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What are employee retention best practices
Employee attrition costs US businesses 1 trillion dollars a year. For many businesses, the cost of replacing just one employee equals more than 24% of their annual salary. No wonder then that employee retention best practices have become the focus of HR departments across the country: it’s simply too expensive not to. Strategies to increase employee morale, decrease voluntary turnover and keep the workforce happy and engaged have the potential to make or break a company.
An effective employee retention strategy can include anything from employee development and tuition reimbursement programs to childcare to employee appreciation. They all have one common thread: they revolve around employee satisfaction. Here we'll look at six best practices that companies around the world have found effective in stemming attrition and retaining their valued employees. First, though, for a few statistics:
Statistics on employee retention best practices
Statistics show that only one in four employees are satisfied with their jobs, and employee disengagement is running rampant: 64% of workers are either not engaged or actively disengaged at work. As many as 70% of employee turnover is caused by employee dissatisfaction, while employee satisfaction has the power to reduce employee turnover by up to 50%.
Of those who voluntarily left their jobs, 33% did so to get away from their manager and another 31% were looking for a better culture fit.
The tech industry has some of the lowest employee turnover rates (20%+), compared to hospitality (33%), retail (31%) and non-profit/education (30%). What is bringing those numbers down? It could be their focus on employee development, or maybe it is the flexible work schedules or potential for remote work. It could also be the perks and benefits they offer, or maybe it's that they know how to recognize their employee's contributions and do employee appreciation right. Either way, it's obvious that the tech industry is doing something right when it comes to employee retention best practices. Need help calculating employee turnover? Use our calculator to estimate turnover costs.
7 employee retention best practices
Here are six employee retention best practices that have been used successfully to increase employee engagement, drive up satisfaction, and bring down turnover rates in companies across the country:
1. Cultural fit is key
Research shows that employees who feel like they belong within the culture, and enjoy getting along with colleagues and managers, stay at the company longer and perform better than those who don't. For example, not only should job postings include a description of the organizational culture, but they should also specifically ask applicants to describe how they match this culture during interviews. Be honest: Employees should be made aware of any cultural challenges upfront, and should also be given the choice to opt out if they would prefer another workplace environment. For example, a call-center employee retention strategy is to inform employees about the loudness of their work environment so that workers can decide whether or not it's right for them. In fact, using models like the 9 Box Grid can further strengthen efforts to ensure employees are a good match for the company’s culture.
2. Offer employee benefits
Offering employee benefits is one of the most commonly used employee retention best practices because it appeals to employees' desire for security and stability. With employee benefits, workers know that they'll be taken care of in case they experience health problems or struggle financially due to large expenses like child care. This leads to high morale and employee loyalty. For industries like construction, manufacturing, or jobs involving fieldwork, providing essential gear such as safety jackets can further enhance employee well-being and job satisfaction.
3. Develop practical and applicable employee training programs
If employees are not given the tools they need to succeed, team morale will suffer. Encourage employee growth through classes, seminars, and tuition reimbursement programs. New employee training shouldn't just include technical skills but also employee development which includes less tangible skills such as communication or project management. A well-structured learning management system can help streamline these training programs, making learning accessible and engaging for employees. Employees who develop their skills can more easily take on new challenges when they arise, and they will stay longer if they know there is room for professional growth within the workplace.
4. Implement employee retention best practices early on in the hiring process
New employees are especially prone to feel out of place and disengaged, so it's important to give them the hand-holding they need as they start out. Employee retention best practices should be outlined before an employee is hired, as this approach will help attract and retain qualified employees and increase job satisfaction. For example, some companies offer a cash bonus for successfully passing the first 90 days of employment on top of their standard salary. This employee retention best practice incentivizes employees to adjust more quickly and encourages them to continue working hard during that time period. A smooth onboarding process and access to a full job description from the get-go is also important for retaining your new hires.
5. Implement employee retention best practices on a personal level
Employees who feel appreciated by their superiors are more likely to stay at the company longer, so make sure every new employee has a supervisor he or she feels comfortable talking with face-to-face or over email. Feedback loops between employees and managers should be offered on a regular basis, not just during the employee's annual review. This is important for keeping your retention rate out. The more supervisors and executives talk to their employees and show interest in what they're doing (and how they can do it better), the less those employees will feel as if management is out of touch with what goes on at work every day.
6. Practice employee engagement
A new employee retention best practice that has been gaining steam is employee engagement - making sure that workers have a sense of purpose within the company as well as giving them ample opportunities to develop skills they can apply throughout their career so they don't get bored or plateau early on. For example, new hires should have access to planned networking events, mentoring programs or workshops so they feel like they belong and can build relationships with coworkers. You can reinforce that belonging through workplace design—creating intentional spaces that make it easy to meet, learn, and collaborate (especially on anchor days) reduces friction and keeps engagement high. An engaged employee is one who sticks with the company, and also one who is productive, creative, and a great contributor to company culture.
