Employee Retention: How to Keep Your Top Talent
Charlette has over 10 years of experience in accounting and finance and 2 years of partnering with HR leaders on freelance projects. She uses this extensive experience to answer your questions about payroll.
Jennifer Hartman is an HR Specialist and staff writer for Fit Small Business, with over 15 years of experience in accounting, payroll, and human resources.
Strong employee retention can be a significant part of organizational growth, as it provides a host of benefits—from reduced costs to improved employee satisfaction to a better customer experience and even higher revenue. You can improve your employee retention by competitively compensating your employees with fair wages and benefits, focusing on work-life balance, and providing opportunities for development and upward mobility.
This article dives into nine employee retention strategies that will benefit your organization and your employees, making it more likely they will stay and achieve their goals within your company.
1. Ensure Pay Is Competitive
Offering competitive salaries is not only an excellent way to attract and hire employees but an important way to retain them. Providing employees with competitive salaries and offering raises and bonuses consistent with industry standards reduces the chances of your top talent finding better offers elsewhere. Moreover, giving regular performance-based pay raises and/or bonuses demonstrates a company’s commitment to the employee and can build goodwill—even if the company can’t always keep pace with competing offers.
Did You Know?
Due to the Great Resignation of 2021, companies are projected to increase employee salaries up to 3.9% in 2022, the highest rate in nearly 15 years. A raise in salary of this level can help with employee retention.
Competitive pay is more than just dollars in a paycheck: It also includes the benefits offered to employees that contribute to their total compensation—healthcare coverage, life/disability insurance, paid time off (PTO), and retirement benefits. Making sure that your total compensation package is competitive will also increase your chances of retaining your employees. With 20% of workers considering leaving their jobs to seek freelance employment, offering a robust benefits package can help increase employee retention.
2. Incorporate Onboarding & Orientation
Many companies find that turnover is highest among new employees, so it’s important to give them the resources they need to succeed from the beginning. Research shows that formal onboarding and orientation increases employee satisfaction by 70%, and can result in a new employee being 2.6 times more likely to remain at their job.
Take steps to retain talent from the first day by providing employees clarity around their roles, day-to-day requirements, and what success looks like—all of which can be accomplished with a formal onboarding and orientation process. By supporting an employee’s growth mindset from the beginning, you’ll be more likely to retain top talent in the long run. According to a Gallup poll, 29% of new hires feel fully supported and prepared for their new role following a detailed onboarding and orientation process. This can help them master their positions and future career growth.
3. Communicate Openly & Transparently
To build trust and make employees feel at ease, develop a company culture that encourages open communication and fosters a feeling of psychological safety in the workplace—whether that be in an office or on a video call. Communication should also go both ways, so solicit input from your team members to nurture engagement, build trust, and encourage employee retention.
Did You Know?
Due to the changes in the workplace as a result of the pandemic, approximately seven in 10 employees feel burned out in their jobs, in part due to lack of communication around workplace changes, what’s expected of them, and other areas.
Being transparent with your employees about company policies and decision-making can also make employees feel more loyal to—and invested in—your company. Communication should inspire employees’ confidence in themselves, their colleagues, and the company itself. Hold at least a monthly all-company meeting to discuss:
- Company outlook
- Employee achievements
- Policy updates and reminders
- Strategy objectives
- Organization goals
- Budget goals and achievements
4. Prioritize Work-life Balance
In addition to promoting a corporate culture that encourages open communication, set and enforce policies that support a healthy work-life balance. Depending on your organization, this may mean offering work-from-home options (even post-pandemic) or otherwise facilitating flexible work hours. In fact, a survey suggests that employees working flexible schedules (such as four-day workweeks) have a 63% higher sense of well-being.
Work-life balance can also involve maintaining manageable workloads (do regular check-ins to ensure it’s working for the employee), creating a positive work environment, and providing wellness programs. Allowing employees to prioritize a healthy work-life balance will make them more likely to stay with your company for the long haul.
Check out our employee retention statistics article for more useful data you can use as you develop your employee retention strategies.
5. Conduct Regular Performance Reviews
One-on-one performance review meetings with managers can help employees understand the definition of success in their roles and are a great opportunity for supervisors to learn more about what makes an employee tick and what they need to be their best selves. This not only helps you better manage your employees day to day but also lets you learn about—and nurture—their professional goals. Sometimes, all you have to do to retain top talent is ask the right questions and listen.
