Much ink has been spilled on the various reasons that employees leave a company – too much stress, not enough pay, no room for growth, et cetera – but what about the success stories? Those companies that retain employees most effectively have developed similar habits to keep their top talent satisfied. While some factors for employee turnover cannot be controlled, management and professionals in human resources can impact retention by making some strategic changes to how the business is run, and how employees are rewarded for good performance.
One of the key indicators of whether an employee stays or leaves a company is whether they feels there is room to progress. Creating a clear job path not only motivates employees to work hard in their current role, but also opens the door to gain more skills and knowledge in order to fulfill gaps in the organization. For every ten months an employee stagnates in a role, the odds of that employee leaving raise by 1%. Even when controlling for various factors, such as pay or job title, role stagnation correlates strongly with employee churn.
According to the Harvard Business Review, when employees understand what they must do to advance, commitment to company increases, and the likelihood of another business poaching your talent decreases. Hosting workshops or providing software free of charge that gives employees an opportunity to hone their skills also aids in retention.
One of the more nebulous business concepts to nail down is “culture.” What that means for one organization will differ vastly from another. A free-spirited, laissez-faire company with an open office and free snacks on Fridays could be perfect for a small publisher, but it might not fit well for a manufacturing company, which needs rigid guidelines and safety protocols. Nonetheless, employee morale hinges greatly on the perception of how company culture applies throughout the entire organization, from the home office (or executive suite) through each department.
Employees who are not considering a job change are shown to enjoy their work and how it complements other areas of their lives. “The ability to make a difference” figures more prominently in predicting whether an employee stays or goes than other variables, including total pay. An asserted and transparent value system, one that establishes honesty, teamwork, and respect among all peers, can decrease the chances of turnover by a great deal.
Related to the concept of workplace culture is an employee’s perception of themselves at the company. Some of the most cited reasons for leaving a company are that employees feel devalued, unrecognized, and coached poorly, or that they no longer feel a working trust among managers and senior leadership. Providing mentoring with clear goals gives employees structure and boosts confidence.
Using communication techniques like consistent coaching, manager-employee reviews, anonymous surveys, employee suggestions, and newsletters will help. Providing consistent feedback, especially in an employee’s first few months on the job, adds value to each role and establishes an obvious interest in the employee’s professional growth.
Of course, sometimes the simplest solution is the best one: paying your top performers more incentivizes them to stay longer. Especially for those employees identified to have great growth potential, responding to their continued progress with matching levels of compensation rewards them in an obvious, tangible sense. The best performers generally rise to their highest opportunity for bonuses and merit.
The Harvard Business Review pegs the percentage increase in likelihood that employee stays is 1.5% for every 10% percent increase in pay. Other forms of compensation not tied to money include paid family leave, paid sick days, and flexible scheduling, all of which can help to convince an employee to stick around.
A few factors that otherwise affect a business’ health and opportunities to grow do not seem to have a mathematically significant correlation with an employee’s decision to stay at or leave a company. Surprisingly, the strength or leadership of senior employees and executives doesn’t have much impact on the tenure of the average worker. The most charismatic owner or C-suite executive won’t change individual worker’s mind about finding a better role elsewhere.
Employee retention models are a necessity, not just to improve the growth of the workplace, but for the bottom line. A report from the Society of Human Resource Management found that the average cost-per-hire is $4,129 — keeping employees around longer just makes good business sense.
The challenge for human resources managers is to save both money and keep talent happy for the organization. Instead of constantly spending time, money, and resources on locating new employees, companies can improve the people they already believed in enough to hire in the first place. Luckily, these practices can be implemented internally and translate into more retained employees with little need for restructuring or reorganizing.