Employee retention is arguably one of the most critical strategies for small business success, especially in today’s historically tight labor market. The unemployment rate nationally has hovered at or below 4% since April 2018. That makes employees more likely to seek new opportunities – often with the competition – if they are not satisfied in their current positions.
According to the Bureau of Labor Statistics, more than 3.5 million Americans quit their jobs every month of 2018. And, while experts disagree on how much it costs employers to replace a salaried employee, they all agree the number is staggering. Estimates range from between one-half to twice the employee’s annual salary.
If you do the math, without even considering the emotional and cultural costs of employee turnover, you’ll agree that spending fewer resources to retain employees than you would to replace them is one of the smartest things you can do as a small business owner. Successful employee retention is tantamount to a business finding hundreds of thousands of dollars in new revenue every year.
Pay is still important when it comes to attracting and retaining top employees. Monitor industry compensation standards to ensure your salaries are commensurate with competitors’.
Benefits round out the compensation package, and employees expect plenty of them. Consider offering benefits that accrue significant value over time or improve with tenure to help keep employees from quitting and abandoning their progress. Bonus structures, paid time off, stock options, matching retirement plan contributions, workspaces and even title changes all can be designed to improve as employees ascend through the ranks.
Onboarding and employee retention go hand-in-hand. When you use a structured process to introduce new employees to your company, they feel more comfortable, connected and engaged at work – all factors that contribute to employee satisfaction. Properly onboarding new employees sets them up for success on the job.
Onboarding best practices start during recruitment, when you should begin describing your company’s culture. And, while the first day is important, and you should take every opportunity then to make a new employee feel welcome, onboarding should last at least 90 days. It may take even longer for your newest staffer to understand where he or she fits into the big picture as well as the smaller details like how certain software programs work.
Implement procedures that allow all employees to provide and receive regular feedback, and encourage interaction with colleagues – throughout their tenure, but especially during the first several months. Employees who feel valued and develop good relationships with colleagues are far less likely to leave.
Work-life balance remains a top concern for many employees. In fact, employees often automatically expect the option of flexible work schedules in today’s tight and technologically advanced labor market. Allowing employees to telecommute part of the time, completely unplug during weekends or vacations and otherwise build flexibility into their schedules usually pays off for employers in the long run.
When employees have fulfilling personal lives, they are happier at work. A 2018 survey linked happy workers with higher productivity and increased loyalty, concluding that employees who achieved symmetry between work and home were twice as likely to be happy on the job compared to those individuals who did not have work-life balance.
Sometimes a simple “thank-you” goes a long way. Employees are human beings, and we all want to feel appreciated. Recognizing a job well done, repeatedly, does not cost a lot of money, but it makes a big impact with employees. It makes them feel valued.
A recent Gallup poll found that employees who do not feel adequately recognized are twice as likely to say they'll quit in the next year. Regular workplace recognition is a significant source of employee motivation, engagement, productivity, loyalty and retention – and those benefits extend to the entire company, not just the individual receiving the praise.
Providing employees with regular, personalized professional development opportunities reaps benefits similar to those created by employee recognition activities. Employees who use their strongest abilities on the job are more self-confident and likely to feel a sense of pride and accomplishment.
Employees want to continue learning throughout their careers. So if they do not have the opportunity to further develop and grow their skills at your company, job satisfaction levels will suffer.
That includes advancement opportunities. If they cannot see a path to continued growth, they are likely to look elsewhere for career development and promotions. Keep the lines of communication open so you understand employees’ professional goals. Employers who help employees achieve their on-the-job dreams through a clearly defined path enjoy higher employee retention rates.
If you weave these five strategies into the fabric of your company culture, you will reduce turnover and retain top performers. Historically low unemployment rates make finding good talent increasingly difficult, so it’s important that human resources teams and department leads do everything they can to manage their employees in a way that trims attrition and fuels everyone’s success.