How to Improve Employee Retention
It’s a big problem in business. 90% of executives said keeping new hires is an issue in their organizations (Korn Ferry). 87% of human resource leaders say improved retention is a high/critical priority (Kronos).
Since so many organizations are struggling with this issue, employees have options. Dealing with high rates of turnover and competing for talent quickly becomes expensive, time-consuming, and disruptive. Retaining the high-performing, high-potential employees you’ve already got is more important than ever.
Why Employees Seek New Jobs
Even those who aren’t actively looking are likely open to hearing about other opportunities. Recent data reveals that:
- 59% of US workers are likely to leave their jobs for new opportunities (Adobe)
- 47% of Americans would leave for their ideal job even if it meant less pay (Adobe)
Here’s why so many employees are considering making a change:
- 41% of employees said they would need to leave their current employer in order to advance their careers (Towers Watson)
- 40% of employees choose to leave a job because of a "lack of advancement/opportunity" (Express Employment Professionals)
- 10% of employees think they’re not being paid what they’re worth so much that they’ll quit their job (BambooHR)
- Top reasons why job seekers will leave for another job: more compensation (61%), location (42%), better work-life balance (40%), health benefits (36%), growth opportunities (35%), company culture (21%) and leadership (15%) (Jobvite)
This illustration from PWC shows the most common reasons departing employees gave in their exit interviews.
These are the reasons given in exit interviews. These are the reasons people accepted other jobs. Probing a little deeper reveals useful information, too. Gallup’s research with employees who recently started a new job asked “What initially caused you to consider a new job offer?”
The top four reasons in that research show these reasons people consider leaving:
- Without expectations and guidance, I do not have a sense of what it takes to be successful. I’m not sure what my manager wants or how to go about delivering.
- My manager does not provide consistent and clear expectations.
- My manager has not shown me clear ways to enhance my earning potential and career development.
- My manager does not provide regular feedback or coaching about my work performance.
All four of these reasons were given more frequently than a need or desire to earn more money. The common denominator in these four reasons? The manager. This demonstrates just how important the manager’s role is in employee retention. Discovering how to improve employee retention starts with understanding the manager’s role in employee engagement and the employee experience.
What’s the Impact of Low Retention Rates for Your Company?
The immediate impact of turnover is that people have to scramble to cover open positions. This zaps morale and increases the risk of additional employees being open to the idea of leaving. There could be an adverse impact on productivity, quality, customer satisfaction, expense management, and revenue.
That’s why $11 billion is lost annually due to employee turnover (Bloomberg BNA).
To calculate the likely cost of turnover in your organization, start with this finding. Replacing a lost employee costs 150% of that person’s annual salary. (Columbia University)
That’s an average. Senior-level roles, sales roles, and highly specialized roles will likely cost even more. The cost to replace an employee includes expenses related to recruitment, selection and onboarding. Expenses for overtime and temps may be a variable to consider, too. Don’t forget to factor in lost opportunity costs as production rates decline, quality suffers, customers and sales opportunities are missed, and strategic options are overlooked.
Of course, some turnover is unavoidable. Some is desirable, particularly if there are underperformance of other issues. Wondering how your organization stacks up when it comes to retention? The average employee tenure is eight years, the annual turnover rate is 19% and the involuntary turnover rate is 8% (SHRM). You can use this as a general benchmark to see how you and your managers are doing.
Suffice it to say that there is an impact when people leave. That impact is felt by other employees and by customers. Ignoring the impact, discounting the related costs, or passively accepting turnover as “business as usual” won’t serve you well.
To download additional stats on employee engagement, check out this comprehensive resource from Access Perks
Next Steps for Improving Employee Retention
Take an active and assertive command to improve retention rates. Step-by-step, here’s what you can do.
- Be proactive. 75% of the causes of employee turnover are preventable (HR Dive). Diagnose why people are leaving and develop a plan that addresses the root-cause issues.
- Conduct stay interviews. Don’t wait until it’s too late. Exit interviews are a lagging indicator. Ask current employees for input about what they like and what they’d like to see done differently. Hear them out and look for recurring themes so you can make positive changes. 92% of employees say showing empathy is an important way to advance employee retention (Businessolver). Asking for input and responding to it will demonstrate empathy and a genuine interest in employees’ input.
- Train managers. Manager training is essential. Basic supervisory skills training can significantly boost employee engagement AND retention rates. This article explains the links. Without training, it’s not fair to expect managers to know what, why and how to simultaneously manage work AND lead people. Consider a course like Workplace Conversations, available onsite for a group of managers or online and self-paced for individuals.
- Focus on employee engagement. Make it a part of manager training because employee engagement is inextricably linked to manager actions. This on-demand presentation describes specific strategies for improving engagement levels. Managers can also download this customizable job aid. It’s a daily checklist of simple, practical actions that increase employee engagement.
- Put people first. This on-demand webinar describes the practical, tactical steps you can take in your organization to ensure people feel supported and connected. One of the most important ways to put people first and build organizational strength is to invest in employee development. Employees who get the opportunity to continually develop are twice as likely to say they will spend their career with the company (Gallup).
At People First Productivity Solutions, we consult, coach and train executives and managers so they can boost employee engagement, create employee experiences that improve productivity and job satisfaction, and become stronger overall. These are the essential ingredients in achieving long-term business success. Let us know how we can help you!
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