If your people are your source of innovation, it’s clearly important to retain them. But not only that, employee retention is crucial for the bottom line. Employee turnover is also costly for organizations and can directly impact business performance.
Given its importance, we’ve taken a closer look at what employee retention is, why employees decide to leave, why retention matters, plus eight ways to retain employees that work.
What is employee retention?
Employee retention is an organization’s ability to keep (retain) its current employees. Employee retention strategies are the actions organizations take to keep employees happy, engaged, and productive at work.
Why do employees leave?
Despite an organization’s best efforts, employees leave for myriad reasons.
- Not feeling valued
- More flexible work arrangements
- Better company culture
- More competitive pay
- Better employee-manager relationship
- Better opportunities for career advancement and/or job growth
- More defined career path
- More affordable health insurance
- Misalignment with an organization’s values
- Better work-life balance
- Better job satisfaction
- Priorities have changed
- Feeling burned out
5 retention mistakes employers make
|1. Ineffective managers||Managers influence almost every key driver of employee engagement, meaning it’s critical that managers have the support and tools they need to not only listen to their people, but act on feedback to improve their experiences.|
|2. Focusing on monetary benefits only||Our research showed that those who left their jobs voluntarily said they would return to the workforce if the following benefits were offered to them: 1) More flexibility on working hours, 2) Reduced working hours. and 3) Increased paid time off|
|3. Thinking well-being and burnout prevention is the employee’s responsibility alone||Organizations, managers, and employees all have a role to play here.
Organizations can help prevent employee burnout by establishing policies that promote work-life balance, prioritize well-being and restoration, normalize taking unplugged time off, and lead by example.
|4. Discriminating against working parents||A recent study revealed that 45% of working parents felt discriminated against in the workplace as a result of focusing on family responsibilities.
If organizations want to retain top talent in today’s competitive labor market, they will need to respond to working parents’ new realities – and expectations – for a better work experience.
|5. Not taking action on employee feedback||Our data shows that listening without taking action actually results in worse engagement than if you don’t have a listening program at all.|
Why does employee retention matter?
As we mentioned earlier, employee retention – and employee turnover – have an immediate impact on an organization’s bottom line. But that’s not all. Employees that are unhappy are less productive, have lower levels of engagement and morale, and are less likely to feel a sense of belonging at work (more on that, below).
Conversely, research shows engaging employees makes them more inclined to work harder and solve problems, grow and develop faster, get along with people better, and stay longer at a company.
All these factors have a measurable business impact:
- Improved performance. SHRM research shows that people who are engaged in their work are more likely to help the company achieve its goals.
- Lower attrition. According to the Oxford Handbook of Positive Psychology at Work, engaged employees are 87% less likely to leave their organization, which means reduced turnover costs in having to recruit new staff, train them, and wait for them to ramp up to full productivity.
- Increased revenue. According to Gallup, high team engagement contributes to 21% greater profitability and those teams who score in the top 20% in engagement realize a 41% reduction in absenteeism and 59% less attrition.
- A better customer experience. The same Gallup study found that high employee engagement contributes to a 10% increase in customer ratings and a 20% increase in sales.
8 employee retention strategies that work
Now that you know the importance of retaining employees, it’s time to take action.
Here are eight employee retention strategies that will keep your employees happy and encourage them to stay:
1. Listen (and do it regularly)
Listening – and listening regularly – has a big impact on engagement and therefore retention too. For example, engagement rises to 61% for those whose company has a feedback program, compared to 45% for those without.
Frequency of listening makes a big difference, too. Even if you have an engagement program, asking people for their responses once a week (or even more) can boost your engagement score by as much as 10%.
Asking for feedback not only makes employees feel heard and valued, it has the often highly lucrative benefit of gathering ideas to improve the entire business – not just an employee’s day-to-day life.
Collect and apply employee feedback with our 360-Feedback eBook: Download Now
2. Understand – and act on – the results
Meanwhile, companies’ execution based on employee feedback has a direct, positive effect on the employee experience. As more employees grow satisfied with the action their organizations take based on feedback, the higher employee retention and engagement goes.
Asking for feedback through employee engagement surveys helps you to understand your employees’ attitudes at work and how they view your company.
However, don’t bother asking for feedback if you’re not going to act on the results. Our data shows that listening without taking action actually results in worse engagement than if you don’t have a listening program at all.
Why? Because then you’re not really listening. Understanding and acting are crucial steps in the listening process. Your people will soon lose faith in the process if they don’t see changes being implemented.
Instead, take a deep dive into the results.
Look at the data for trends in areas such as career progression, senior leadership communication, and managers. For people who said they may leave in the next three to six months, what are the common reasons?
Here are some examples of how to take action:
- If the majority of your employees state their managers don’t empower them to make decisions, dig deeper into what your managers need to be more effective. You might set up a training program to help managers become better champions for their people.
- If employees feel like senior leadership isn’t transparent, consider having your CEO film a weekly video series or send out a newsletter from the C-suite. Or, create a Slack channel where employees can talk to senior leaders directly, and get their questions answered. Either option helps increase transparency, as well as communicates the leadership team’s vision and priorities — something we know is a key driver of employee engagement.
The key in both of these situations is to take action – and to ensure that you communicate the actions being taken to employees so they know their voices have been heard.
3. Foster a sense of belonging at work
When we spoke to more than 11,800 participants as part of our annual global study of employee experience trends, a sense of belonging emerged as the strongest driver of employee engagement – ahead of typical drivers like trust in leadership and ability for career growth.
