Employee retention is top of mind for many organizations as high turnover, across all industries, continues to disrupt the workplace.
Many employers are anxious about the number of employees departing their jobs and organizations, and for good reason. Unwanted turnover can be a costly problem, having negative effects on a wide range of people and business metrics. By 2030, the United States is on track to lose $430 billion annually due to employee turnover.
The key to minimizing unwanted and expensive employee turnover? It’s your employee retention strategy. Understanding exactly what is causing your employees to stay or go—and working to actively address problem and opportunity areas—can help you create a culture that attracts and retains top talent.
This retention strategy guide can help shape your employee retention efforts in 2023. We’ll cover:
Employee retention is defined as an organization’s ability to keep their talent and reduce turnover. This metric is represented as the percentage of employees who decide to stay at their organization within a given time period.
Organizations with high retention rates have successful, accepted strategies to engage and motivate employees in their day-to-day experience. By keeping a pulse on your retention rates, and on what’s causing employees to stay or go, you can understand where to take action.
Your retention rate can be a true indicator of business success. When employees are engaged, motivated, and committed to your organization, they’re likely to have a positive impact on the business. Leaders who want to drive results, now and in the future, need to improve their employee retention practices.
Employee retention and employee turnover go hand in hand. While retention represents the amount of employees who stay, employee turnover is the percentage of employees who leave. These employees often seek employment elsewhere, looking to change industries, roles, or even leaving the workforce entirely.
Organizations with high turnover rates have low retention, and often fail to shape a workplace culture that engages their employees. These metrics are completely dependent on one another: when one rate decreases, the other increases. And with the right strategic, data-based decisions, leaders can ensure that their retention rate is the growing metric, not turnover.
Employee retention is critical to business success. When your top performers leave, their valuable company knowledge is often lost. Your remaining workforce may feel disoriented and unproductive without the previous employee’s expertise. And your talent’s productivity will plummet further when they're forced to pick up the slack as a position remains unfilled. All this can lead to burnout and future turnover.
Moreover, it’s costly to replace a departing employee. The cost to replace an individual employee can range anywhere from one half to two times the employee’s annual salary. The recruiting, onboarding, and training costs associated with hiring new talent is outright expensive.
The cost to replace an individual employee can range from one half to two times the employee’s annual salary.
To make things worse, it can take one to two years for a new employee to reach similar performance to their predecessor. It’s clear that if your employees are constantly turning over, it’s difficult
to build an engaging, high-performing workplace.
Calculating your employee retention rate can be achieved easily with a simple formula. Just divide the number of retained employees throughout a given time period by the initial amount of employees in that time period, and multiply by 100.
(Remaining headcount during set period/ Starting headcount during set period) x 100
It’s important that your remaining headcount number doesn’t include new hires. Your retention rate is about the number of tenured employees who stay, not the number of people you’re able to hire. If you include employees who joined your organization during the set period that you’re measuring, you’ll skew your numbers.
While employee retention may seem difficult to understand and navigate. There are strategies that can help. Leverage these top strategies in your approach to employee retention:
Hiring the right people is more difficult than it sounds. Leaders should not only assess whether candidates are a good fit in terms of skill set and experience, but they should also consider personality and values.
If the talent you hire doesn’t align with your mission or culture, it will be difficult to keep them from leaving. Your employees should be contributing to a purpose they care about on a day-to-day basis, or you risk burnout and turnover.
Your onboarding process should:
Employees should be introduced to others outside of their team and be given an outlet to ask questions when they arise. This process can take up to a year to ensure your employees are fully immersed and comfortable with the organization. But a strong onboarding plan can help employees feel connected faster—which decreases their likelihood to second guess their decision to join your organization.
Let's face it, if you can’t offer fair, competitive pay that’s on par with industry benchmarks, your ability to attract and retain top talent is weakened. Employees need to be appreciated for their work, and a big part of that is compensation.
If your employees are putting in full effort but feel like their pay is lacking, they’re likely to burn out and look for opportunities elsewhere.
