention rates and you’ve got an awesome feedback system in place. Plus, your employee drop-off points (and reasons for leaving) are clear and you’ve made sure your one-of-a-kind culture is evident from the moment your future employees hit your careers site.
Now, it’s time to knuckle down on your nurture tactics. 💞
Because, as with any relationship, a lack of trust can rapidly erode an otherwise good situation—and with more and more companies investing in new technology to monitor their remote employees, the line between boundaries is worryingly thin.
From pinpointing at-risk employees to investing in learning and development (instead of creepy monitoring tools), this step is all about knowing who to nurture, how, and when.
Let’s break it down:
✔️ Pro tip: Today’s employees want to be seen as people, not cogs in a machine. Keep your best people with you by ensuring that everyone has the tools and resources they need to get the job done.
“Now is not the time to ‘know it all’, it’s the time to humbly admit areas of development.” —Laura Mazzullo, Owner of East Side Staffing
Employee retention is a beautiful thing. But exactly how it looks will vary greatly from organization to organization, and even from year to year.
Clearly, the employee retention programs that worked just fine in recent history aren’t going to cut it in the future. And more than any sparkly new engagement app or wellness wearable, the thing that matters most to your employees is your ability to stay open and responsive to change.
From connecting with applicants on a human level, to asking employees for feedback (and acting on it), there’s no shortage of ways to increase employee retention for employers willing to do the work.