The bottom line benefit of retaining your top employees
Learn about strategies and tools to help retain your best employees.
Take a good look at a successful small company, and it’s a safe bet it not only attracts great workers, but keeps these employees over the long term. Retaining employees saves companies money, which goes directly to superior bottom-line performance. Some estimates suggest that when a company has to replace a typical salary earner, it can expend in recruiting and training costs the equivalent of six to nine months of the employee’s annual salary.
A number of experts believe small companies should aim for an 85 percent retention rate on a year-by-year basis. But for small companies already stressed by the rigors of growth, ensuring top talent stays put can be easier said than done. Monster, the online recruitment tool for employers and job seekers, reports 82 percent of surveyed employees have refreshed their resumes in the past half year, and almost 6 in 10 continually seek new jobs. For small businesses competing against larger companies with much greater resources, those figures can be daunting.
Clearly, employee retention is key to greater small business success. But while you can't retain every great performer, you can establish programs and processes designed to help increase the odds employees are retained. Let’s first examine some of the reasons employees leave companies, before shining a light on a handful of strategies created to help keep your employees from seeking greener pastures.
Decision to depart
According to the U.S. Bureau of Labor Statistics, the average tenure of an employee in the U.S. has fallen to just 18 months. Leading factors in employee defections include opportunity to obtain increased salaries elsewhere, dislike of co-workers and supervisors, the belief that bosses are inflexible in scheduling and time off and the inability to convince supervisors to listen to their needs. Many American workers lack any sense that they belong, have a purpose and make a difference within their companies.
While all of the above are significant, lack of opportunity for skills training and growth within organizations may be the single biggest factor leading to employee defections. According to a survey conducted by Achievers and Experience, Inc. cited in an article by Jacquelyn Smith in the April 3, 2012 issue of Forbes, recent college graduates valued career advancement over anything else. Small companies need look no further than their own willingness to invest in their employees to grasp and appreciate employees’ willingness to invest in them. When a company is eager to invest in employee development, the result is often above-average employee engagement and retention.
Numerous strategies and tools can be employed to boost the percentage of employees retained by your company or organization. Combining all or most of the following approaches could lead to a dramatic increase in retention rates.
Regular reviews and evaluations. Everyone likes a pat on the back for performing a job conscientiously. But employees also value constructive feedback on their performance, as well as reviews of expectations and objectives. Scheduling recurring one-on-one reviews is a way to help employees feel appreciated by their organizations. It also gives management an opportunity to learn what employees seek from their jobs.
The “stay interview.” Many companies schedule employee exit interviews. In these one-on-ones, interviewers are likely to ask, among other things, why the employee is leaving the organization. But not as many insist on slating “stay interviews” with evidently happy, long-standing employees. These interviews can reveal why employees remain in their jobs, what they like and what they would change about the employer. Their answers can help you fine tune your approaches to retention.
A clear path upward. Small businesses with high employee retention rates help employees visualize upward movement. They invest in training and mentoring programs that enable workers to hone their skills. And they enable employees to recognize hard work will pay off by promoting whenever possible from within the organization.
Health insurance. The provision of health insurance is a key factor in hiring and retention. If a health insurance plan is beyond your firm's resources at present, consider reimbursing employees' health insurance premiums.
Monetary rewards and incentives. Substantive pay increases, stock options and other financial awards provided to employees who meet performance benchmarks and remain with the company for specified time periods can serve as cement holding employees in place. In addition, consider incentives and contests that build interest and enable workers to recognize linkages between hard work and remuneration.
Fostering work-life balance. Small firms are often more nimble than their larger counterparts, meaning they may have an edge in providing work-life balance. Job-sharing, telecommuting, flex-time, permanent part-time arrangements and even free dry cleaning pickup and drop-off can convince staff you’ll be flexible in helping them juggle work and leisure life.
Tech-enabled Retention Solutions
A number of tech-enabled tools have been unveiled in recent years to streamline retention efforts while making them more efficient. Among these tools are:
TINYPulse. This Seattle company created a software solution to enable companies to gain actionable feedback from employees in an anonymous and real-time manner. This is accomplished through short, recurring surveys to which workers feel safe responding.
Halogen TalentSpace. This talent management software suite was introduced to provide companies with the means to better oversee performance appraisals, coaching and leadership development and foster a pay-for-performance corporate culture.
Slack, HipChat and Lua. These software tools were designed to import social media mechanisms into organizations to spur real-time communication and collaboration. They give workers a voice in decision-making that can help them feel empowered, motivated and valued.
There’s much to gain when you retain. Employ the strategies above, and your company may soon be more consistently grooming leaders of tomorrow, while saving the high costs of defection today.