7. Recognize employee contributions
While all employee retention best practices are important, recognition for employee contributions has the biggest impact on employee satisfaction and can therefore be called an important factor in employee retention - one that makes it easier for an organization to keep its teams happy. When possible, an employer should find ways to provide public recognition because recent research shows that employees who are recognized privately are more likely to leave the company within 12 months due to lack of visibility. To lower your turnover rate, what you need to do is shout out that employee recognition! For example, company-wide emails recognizing a good employee who has excelled during project milestones can motivate other members on the team while encouraging them with tangible evidence of their contributions at the workplace over time.
Examples of employee retention best practices in action
To find examples of these employee retention best practices in action all you need to do is look at examples of companies who are succeeding in keeping their workforce loyal and their turnover rates low. For, instance Bank of America offers its employees a variety of employee benefits including adoption assistance, discounted mortgage rates and tuition reimbursement programs. This gives current employees peace of mind while also making their job more attractive to potential hires who are looking for perks like these.
For an example of a company providing in-house career growth and training, take Google. Google offers a broad range of courses (ranging from topics like cooking or public speaking to more employee-specific MBA degrees) for employees looking to learn new skills without taking classes outside the company. It also offers employee development programs dedicated to training managers in how to be successful leaders.
One company that runs an especially effective employee appreciation program is Southwest Airlines, which has one of the lowest employee turnover rates in the country. Southwest recognizes employee contributions by highlighting those efforts through employee-of-the-month awards and providing employee discounts and participation in employee stock option programs. These programs are designed to keep employee satisfaction high while also keeping employee retention best practices at the forefront of their employee development strategies.
Employee retention techniques vs. retention tactics
There is a difference between a technique and a tactic. A tactic (a retention bonus, a one-off perk) buys short-term relief. A technique goes to the core of how you run the business and takes longer, but it is what stops attrition recurring. Employee retention is the number one priority for HR professionals.
The seven practices above are techniques. Four more that belong in the same category:
- Offer competitive compensation: retention starts with attraction. A competitive salary and benefits package means an employee never has to choose between staying and paying for decent healthcare.
- Offer challenging work: talented people are looking for opportunities to grow, not easy jobs. Give them work that stretches them, make sure they have what they need to succeed, and let their skills grow over time.
- Offer performance-based rewards: incentives are more powerful than they look. When employees know good work has a real chance of being rewarded, they keep producing it, and loyalty follows.
- Create a work environment people enjoy: pay is not the whole story; people want to like where they spend their days. For office teams that can mean cafeterias, gyms, or quiet rooms; for remote teams it means a strong virtual environment and small perks such as a co-working allowance.
Employee empowerment: the retention lever most companies skip
Retention practices tend to fall under three headings: appreciation, engagement, and empowerment. Most companies work on the first two. Empowered employees do their best work when no one is watching, and they are far less likely to move for a slightly higher salary. Three ways to build it:
Tip 1: Give people the hours they want. There is no reason every employee must be at a desk from 9 to 5. Flexible schedules and remote options raise productivity and morale for the right people, and the number of employees who quit over work-life conflict goes straight down.
Tip 2: Let them help make decisions. Make it easy for employees to weigh in on decisions that affect them, emphasize open communication, and take employee feedback seriously when the decision is made.
Tip 3: Be transparent about company goals. Tell everyone what the targets are, how close you are, and how their work contributes. Transparency builds trust, and trust is what keeps people through a rough quarter.
Three quick ways to show appreciation this week
Appreciation should be daily, not reserved for the moment someone goes above and beyond. Celebrate good work even when it is not perfect; a few minutes of specific praise does more than waiting for a flawless result. Praise in public, but give constructive criticism in private, and never humiliate anyone.
Personalize it. A handwritten card or a short phone call carries a weight that a templated email never will, and one call can make a measurable difference to loyalty and morale.
Final tips for employee retention best practices
As you work to implement employee retention techniques don't forget the goal you're working for, and keep the focus on your talented employees. Your employee retention policy will be exactly as effective as you are successful in meeting the felt needs of your workforce. So don't forget to listen to employee feedback, and work on creating an open, transparent company culture where everyone feels free to speak their mind. Feedback apps like Matter can help create a culture of feedback where employees give and receive kudos, helpful pointers, and constructive feedback from peers and managers alike. Just the simple introduction of this software can be revolutionary in improving the employee experience and giving life to your company culture.
Once you've got your finger on the pulse of your teams, start implementing best practices! From providing recognition for employee contributions or implementing company-wide networking events, these employee retention strategies will help you retain your most valuable resource: people! Which employee retention best practice do you plan on implementing first?
