We focus a lot on employee acquisition as recruiters but we shouldn’t lose sight of the fact that employee retention matters too.
Studies show that the cost of losing an employee depends upon the employee’s role and ranges from 40% to 400% of their annual salary. The approximate cost of replacing an employee according to Simply Benefits:
Entry-level – 40%
Mid-level – 150% or more
High-level or highly specialized – 400%
The way to avoid these costs is to retain your employees. Once you go through the process of hiring a good person, you don’t want to lose them.
Over the past couple of years, people have been quitting their jobs in droves and some media outlets were recently reporting that this Great Resignation is far from over. The Guardian reported in late November 2022 that, in the UK, growing numbers of people were still quitting the workforce.
Can businesses afford to keep losing employees? Probably not. So, we should be looking at strategies for keeping them.
There are obvious ways to encourage employees to stick around, the first one being increasing pay. When people are paid well – enough to live comfortably without having to take on second and third jobs – they are less likely to leave and look for another job that pays more. Benefits and perks are also considerations, of course.
And companies are paying attention. In a recent survey by Express Employment Professionals 66% of Canadian companies said they were increasing wages in 2022 (up from 51% in 2021 and 44% in 2020) and 28% were increasing benefits. The most common benefits being increased were sick leave (17%), additional health care incentives like gym memberships or mental health resources (17%), increased paid time off (16%), more parental leave time (13%) and improved retirement plans (12%).
But these things aren’t necessarily enough, according to a report stating that 35% of Canadian companies say turnover has increased this year over last year, and 40% have open positions they can’t fill. Thirty-six percent said people left because other companies were offering better pay and benefits and 28% said someone else was offering better perks, like more vacation days and remote or hybrid work.
Someone is always going to be offering something better than you. But money isn’t everything, and even the best paying companies are going to lose people if they don’t treat their employees well. The flipside of that is that companies that can’t afford top salaries and benefits can still retain employees by providing opportunities for advancement, making them feel valued, and giving them a sense of ownership in the company – because this is what people want.
Some insight into these strategies:
Providing opportunities for advancement
Pew Research recently found that the top reason employees quit jobs, aside from pay and benefits, is a lack of advancement opportunities. This isn’t news. A lack of advancement opportunities consistently tops lists of reasons for employee attrition, and yet, employers still don’t promote from within. This is somewhat understandable; if an employee is good at their job, you rationalize that you need them to keep doing that job and should therefore hire someone from outside to do the more senior job. But people don’t want to feel like they’re stagnating. We all want to move forward and upward. So, the upshot of this is that the good employee will leave, and you’ll have another role to fill. It makes more sense to retain the employee you know, like, and trust and move them into a senior role than to lose them and have the replace them with an unknown quantity. Think of the long term.
Provide opportunities to grow within your company and good people will stay longer.
Making people feel valued
It doesn’t require a complex understanding of human nature to know that people want to feel valued and respected. One survey by Glassdoor found that 81% of people are motivated to work harder when their boss shows appreciation for their work.
This starts with obvious things like open communication and employee reward programs. But you can’t stop there. Remember that it’s equally important to recognize your B players when the A players are winning the accolades over and over again – and your reward system should reflect that. Allowing employees the flexibility to work remotely and choose their own hours, as long as the work gets done, also shows that you value their needs and trust them to govern themselves.
Celebrate accomplishments and show recognition on social media. Provide feedback regularly and don’t wait until it’s time to criticize. Set an example of treating people with respect and empathy and show a genuine interest in people’s lives.
People are less likely to quit bosses and companies they like.
Giving people a sense of ownership in the company
When someone feels that they are integral to the successful outcome of a thing, and that they have a stake in that outcome, such as with performance-based pay, they will be more invested in that outcome.
An HBR article explains that players in a game will watch the numbers to see the results of their actions and find out whether their actions were on track or misguided. “If they win the game, they know there’ll be a payoff. Most people think of engagement in individual terms—feeling fulfilled by the task at hand, wanting to do a good job. We see engagement as being part of a team that’s competing to win.”
The authors explain that it’s surprisingly easy to generate high engagement among employees with open book management, which works by sharing key financial numbers with employees. “People begin to watch these indicators,” they write. “Then they figure out how to move them in the right direction.”
Some empirical research suggests that sharing key financial information increases sales, revenue, and employee engagement. And proponents of open book management say it dramatically increases engagement, a by-product of which is retention. Involving your team in the decision making process also increases feelings of ownership.
You might not be able to offer the best perks and the best salaries (though we hope you do the best that you can) but you can appreciate, involve, and empower your team. If you do, they will be more likely to stay.