Additionally, conducting regular performance reviews can help tie an employee’s performance to your company successes. This gives managers a chance to weigh the expectations of employees against their performance and contributions. Clearly outlining goals and performance can lead to a more positive work environment.
With Gallup reporting that some companies had to make abrupt changes to their performance reviews or cancel them altogether as a result of the COVID-19 pandemic, it is important to build a process that is adaptable and responsive to changes in your business as well as timely and ongoing (don’t just meet once a quarter, but have more frequent, informal performance check-ins with your employees).
For a look at some of the key qualities your managers should have, check out our article on the top people management skills.
6. Offer Personal & Professional Growth Opportunities
Companies that want to retain their top talent should provide employees the tools they need to be successful in their current roles—and as they develop. Learning how to use new software or hardware, developing skills that will be transferable to other areas of the company, and offering up-skill training are all ways companies can keep employees engaged at work. By investing in team members, companies increase employee loyalty and productivity.
Training and developing your team should be a top priority in employee engagement and retention. Training new employees on company policies, learning new skills, and creating opportunities for professional development are all ways to keep your team engaged and productive. With two-thirds of management actively involved in professional development, this will be an investment that pays off in the long run in terms of productivity and morale (a possible 3-1 return on investment). It will also ensure that your workforce is staying in line with any changes or developments within your industry.
Start with offering job training and education opportunities that can be translated into role advancement for your employees. Depending on the employee, it may also be helpful to cover education expenses to grow in a relevant field or to encourage conference attendance through financial assistance and flexible work schedules.
You can keep track of your return on investment (ROI) for training and development with this simple formula:
((Value of increased performance – Cost of employee training)
÷ Cost of employee training) x 100
7. Promote From Within
Whenever possible, consider the career paths and goals of your employees in the context of existing roles in the company. Promoting from within not only boosts morale but can be the key to keeping employees engaged, even as their goals and interests develop. This is partly because employees are more likely to participate in corporate events, training sessions, and other activities when there is a greater likelihood of promotion. Internal promotions also foster a greater sense of loyalty—which leads to higher employee retention rates.
Did You Know?
LinkedIn found that companies with a high rate of internal promotion see 41% longer employee tenures than companies with low rates of internal hiring.
The current labor market is competitive and many employees are finding it difficult to stay employed with a single company for their entire career. In fact, 36% are actively seeking employment elsewhere, and the No. 1 reason is lack of career opportunities. In response, some companies have adopted a promotion policy to retain employees. This policy is most commonly found in the tech industry where the boom of startups has created fierce competition for top-level talent.
8. Challenge Employees
According to Forbes, up to half of your workforce or more may be bored in their jobs. Giving employees new and challenging tasks can help them learn new skills, use more of their talents, and feel more engaged in their work.
Boreout:
The state of being chronically bored, which, like the better-known phenomenon of burnout, can lead to disengagement, poor work performance, and turnover.
Depending on the role, employees may benefit from stretch assignments that require them to go beyond their current expertise or skill set. Provide a safe environment for them to experiment, fail, learn, and develop.
Careers should be designed with top talent in mind so that they are given the opportunity to grow and learn within the company. Challenging positions tend to increase motivation and engagement among employees. However, don’t make the job so challenging that the employee wants to give up.
9. Give Employee Recognition
Creating a culture of recognition not only increases employee confidence in completing day-to-day tasks but helps employees feel more secure in their positions. In fact, employees are more than twice as likely to experience burnout when they feel unappreciated. Managers can nurture team members and encourage high retention by setting tangible goals, providing ongoing feedback, and celebrating accomplishments.
This type of positive reinforcement is even more effective when managers tie individual achievements to company-wide goals and initiatives. Beyond the virtual meeting call-out, employers can show their appreciation to employees in a number of ways, including:
- Bonuses
- Pay raises
- Swag gifts
- Company logo products
- Additional paid time off for a job well done
Read our guide to the best employee recognition ideas for more information.
Bottom Line
High employee turnover is expensive and bad for morale and can negatively impact the performance of other employees. Plus, depending on the job market, it can be difficult to continuously hire high-quality team members.
To retain the employees you hire, you need to plan accordingly, from onboarding to policies to pay. Employees who feel valued and heard are more likely to work with you long term. Making it a point to build trust, show appreciation, and provide everything your employees need to be successful in their position will lead to stronger employee retention.
