Losing good employees is never easy. It can be frustrating, disheartening, and expensive. When employee turnover is high, you may feel like you’re constantly replacing your team, which makes it hard to build the company culture you want. It also takes up valuable time that could be spent growing the business.
Today’s post will tell you how to calculate and track your employee retention rate over time. Then we’ll go over five employee retention strategies you can use to keep your best talent.
What Is Employee Retention?
Employee retention is a company’s ability to keep its employees. Companies with good employee retention tend to employ people who stay there for a long time. In other words, those companies have a low employee turnover rate.
But how much does all that really affect a business? There are several reasons why employee retention is important.
The ability to retain good employees helps businesses to avoid the substantial costs of hiring and training new people, but there are other, less immediate benefits too. Good employee retention helps create a culture of teamwork where everyone is working together towards the same goal. What’s more, when employees feel truly invested in the company’s long-term success, they’re more likely to give honest feedback that can help improve and streamline company practices.
How to Improve Employee Retention
If your company is large enough (has enough employees) for statistics to be helpful, your employee retention rate and employee turnover rate are good places to start.
How to calculate employee retention rate:
Your employee retention rate, sometimes called the “stability index,” measures your retention of employees over a certain period of time.
First, choose a period of time. Then divide the number of employees who stayed for the entire time period by the number of employees you had at the start of the time period. Then multiply by 100 to get a percentage.
The downside of this measurement is that it doesn’t account for people who joined and immediately left all within the time period. That’s where your turnover rate comes in.
How to calculate employee turnover rate:
SHRM has a good definition of turnover rate: “the number of separations divided by the average number of employees during that same time period.” Again, multiply by 100 to get a percentage.
Calculating both of these rates on a quarterly or yearly basis can help you get a clear picture of how well you’re able to keep employees.
5 Employee Retention Strategies
Now it’s time to talk about how to retain your employees. It’s sometimes tempting for employers to simply ask employees what they want and try to give it to them. Understanding and attempting to meet your employees’ needs is great, but improving employee retention is more complicated than that. Here are some strategies that really work:
- Workplace Culture & Retention
- Hire the Right Person to Begin With
- Employee Development for Retention
- Ask for Feedback
- Salary and Benefits Matter
1. Workplace Culture & Retention
It’s not just about dishing out lots of perks and benefits. It’s also about creating a great workplace culture where employees feel valued and connected.
- Encourage communication and make sure employees have opportunities to give feedback.
- Celebrate it when employees and teams reach their goals. Even just thanking someone for their work can go a long way.
- Make it possible for employees to negotiate a happy work-life balance.
- Plan some team bonding outings (bonus points if you’re able to keep them mostly within regular work hours).
2. Hire the Right Person to Begin With
Keeping your employees becomes a lot easier when they’re a good fit from the beginning. If you notice that many of your employees aren’t staying long, it’s worth taking a look at your hiring process.
Are you attracting diverse candidates whose ambitions align with your business goals? Do your job descriptions accurately reflect the company culture? Are new hires 100% clear on what’s expected of them before they sign on?
Here’s another tip: if you’re thinking of hiring someone who has been a job-hopper in the past, ask them about it. Make sure you understand their reasons for leaving previous jobs so you can move forward with confidence that they’ve found the right fit this time.
3. Employee Development for Retention
The goal isn’t only to keep your employees happy, but also to help them feel a sense of purpose. Over the past several years, many studies have shown that meaning is more important to people than happiness — in work and in other areas of life.
Employees who feel that their work is meaningful and important are more likely to stick around. That’s why a sense of meaning, purpose, and belonging needs to be a big part of your employee development and retention strategy.
Make sure your employees have:
- Mentors who can help guide and inspire them
- Goals (ideally both individual and team goals)
- A clear view of how their work is essential to the company as a whole
4. Ask for Feedback
Some employees quit because the job truly isn’t right for them. Others may want to stay, but have a few frustrations with the job that they simply can’t get past. Unfortunately, many people don’t feel comfortable making their concerns heard, often because they’re relying on a good reference for their next job.
Make sure employees know they won’t face negative consequences for honest feedback. Ask them what they do and don’t like about their job. If you’re still worried you won’t get fully honest answers, try an anonymous survey or a suggestion box.
Next time an employee quits, consider having a one-on-one exit meeting with them to talk about their suggestions for how to improve their job for the next person.
5. Salary and Benefits Matter
Money isn’t everything, but there’s no denying that good pay and benefits can be big motivators for employees. In fact, a Glassdoor survey found that, for 45% of people who quit their jobs in the US and UK, salary was the top reason. Also, 98% of job seekers and employees say it would help them to be able to see pay ranges in job listings.
It’s not just about salary, though. Other benefits matter too. Did you know that 56% of employees say health care and insurance concerns motivate them to stay at their jobs?
Raises, bonuses, and great benefits are tangible ways to show employees you appreciate their work.
Setting up an Employee Retention Program
Rush Recruiting & HR has extensive experience in helping businesses improve employee retention and employee turnover. We can help you smoothly integrate these strategies, and even more importantly, we can work with you to identify the unique problems and solutions that will make the difference for your business.
Call us today at (503) 481-1285 to get started.