Why are millions of Americans leaving their jobs? In a recent survey of over 13,000 employees, 40% considered leaving their current positions in the next three to six months. Lack of career advancement, inadequate compensation, uncaring and uninspiring leaders, and lack of meaningful work were cited as the most common reasons for quitting.
This spike in employee turnover has been named The Great Resignation. Sparked by the COVID-19 pandemic, the world economy has seen a continued trend of high levels of voluntary resignation and a stark drop in employee retention.
A new phenomenon is evolving: quiet quitting. It’s defined as employees doing the minimum requirements of their job and putting in no more time, effort, or enthusiasm than necessary. The trend suggests that, in addition to the staggering number of people quitting their jobs, those employees who did not resign are also experiencing dips in engagement, participation, and performance.
Clearly this workplace crisis is unsustainable. What can organizations do to be considered best places to work? An important place to start is to focus on employee retention.
Employers need to create retention strategies that lower employee turnover and can give employees purpose and engagement in their jobs. In other words, employers have to provide a compelling reason to stay, and stay engaged at work.
Why Employee Retention Matters
Increasing employee retention is critical to a business for many reasons. One key driver: the costs associated with high turnover. Replacing an individual employee can range from 1.5 to 2 times the employee’s annual salary. In total, U.S. organizations pay up to $1 trillion in turnover expenses annually. These costs put an immense strain on companies, especially in high-turnover industries.
According to the US Bureau of Labor Statistics, the leisure and hospitality, professional and business services, and construction industries were the most volatile, with turnover rates of 84.9%, 64.2%, and 56.9%, respectively. The good news is that increasing employee retention not only reduces the rate of turnover, but also preserves historical knowledge and safeguards morale. Here’s why:
- Employees have invaluable organizational and historical knowledge. This wealth of knowledge and background can take years of experience to develop and is lost when they leave the job. Increasing employee retention ensures that a company not only keeps its people but retains an experienced workforce with indispensable company insights and knowledge.
- When an employee leaves a company, a piece of your workforce is missing, and others must step in to fill that gap. As a result, colleagues that remain may have to work more or longer hours to take on this workload – lowering morale and increasing chances of burnout. Employee retention is critical in reducing the negative impacts of high turnover on company culture.
Whether employee retention is high or low, HR leaders can watch for these signals to improve work culture and the employee experience.
5 Strategies for Increasing Employee Retention
Here are strategies HR professionals and leaders can employ to improve employee retention and well-being.
1. Evaluate Your Onboarding Process
A new employee’s first impression of your company can speak volumes to their overall experience in their new position. According to SHRM, employee turnover can be as high as 50 percent in the first 18 months of employment. So, it’s critical that a company strengthens its onboarding and training processes.
Organizations with a strong onboarding process improve new hire retention by 82 percent and productivity by over 70 percent. Yet, Gallup reports that 88 percent of employees don’t feel their company does a good job onboarding new employees, suggesting a high need for improvement.
HR professionals must strengthen their company’s benefits and onboarding as it immensely impacts employee experience and increases retention. Among its advice, Gallup offers these practical tips for a better onboarding process, including:
- Find creative ways to build connections
- Encourage tenured employees to reach out to new employees
- Lean into learning
- Add experiences that bring your culture to life
2. Provide Opportunities for Professional Development and Upskilling
Named The Great Attrition by McKinsey, among the top reasons employees quit is lack of career development and advancement. HR leaders must assess their organization’s learning opportunities. Data shows that 57 percent of U.S. workers want to update their skills, and 48 percent would consider switching jobs to do it.
To help prevent this, HR professionals and leaders must prioritize professional growth and development in their workforce. 61 percent of U.S. workers cited upskilling opportunities as an important reason to stay at their job. And 71 percent reported increased job satisfaction with increased career development.
Harvard Business Review offers three key considerations to guide leaders in building upskilling programs:
- Empower your employees to own their own career development
- Show them where ideas go (meaning: ask for input and then use it!)
- Provide a road map with clear paths and milestones for performance measurement.
3. Employee Recognition Drives Retention
Research has shown that when employees believe they’ll be recognized, they are 2.7 times more likely to be highly engaged. Plus, engagement can increase retention, proving the critical role of recognition in a company’s employee retention strategy.
Employee recognition increases one’s sense of belonging, happiness, and feelings of appreciation in the workplace. In this, recognition can improve an employee’s job satisfaction and experience at work, increasing the chances that an employee won’t look for another job.
Recognition can be expressed in a variety of ways. It can be through bonuses, creating a formal employee recognition program, expressing gratitude, or celebrating company and individual successes. Some additional pointers on giving recognition:
- Be authentic by praising with specific examples
- Avoid comparison praise which could diminish past efforts
- Promote extension praise by acknowledging team efforts
- Give recognition with undivided attention, free of distraction
- Acknowledge the time, energy and extent of the work
4. Leadership Contribution to Workplace Culture
Workplace culture directly impacts retention. Studies reveal that a third of job seekers would let go of their perfect job if the workplace culture wasn’t a good fit. Additionally, over 70 percent of workers cited corporate culture as an important factor influencing their decision to work at a company.
It’s crucial that HR professionals evaluate and improve their company culture and integrate it into their employee retention strategy.
To improve company culture, business leaders should consider incorporating the following action steps:
- Establish company values and mission – Integrate these throughout company efforts and encourage employees to achieve a common goal.
- Listen to your employees – Be flexible and accommodate to the needs of your workforce, providing additional support and recognition where needed.
- Build trust – Make a point to get to know everyone on your team and establish a line of communication and trust.
- Host company-wide events – Encourage employees to engage with coworkers and participate in group lunches, company parties, etc., whether virtual or in-person.
For more on how leaders can improve company culture and build trust in the workplace, check out Aduro’s How to Build a Community of Trust with Servant Leadership webinar.
5. Flexible Work to Support Employees’ Unique Needs
Workplace flexibility is no longer a luxury – it’s an expectation. Nearly a third of workers sought new jobs because their current workplace didn’t offer flexible work schedules. A study reported that 74 percent said they’d be less likely to leave their employer if they could work from home some of the time. Providing flexibility and accommodations suited to your unique workforce is crucial to retaining your employees.
Flexible work options have been shown to reduce absenteeism, increase employee engagement, and raise productivity levels. Companies that offer flexible work arrangements experience greater employee retention and attract more talent.
Whatever flexibility looks like to your employees, it’s crucial to provide equitable opportunities for all. Keep in mind these four tips for a successful strategy:
- Trust is a two-way street. Flexible work requires developing trust between employers and employees.
- Don’t lose sight of your company’s culture. Protecting and prioritizing company culture in a distributed workforce is crucial to ensuring a successful retention strategy.
- Keep an eye on personal growth. In a hybrid or remote work environment, employees often feel they have fewer opportunities to advance and grow than their on-site colleagues.
- Provide your employees with holistic well-being resources. Companies must create an environment for enhanced performance by engaging in a formal and holistic approach to wellness.
For more information on flexible work strategies, check out Aduro’s blog article, Flexible Work Strategies to Support a Hybrid Workforce.
Increasing Employee Retention Takeaways
With an average of 4 million Americans quitting their jobs each month in 2022, employers must take action to combat turnover and strengthen their employee retention strategies. Improving a company’s employee retention strategy can garner cost savings, increase productivity, and the retention of indispensable organizational expertise.
To learn about how Aduro can support you and the well-being of your employees, check out adurolife.com.