Employee retention is a major challenge in 2021. In the era of job hopping and freelance work, how do you keep employees connected to your organization? And what are the benefits of employee retention? Effectory has the answer!
Effectory’s current international research shows that engagement has a huge impact on employee retention. Employee turnover is 22 percent lower than average in organizations where employees are engaged. In addition, performance increases by 26 percent and alignment by 28 percent when employees are engaged.
To go back to the heart of the matter, what factors make your employees feel engaged and why do they want to keep working with you? Employers who take the time to think about these questions will keep their talent on board organically.
What is employee retention?
Employee retention means connecting employees to your organization and establishing a sustainable employment relationship with talented people. This is a crucial prerequisite for an organization to be successful. Employees who are on-boarded and trained become efficient workers and keep your organization running. Employee retention ensures that valuable knowledge and expertise remain in-house, and thus maintains the quality of your service. A solid core of employees also helps you form a strong organizational culture.
Avoid a high level of employee turnover
Failing to retain employees costs an organization a lot of time, money and energy as new people have to continuously be recruited and on-boarded. This means first investing in employer branding and in communicating with the labor market, before then having to carry out interviews and selection procedures.
Once talent has been recruited, you need to invest in an onboarding program and intensive coaching. It often takes a few months for employees to be able to function at 100%. So if employees leave after a year or two, that investment has not been worth it. In addition, they take the knowledge and skills they have acquired directly to your competitors.
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The right strategy for employee retention
But how can you effectively keep your employees on board? Literature on the matter lists several factors that can positively influence employee retention. These include having a sense of purpose, being appreciated, good opportunities for development, flexible working hours and the option of working from home, a good working atmosphere.
Salary does have an impact on employee retention but its impact is limited. Employees who receive high bonuses often stay in their job for a little longer than average (the “gilded cage”), but are not significantly engaged and committed. Soft factors such as appreciation, challenges, work atmosphere and flexibility are far more important. These factors influence how engaged and committed employees are and make them want to stay with their employer.
In short, when employees feel that an organization is doing everything it can to help them work well and values their contribution, this leads to employees doing their best and means that they don’t go looking for another job as soon as the opportunity arises. Here are a number of ways you can do this:
- Employee retention tip 1: sense of purpose. Expressing your organization’s overarching goal. Why do we do what we do as an organization? How does every single person contribute to this? Fortune carried out researchthat shows that employees who experience “a special sense of purpose” in their work are up to six times more likely to be intending to stay with their current employer. So much can be achieved when employees can identify with their work and feel that they’re part of something important.
- Employee retention tip 2: appreciation and recognition. It’s also important to show employees that they are appreciated. A personal pat on the shoulder is invaluable. Employees who feel like they are important to an organization grow in their role and become extremely loyal. This naturally results in employee retention.
- Employee retention tip 3: invest in development. Gaining new skills and being given the option to participate in training is important for employees, since this shows confidence in long-term collaboration. As a result, employees will be quicker to want to give something back and more likely to want to stay with your organization.
- Employee retention tip 4: ask your employees if they are satisfied with their working conditions. For example, do they need more flexibility in terms of working hours or where they work from? COVID-19 has changed our expectations about how, where and when we want to work. By asking about these issues, you show that the well-being of your employees is important to you. In addition, you can use employee feedback to identify areas that need to be improved.
- Employee retention tip 5: invest in a good working atmosphere. Clear communication helps immensely in this regard. Transparency about important policy choices gives your employees a sense of trust and involvement. Social innovation is even better — this is when employee ideas are actually taken into account in the organization’s policies.
Employee experience in 3 easy steps
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Facts and figures on employee retention
Finally, what is the financial benefit of employee retention for your organization? Do you save costs by preventing employee turnover? Yes, you do! The cost of an employee leaving is on-fifth of their annual salary on average, according to research by Heather Boushey and Sarah Jane Glynn from Harvard University and the Washington Center for Equitable Growth.
As stated, this figure of two times their annual salary is an average. Lower-level employees are less expensive to replace than employees in positions that require very complex skills or specialist training. According to the researchers, the cost of an employee leaving can range from 6% of the employee’s annual salary to as much as 213%. These costs include:
- Exit costs: this includes performing exit interviews and legal costs when an employee leaves.
- Replacement costs: recruitment and selection. Job adverts, recruiters or agencies, conducting interviews.
- Onboarding costs: training, onboarding programs, coaching.
- Productivity costs: loss of knowledge and expertise, work backlogs, demotivation and increased workload for remaining employees.
Dive deeper into your organization
Are you serious about employee retention? Are you curious about what your employees are doing and how they feel at work? Our feedback products can help to give you an insight. Feedback from your own employees is incredibly valuable if you want your organization to progress. You can choose what approach the study takes, from an overall screening of your organization to getting ideas for improvements relating to a specific topic. Our research is tailor-made, both in terms of content and design.
Increase employee engagement through action-oriented feedback. Using a single platform, you can collect reliable data, analyze the results, and share insightsview employee survey solution