Retention strategies that work
Retaining skilled employees is one of the most difficult challenges facing organizations today. Turnover is extremely costly; it is estimated the cost of turnover is anywhere from 50% to 150% of an employee’s annual salary. In addition to the hard costs associated with turnover, there are the soft costs – lack of productivity of the departing employee and new employee, the “drag effect” on other employees, the impact on customer/vendor/client relationships and so forth. Furthermore, attrition can be contagious, multiplying costs rapidly.
According to the Gallup Organization, there are three primary reasons why people leave their jobs:
1. Design different strategies for different employees
While there are common elements of successful retention policies, the most effective policies recognize the needs and expectations of their employees will vary by age and level of responsibility. Low wages earners are focused on economic survival – a wage above competitors and a system of recognition can be an effective retention strategy. High earning executives focused on self-actualization will want to see a clear career path, have the opportunity to increase their value to the marketplace and be part of a leadership team.
2. Orientation process
A large percentage of turnover occurs within the first months of employment. Use the orientation process to build workplace relationships and make new employees “feel at home.” Assign employees a mentor, pay for lunches with co-employees, and involve them early on in employee activities.
3. Survey your employees
Ask your employees what it will take to keep them. For new employees, survey them 60 days after they start. Have a regular schedule – monthly, bi-annual or annual to get input and feedback from your employees.
4. Train your managers and employees: create a culture of pride
Pride of workmanship is a top retention strategy. Managers need to communicate expectations, instill confidence, and recognize and reward employees who do a job well. Good managers must know not only how to manage but also how to value employees. Engage employees and managers in career planning, so that they understand the potential for growth.
5. Know how competitive your salaries and wages are
When a workforce is paid above the norm, compensation falls by the wayside as an important retention factor. If you want to hire the top 10% of the available workforce, you may have to pay in the top 10% of compensation as well.
6. Nurture your top quality employees
The energies of management are often focused on the 20% of the workforce who cause problems. Be sure that your managers are attuned to changes that might signal discontent from your top employees. Consider offering retention or referral bonuses.
7. Conduct exit interviews
An exit interview can be an invaluable source of information, even if you have to pay the departing employee to take it. Don’t assume the reasons are known. Often managers will compartmentalize what they believe vs. what the employee feels.
The concept of loyalty continues to lose ground. Businesses can no longer offer the job security they once did and younger generations are not motivated by loyalty. The motivation focus continues to move away from the employer and towards the individual. Understanding what motivates the individual employee, training managers to create effective relationships and value employees, and offering opportunities for growth are the foundations for an effective retention strategy.