Perks are another way, outside of compensation, to show your appreciation for employees and get them to stay. Almost one-fifth of employees say they would stay at their organization if they offered better benefits.
19% of employees would stay at their organization if they offered better benefits
To stay ahead of the curve, the best organizations are providing unique benefits that better support their employees in a new world of work. Mental health stipends, paid parental leave, paid volunteer time, and technology reimbursement are great benefits that make employees feel valued, supported, cared for, and less likely to look elsewhere.
Employees want and need to be in the know in order to feel connected and to do their jobs well. Managers should regularly connect with employees to address roadblocks, answer questions, and discuss future career goals. Effective communication will help drive employee loyalty and give employees the tools to perform well.
If employees feel stagnant in their role, they may feel restless and dissatisfied. A workplace survey report found that 94% of employees would stay longer if their company invested in their learning.
Give employees ample opportunity to build upon their skills through stretch assignments, cross-training, and seminars. Leverage regular growth conversations to outline a clear path to advancement and outline learning opportunities and actively prevent turnover.
Recognition helps employees feel appreciated and valued for their efforts. If an employee goes above and beyond, and doesn’t receive recognition, they may lack motivation to keep up the hard work. Your employees need validation. Without it, feelings of low engagement may surface that can lead to turnover.
Organizations that are competitive in attracting and retaining employees give their talent a strong sense of autonomy. While providing remote and hybrid options has become increasingly necessary in the modern workplace, that’s often not enough.
In today’s climate, employees need to be able to decide how they work. Micromanaging should be avoided. Trust should be the default. And creativity in how work gets done should be applied. If employees consistently perform well, they should be given the freedom to decide how they get their work done when possible.
Employee listening should be an ongoing process within your organization. The insights that employees have can give you the tools to take strategic, evidence-based action and improve the employee experience.
A comprehensive employee listening program includes:
The annual performance review is a thing of the past. Disjointed and disengaging performance management practices actively drive disconnection and turnover. Employees need aligned goals and ongoing coaching, feedback, and recognition to stay connected and perform their best. It should be crystal clear to employees how their performance is measured and they should be an active partner in discussing and improving their own performance.
Collaboration and teamwork is key to a healthy work environment. Teamwork increases productivity and helps shape valuable workplace relationships. But in a world of remote work, many leaders don’t understand how to promote collaboration when face-to-face interaction isn’t a possibility.
By setting aligned, collaborative goals, leveraging regular video chats, and creating designated communication channels, your remote employees will have no problem working as a team to drive the outcomes that matter. The relationships formed as a result of collaboration will keep your employees at the organization for the long haul.
Diversity, equity, and inclusion has become an expectation in the workplace. Leaders should always be thinking of ways to make the workplace more inclusive by eliminating bias and barriers to diversity. Leaders need to view employees on an individual level and create a work environment that supports everyone’s unique needs.
Constant communication around DE&I, with each employee, will help you understand where your efforts are lacking. And when you take action to promote inclusion, employee well-being improves and innovative business results come to the surface. As employees feel seen and included, they’ll have more initiative to stay.
As most leaders know, the workplace is changing at a pace not seen in recent times. And to retain employees, change needs to be navigated effectively and openly. But only 35% of exiting employees reported that they experienced transparent communication throughout their organization.
To boost retention, leaders should leverage open, regular communication around change so that employees know why it’s happening. When your workforce feels like change is swept under the rug, they are likely to feel a sense of disconnection from the organization and you’ll risk turnover.
Feedback should go both ways. When only managers provide feedback, it’s easy for employees to feel defensive or inadequate.
To create a foundation of trust, managers should ask for and welcome employee feedback. This way, they can uncover areas of improvement for themselves and grow in their role. And employees will be more likely to accept and implement manager feedback.
The connection and growth that both parties will experience as a result of two-way feedback is likely to engage and retain employees.
Exit surveys help leaders understand the reasons that employees leave. This way, they can use evidence-based data to take strategic action toward retention. But leaders need to ask the right questions.
