Up to 5.6 million employees quit their jobs in June 2021 per the Job Openings and Labor Turnover Survey (JOLTS). Another survey reported that 94% of employees would not switch jobs if they had opportunities for long-term skills training.
In this article, we look at the importance of employee retention, why employees leave, why they stay and strategies you can adopt to improve your employee turnover rates.
Why Do Employees Leave?
It's important to understand why employees leave because the costs of employee turnover continue to rise. It takes about 2.5 times the annual salary of an open position to fill it. Additionally, decreased engagement, lower productivity, onboarding, and training costs make obtaining and keeping high-quality employees a huge priority.
Here are some of the main reasons that employees leave their positions.
There's an adage that says people leave managers not jobs. It may not print a complete picture, but it is accurate in many regards. Personality clashes, poor leadership, and other factors indicating poor management can frustrate employees looking for clearly defined goals.
On the other hand, good managers show understanding and empathy, and know-how to motivate their teams. These qualities can improve employee satisfaction and retention.
Toxic or Poor Company Culture
Sometimes employees simply don't fit in with their coworkers, and that's understandable. However, other companies don’t nurture a positive culture and suffer for it when new employees fail to thrive. Culture clashes come from misaligned values and feelings of exclusion. Cultivating a nurturing environment that discourages immaturity and mediocrity can help your company retain motivated employees and limit toxic behavior.
Little or No Professional Development
Employees often seek challenges and opportunities for improvement. This may come in the form of professional development plans clearly identified during the recruiting process and in your company's management practices. Employees doing rote tasks often become bored and disengaged.
The truth is, bored employees often seek jobs elsewhere. Granted, finding ways to inspire motivation, loyalty and passion can prove challenging. However, such efforts go a long way to improve employee retention and morale.
Poor Work-Life Balance
Since the pandemic, more employees than ever realize the importance of having flexible work hours that allow them to balance their personal and professional lives. Companies can include flextime, remote working, and part-time jobs as well as many other strategies to help employees blend work-life balance without diminishing productivity. On the other hand, employees that feel burnt out may seek other employment, ticking up employee retention rates.
Lack of Appreciation
Employees want to feel appreciated. Many employees spend more time at work than at home with their families. Therefore, if they feel passed over for promotions, pay raises, and bonuses, they may look for a position where they feel appreciated and appropriately rewarded.
Work is no longer just about paying the bills. NPR introduced the concept of the Great Resignation. As people emerge from their homes to go back to the office, they miss the flexibility and freedom of working from home. Many of these employees end up defecting to more flexible jobs, sometimes even taking pay cuts to make it happen.
Why Do Employees Stay?
According to SHRM, employees value transparency and fair treatment. In a survey on job satisfaction and engagement, employees identified the following priorities for job satisfaction.
Treating All Employees With Respect
Respectful treatment of all employees includes giving the same respect to the custodial staff as the C-Suite. Even a great compensation package cannot entice employees to stay in a toxic or disrespectful environment.
Compensation and Benefits
Many employees stay for compensation and job security reasons. In fact, these are the main reasons that people list for staying put. Therefore, offering competitive salaries and benefits encourages employees to remain.
However, employers can't throw money at an employee every time a better offer comes along. It's just not fiscally feasible. Therefore, it's important to consider soft factors such as culture, training opportunities and other initiatives that can prevent employee defection.
Competitors are always ready to lure your valuable employees away. Therefore, it's a good idea to discuss and budget for counteroffers, when appropriate. To put it in perspective, employees who leave increase their salary by an average of 15%.
Trust Between Managers and Employees
Employees who trust their managers often stay put longer, even if other opportunities arise. After all, looking for and starting a new job carry significant risks. If someone makes a decent salary, loves what they do and trusts their supervisors, they have little incentive to leave.
Employees with unique skill sets or the assurance of their employers often stay for job security. Turnover rates at many companies can make employees nervous. Therefore, ensuring employees that you value their contribution can help improve retention rates.
Opportunities to Use Their Skills
Many employees take pride in updating their certifications and education with additional degrees, skill sets and knowledge. Providing a workplace that invites employees to improve and use new skills creates a dynamic environment that employees are reluctant to leave.
5 Best Practices to Improve Employee Retention
Working with a proven recruiting firm can help you find, recruit and hire executives and other valuable employees.
1. Provide Advancement and Training Opportunities
Employees who feel they have a strong future at your company don't have a compelling reason to leave. You can help your employees overcome skills gaps. To do so, offer training in digital transformation and other key skills lacking in your current workforce.
In addition to training opportunities, it's important to provide clear career pathing. This allows new hires to envision future opportunities and work toward promotions and roles of increasing responsibility. To remain effective, it's important to create a career path for each individual as part of their development plan.
2. Prioritize Flexibility and Work-Life Balance
Employers can create an atmosphere of trust and respect by creating flexible work schedules that allow employees to maintain work-life balance. This could include adding more remote positions, allowing employees to work from home part-time, implementing a four-day work week and allowing flex days for employees with children and other family responsibilities.
3. Foster Employee Engagement
By providing mentors for new hires and introducing more team-based projects, you can encourage collaboration. This increases employee engagement and can help you develop a vibrant culture and cohesive workforce.
You can also create employee referral programs that allow employees to recommend friends and former colleagues to the team. Sure, you get a highly qualified employee. However, you also strengthen your company culture by importing strong bonds and positive working relationships.
Here are a few other employee retention strategies to consider:
- Create a clear career or growth path
- Create opportunities for professional growth
- Improve onboarding and training processes
- Keep workloads manageable to avoid burnout
4. Providing the Right Employee Benefits
A great insurance package and 401K plan can help employees feel appreciated. However, there are other perks that also work well.
Employee benefits dramatically influence retention rates, as follows:
- 51% of employees would change jobs for more flexible hours
- 37% would defect for more off-site work opportunities.
- 51% would take a pay cut for unlimited paid time off.
Therefore, employers who think outside the box when it comes to improving employee satisfaction often see the results in higher retention rates.
5. Recognizing Employees for their Achievements
As noted, recognition plays a crucial role in employee engagement and retention. According to a Gallup poll, about 45% of employees say they get enough recognition. Among those dissatisfied with the recognition and praise they receive, the potential defection rate doubles — these employees plan to quit within a year.
Adopting an effective employee retention plan requires feedback from every level of your organization. To take recognition to the next level, instituting awards and rating systems that reward employees for their contribution can dramatically increase your retention rates.
Retention strategies will benefit EVERYONE in your organization.
It’s important to implement effective retention strategies, which include competitive compensation and benefits as well as engagement and training opportunities.
Employee Retention Starts With Recruiting
Learning how to improve employee retention is an ongoing process that starts with recruitment. Employee retention ideas should include effective retention strategies. For example, it's important to identify candidates who will stay the course.
It's not enough to simply find and recruit promising candidates. To offset the high cost of each talent search, it's important to strengthen your retention program's ineffective onboarding approach.
Consider skills, learning agility and experience as well as personal attributes that could hinder or contribute to your existing company culture. As part of the interview process it's important to identify career aspirations and whether they match opportunities for growth at your organization.
Hopefully, this information will help you understand the benefits of employee retention and encourage your company to adopt effective recruitment and retention strategies.
PeopleSuite will find you the right fit with their team of experienced search professionals to attract. Contact us to secure top talent that keeps your company’s retention policies, culture and needs in mind.