Finding ways to improve employee retention should be an important concern for every business owner, manager and HR professional. Replacing employees who leave is something that can be quite costly. HR.Toolbox.com reports that the cost of turnover is generally estimated between 25 and 50 percent of annual salary for hourly positions, and is even higher for managerial jobs. With the high cost of turnover, it's easy to see why it makes good business sense to take steps to boost retention.
Seven Ways to Improve Employee Retention
1. Hire for "Fit"
One of the best ways to improve employee retention is to make sure you are hiring the right people to start with. This involves going beyond making sure that you are hiring people who have the necessary skills, but also ensuring that you're hiring people who are a good fit for the culture of your organization.
According to CNN Money, companies should communicate information about company culture early in the recruitment process, using psychometric assessments to determine key characteristics and have prospective hires interview with several people across the organization.
2. Leadership Development
According to Forbes.com, manager behaviors play a major role in employee retention. The way that employees feel about their managers - and company leadership as a whole -has a huge impact on whether or not they decide to stay or leave. Those who feel micro managed and who view management as unappreciative or unwilling to listen to them tend to feel dissatisfied, and are thus inclined to leave.
Providing leadership development training to supervisory employees to make sure they know how to build a strong team and create a positive environment that meets the needs of workers can go a long way toward boosting retention.
3. Performance Appraisals
Employees want to know how they are doing in their jobs and to be clear on what is expected of them. Those who don't get such feedback may start to feel lost, become disengaged and start to think about leaving. Companies that want to improve retention are well-served by implementing a formal, performance evaluation system as a tool for improving retention that includes frequent performance-related communication between employees and managers as well as completing formal employee evaluation forms periodically.
As Workforce.com points out, performance appraisals can go a long way toward making sure that your best performers know their efforts are appreciated - regardless of whether or not raises can be given. They also serve as a constructive tool for managing those whose performance is not up to expectations.
4. Recognition Programs
Recognizing employees for their contributions and accomplishments can go a long way toward boosting employee retention. According to World at Work: The Total Rewards Association, companies that utilize formal employee recognition programs have worker satisfaction ratings double that of companies that do not have such programs in place, resulting in a positive impact on employee retention.
These programs can take many forms, from recognizing years-of-service with plaques and promotional items to publicizing employee accomplishments in company newsletters to providing incentives for outstanding accomplishments and more.
5. Employee Training
Providing employees with access to job-related training opportunities can have a powerful impact on retention. According to HCareers.com, providing employee training can increase retention by as much as 70 percent.
Some of the impact can be attributed to the fact that teaching people how to do their jobs can have an impact on how effectively they perform, thus reducing performance-related terminations as well as employees who decide to leave because they don't feel comfortable with what they are doing. Additionally, when a company is willing to invest in employee development, workers are likely to feel valued and appreciated.
6. Promote from Within
Companies that exhibit a willingness to promote employees from within often enjoy higher employee retention rates than those who do not. Employees who want to move up are simply not likely to stay in jobs where they do not feel that advancement is a possibility. Even if you have a policy that allows and encourages internal promotions, employees are not likely to see advancement as a real opportunity if they don't see the organization making decisions to promote from within.
HRMOnline.ca points out that implementing formal career pathing and succession planning programs can have a positive impact on retention, and can also help ensure that internal candidates are prepared when promotional opportunities become available.
7. Employee Benefits
Offering a comprehensive benefits packages can play a major role in improving employee retention. In a 2012 MetLife study, more than 60 percent of employees who reported satisfaction with benefits also reported feeling loyal to their employers, something that The Society for Human Resource Management (SHRM) sees as an indicator of just how critical benefits packages are to employee retention. Microsoft Business recommends finding out what kinds of benefits are important to the members of your workforce and designing packages that meet those needs.
Success Through People
People are critical to the success of any organization. To enjoy long-term success, modern organizations must focus not only on finding talented people, but also keeping talent within the organization. Making a commitment to improve employee retention is one way to have a significant and positive impact on the bottom line of your business.