5 Cost-Effective Retention Strategies
Employee retention is a high priority for up to 87% of HR leaders. This is because employee turnover is costly. The average employee exit cost is 33% of the employee’s salary (this doesn't even include the time and resources it took to onboard and train the employee). Another study by Gallup reported that a 100-person organization that provides an average salary of $50,000 could have turnover and replacement costs of approximately $660,000 to $2.6 million per year.
While employee turnover is expensive, retaining employees doesn't have to be. In this article, we offer some cost-effective employee retention strategies.
1) Invest in employee development
Most employees in today’s workforce are not just there for the pay cheques. Skill development is particularly critical for the younger generations in the workforce. According to LinkedIn’s 2018 Workforce Learning Report, 93% of employees would stay at a company longer if it invested in their careers.
Millennials and Gen-Z are highly motivated to grow their careers, and around 76% of younger generations view learning as the key to their advancement. In fact, 62% of Generation Z want to take classes or learn new skills if it makes them better at their job.
There are many ways that organizations can invest in employee development. For example, (i) assign employees a mentor from the company, (ii) recommend training courses/certificates to help them learn new skills and techniques (otherwise known as reskilling/upskilling), (iii) place them on projects that challenge them, and (iv) give them frequent feedback (see point #4). Managers should meet with their employees often to understand what motivates them.
2) Implement continuous feedback
Employees want to continuously develop in today’s workplace. In fact, 65% of employees want more feedback, and 24% of workers would consider leaving their jobs if they have managers that provide inadequate performance feedback.
Moreover, in a HBR survey of 900 global employees, it was found that many employees want corrective feedback over praise and recognition: 57% of respondents stated that they prefer corrective (negative/constructive) feedback, whilst only 43% stated that they prefer praise or recognition. Whether it is corrective or praise feedback, feedback must be effective to develop and motivate employees.
Managers should be providing employees with real-time, continuous feedback, which help enable a culture of feedback. We also recommend that organizations have a performance management solution to document and analyze all the feedback. This can help streamline performance conversations.
3) Train your managers
People don't quit their jobs; they quit their boss.
Managers have an extremely important position in motivating and developing employees. Managers should make all team members’ ideas and contributions feel valued and important; 40% of employees said they would put more energy into their work if they felt better recognized. Moreover, 58% of employees state that trust between them and their managers is very important to job satisfaction, and 40% of employees say the most frequent cause of a bad day at work is an unsupportive, unhelpful boss. Unmotivated and disengaged employees are unproductive.
On-going training of management can help reduce employee turnover. Managers should be trained on how to provide effective feedback. One in five employees are not confident their manager will provide regular, constructive feedback. Bottom line: train your managers to do their job, it could save your organization time and resources down the road!
4) Provide a healthy work-life balance
A healthy work-life balance is incredibly important to employees. Employees who rate their work-life balance highly are 10% more likely to stay at your company. Moreover, a health work-balance decreases the chances of employee burnout, which can subsequently affect workplace retention.
Organizations need to encourage a healthy work-life balance if they want to keep their top players. Remember encouraging a healthy work-life balance is becoming a necessity in the workplace; it is not an option!
5) Hire the right candidates to begin with
Organizations need to find the right employee with the right experience, but they also have to hire someone that understands company values and that is a good fit with the team. To that end, HR needs to communicate company values and showcase company culture to candidates. This will help organizations find the perfect candidate that would be good fit with the team which in turn can increase the chances of retaining that employee for longer.
One study by Built-In found that 46% of job seekers cite company culture as very important when choosing to apply to a company. Moreover, employees who don't like their organization's culture are 24% more likely to quit. Bottom line: hiring candidates that like your company culture makes them more likely to stay for the longer term.
Retention strategies don’t have to be expensive. Implementing things as simple as upskilling and reskilling programs as well as continuous feedback can have a big difference in employees’ decisions to stay or leave.
Let us know what your organization does to reduce employee turnover!