According to our research, only 20% of employees who feel they don’t belong are engaged versus 91% of those who feel they do – that’s three and a half times more. A sense of belonging not only meets your employees’ basic needs, it inspires their work and drives better business results.
Our research also shows that managers directly influence a feeling of belonging in their teams. Employees who trust their managers believe that they care about them as individuals, and listen to their perspectives experience a high sense of belonging. Feeling supported in adapting to organizational changes is one of the top influences on having a sense of belonging.
While our understanding of belonging continues to evolve, we know that it is a key component of inclusion, which has been proven many times to have great outcomes for both employees and businesses.
4. Support employee well-being to increase employee retention
Well-being correlates with important factors like an employee’s intent to stay at a company. According to our 2021 Future of Work study, employees who reported improved well-being during the pandemic were 65% more likely than others to say they’ll stick with their current employer long term.
So, what does supporting employee well-being look like exactly? Nowadays, it’s more than wellness initiatives (like on-site gyms and free yoga classes) and EAP programs. And while both still add value to employees’ lives, they’re not the end-all, be-all organizations once thought them to be.
Instead, organizations should listen to the needs of employees and then act on that feedback accordingly.
Whether it’s providing flexibility to employees as they juggle work and personal responsibilities, supporting employees as they attend to any family health concerns, or just taking the time to listen to employees’ concerns, it’s a necessity at this time for organizations to care and support employees’ well-being.
5. Take a holistic approach to preventing employee burnout
The pandemic – and the pivot to remote and hybrid work – exacerbated many of our built-in boundaries with work. So, it comes as little surprise that a study we recently conducted revealed burnout and stress among the top reasons why employees say they will look for a new job in the next year.
So, what’s causing widespread employee burnout? When the pandemic hit, and many (if not all) employees began working from home, organizations relied on technology to keep their businesses running. And while workplace technology enabled employees to do their jobs from home, new behavioral issues arose, such as employees not shutting off from work (due to always having access) or not taking time off (because they had nowhere to go).
Organizations, managers, and employees all have roles to play in preventing burnout – and ultimately, influencing workplace culture:
- Organizations build the environment where culture takes place by creating the structure around how, where, and when work gets done work; taking time off; focusing on well-being; and so on.
- Managers perpetuate the culture by modeling behaviors and helping employees prioritize work, and encourage employees to take (restorative) time off.
- But ultimately, it’s employees who dictate the culture by establishing their own boundaries with work, communicating with their managers about workload, and taking ownership of restorative time outside of work.
Organizations can help prevent employee burnout by establishing policies that foster work-life balance, prioritize well-being and restoration, normalize (and encourage!) taking unplugged time off, and aligning action with rhetoric (especially as it pertains to leaders’ setting an example with their own behaviors).
We see some companies giving employees recharge days – or even weeks – off to allow them to focus on their well-being without worry of falling behind or missing something. And while these extra days off are helpful for taking temporary breaks, preventing employee burnout requires a holistic and sustainable approach to promoting a healthy work-life balance.
6. Offer flexibility
A recent study by the Future Forum revealed that flexibility is now one of the top factors influencing attraction and retention at organizations. Indeed, nearly all (93%) knowledge workers want a flexible schedule, while 76% want flexibility in where they work.
Knowing what employees expect can help organizations understand their needs and preferences – including how and where they want to work, as well as what matters most to them – and then take action on those expectations.
And with 44% of people saying they’ll look for a new job in the next year, now is the time for organizations to do the work; to take a hard look at their retention strategies and provide employees with the tools they need to establish healthy boundaries with technology – wherever they’re working.
7. Upgrade the physical workspace
The return to work will offer a chance to upgrade the work experience: many employees (46%) want to see the layout of their office space change significantly following the pandemic, and those working in large, open offices are over 30% more likely to want to see their office space change than those in divided spaces. The open office experience that provides employers such flexibility is ripe for change, according to employees.
For employees heading back to the office, their top priorities include:
- More quiet and private working spaces
- More flexible meeting and collaborative areas
- More space between desks
From on-demand space to occasional face time, employees cited the following as the changes that would improve remote productivity for them the most:
- Access to office space when needed
- Ability to meet up with colleagues in person when needed
- Access to physical resources in the office when needed
- Ability to meet with clients, customers, and other external parties in person
- Being able to plan ahead more reliably
Listening and taking action on employees’ physical workspace preferences will not only deliver on their expectations but demonstrate their voices are being heard in a (future) transition back to the office.
8. Do ‘stay’ interviews
Companies often perform an exit interview with a departing employee but rarely do they incorporate stay interviews to help with employee retention.
A stay interview is a conversation with an employee to help managers understand what’s important to the employee. It should be an individual conversation with an employee and their manager.
Common questions include:
- Which aspects of your job make you eager to come to work each day? Which aspects do you not look forward to?
- How well do you believe your talents are being utilized? What skills do you possess that you feel aren’t being utilized?
- What are your career aspirations? How are we doing in helping you accomplish them here?
- Have you ever thought about leaving the company? If so, what caused you to consider leaving? Why did you decide to stay?
- What are the biggest challenges you face? Is there anything you’d like to change about your job? Are there things you would like to change about your team or department?
The pandemic has been long, difficult, and devastating, but it’s also allowed us to discover better ways to work. We’ve realized that flexibility is the future, that different people work in different ways, and meeting people where they are is key to employee retention.
As organizations build their return-to-workplace strategies, one size won’t fit all, but they can create these better experiences by continuously listening to their employees, then taking action on the feedback they receive — now and in the future.