What is an employee retention strategy?
Employee retention strategy
An employee retention strategy is any method a business uses to decrease turnover rate & increase new long-term hires.
Any method a business uses to decrease its staff turnover rate and increase the percentage of new hires that stay with the company long-term can be considered an employee retention strategy. These strategies are specifically implemented to minimize the impact of attrition and maximize talent retention.
Common employee retention strategies usually involve increasing salaries, fostering a more positive culture, improving standard benefits, providing additional or atypical benefits, improving work-life balance, or any combination of these.
It’s no secret that the job market has changed drastically over the last few years. Between the COVID-19 pandemic, the proliferation of remote and hybrid work, and ongoing inflation, the way employees view and relate to their jobs is very different than it used to be. Because of these changes, many businesses have been struggling with high turnover rates and are now looking to improve their employee retention.
The benefits of employee retention strategies
Lower onboarding costs
Perhaps at the forefront of most businesses’ drive for better employee retention is the staggering cost associated with high turnover rates and employee attrition. When an employee leaves their position and needs to be replaced, a company has to invest massive amounts of resources into filling that role.
Hiring a new employee means spending money on advertising and outreach, hours from leaders’ workdays to review applications and conduct interviews, and days or weeks with HR and new hires doing onboarding.
These are all crucial steps, and they’re well worth investing in, but they can be a serious drain on a business’s budget when turnover rates are high. In many cases, it’s better for a company to simply not have to go through these processes by maintaining high employee satisfaction and retention. With an effective employee retention strategy, a business can make more productive use of the funds and work hours that would otherwise be dedicated to recruiting, hiring, and onboarding for recently vacated roles.
As much as effective employee retention strategies are about keeping good employees, they’re also about growing and improving the business as a whole. High employee retention over the course of a decade or more means that a company has a higher density of workers who intimately know the business’s operations, tactics, goals, and culture. This means more people invested in the mission and more potential to expand the business’s vision into the future.
Some particularly innovative employee retention strategies involve cross-training and skill-building outside of an employee's immediate responsibilities. While this might seem like a distraction from a given employee’s day-to-day work, it ultimately results in a better employee and a stronger organization.
After all, a more skilled, more diverse workforce leads to better outcomes. By training employees in different departments and encouraging them to explore skills not directly related to their duties, a business can ensure that its staff is always prepared for change and innovation.
What are the best employee retention strategies?
Right now, employees are often not sufficiently rewarded for loyalty. Many businesses offer stagnant or slow-growing wages, resulting in lower salaries for long-term employees than what other companies are offering to new hires. This means that the best way for an individual to increase their income is to switch jobs.
Combating this type of attrition is simple. Businesses that want loyalty need to reward it by increasing wages. An employee will be much less likely to leave for a new position if they are properly compensated in their current position.
Businesses can accomplish this by offering frequent and substantial raises, bonuses, and cost-of-living adjustments. Likewise, businesses should be improving their benefits packages, helping pay off debts and loans, and extending benefits to spouses, partners, and dependents.
Offer career growth and experimentation
An employee who feels like they’re stagnating is unlikely to stay with a company for longer than they have to. Companies should counteract this by emphasizing career growth and experimentation. Those who want to move up the ladder should be shown how to achieve that goal, those who want to try something new should be allowed to experiment, and those who enjoy their position and work as-is should be allowed to continue their work and develop as they see fit.
Crucially, employees in all three categories should be made to feel important, valued, and respected. This type of security breeds innovation, and each type of employee plays a critical role in the structure and culture of a company.
Encourage movement between departments
Many employers hire with the assumption that an employee will stay in the department they're hired in. However, if an employee starts in one team but finds themselves called to another area of the business, this is still a win in terms of retention, and it will likely lead to a happier employee.
Likewise, managers who are skilled at identifying an employee’s strengths and directing them to the right department, team, or line of work can help streamline operations, improve morale, and build a strong reputation for the company. There are still costs associated with moving employees around in this way, but they are far lower and far less risky than those associated with onboarding new hires.
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