Some sample exit survey questions include "Why did you choose to leave this company?" and "What do you value about this company?" Your questions should give you insight into areas of improvement within the employee experience.
Plus, leaders can use these surveys as benchmarks to uncover which existing employees are at risk for leaving to prevent turnover before it’s too late.
Understanding retention statistics in the marketplace can help you understand the importance of your retention strategy and give you insight into where to focus. Here are some top employee turnover statistics to consider in 2023.
Replacing a departing employee is costly. Plus, recruiting and onboarding is time consuming. Your best bet is to shape a solid retention strategy to minimize resource loss.
When your workforce is constantly turning over, it’s difficult to build teams of productive, knowledgeable, and skilled employees. Ramping up employees toward productivity can take many months, and your other employees will have to pick up the slack.
Tenured employees have the company expertise needed to solve customer problems and keep them happy. Plus, when you engage employees with an effective retention strategy, they will exude those feelings of happiness to customers.
Company culture is a key factor behind whether your employees leave or stay. Organizations who have high retention typically have an inclusive culture that celebrates all employees, and you won’t dread logging on or walking into the office everyday.
The relationship between employee engagement and retention is strong. Those with high retention can experience all of the benefits of employee engagement, including reduced absenteeism, better employee health, higher profitability, and happy, satisfied employees.
When your employees leave, it can be a disappointment for remaining employees. But when your retention rate is high, employee morale improves. When morale improves, your workplace will be a better, more positive place to work.
It’s difficult to get a sufficient return on your onboarding and recruiting initiatives when experiencing high turnover. But when you have an effective retention strategy, the cost it takes to ramp up employees will seem miniscule in comparison to the outcomes they drive throughout their tenure.
“Retention is one of our highest organizational priorities. Quantum Workplace enables us to focus our efforts on the most impactful drivers of employee engagement and retention through engagement surveys and action planning, employee feedback, and employee recognition.”
- Jim Carlino, CHRO at Bancroft
Employee retention surveys help you get direct insight into your turnover problems. But administering can seem daunting and complex. Luckily, with the right strategy, these surveys are straightforward and seamless.
First, you must be able to connect your survey data to turnover data. This helps you pinpoint the survey items related to turnover. With this method, you can determine which survey items are related to retained employees versus those who’ve left. You should also slice and dice your findings by demographics and tailor your retention strategies to different populations within your organization, based on age, role, and tenure length.
After you uncover your data, it’s important to educate other leaders, managers, and supervisors on your findings. They are in the best position to retain employees, so it’s important that they have this information when shaping their retention strategies.
Once your strategies are in place and it’s made clear that they were created with employee surveys in mind, it’s time to determine whether they were successful. Did your turnover decrease? Did it increase? Whichever the case, these evaluations should happen regularly to adapt, adjust, and reduce turnover for the long haul.
It's easy to grow and develop talent for the long haul.Lack of career growth and development is one of the primary reasons employees leave their organization. Employees don't want to feel stagnant. If they do, the result is a lack of engagement and impact. It is crucial to leverage tools that help managers and employees map and track development together.
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It's easy to prioritize connection and celebration.Your culture comes to life through the ways you celebrate and recognize your employees. Building a culture of connection and appreciation centered around your organization’s core values not only boosts employee morale, but also engagement, performance, and retention.
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It's easy to predict and prevent unwanted turnover.You need to take a targeted approach to analyzing turnover and retention. To move from reacting to turnover to proactively addressing it, you have to understand what drives top talent to leave and continuously implement strategies to retain your best employees.
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It's easy to stand out and compete for top talent.Employees are your most vital asset. You need to have a dynamic strategy in place to stand out against your competitors and attract top talent. Benchmarking can help you understand the strengths and opportunities of your employee value proposition compared to your competitors. Transform your EVP into one that cannot be imitated.
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Learn How to Keep Your Best Talent by approaching retention with intention in this eBook.
Published September 4, 2023 | Written By Kristin Ryba
