Maximising employee retention – how to create a workplace where people want to stay?

What is employee retention?

Employee retention is the percentage of employees who stay with an organisation over a period of time. It is the flip side for a perhaps a better-known metric, employee turnover, which refers to the rate at which employees leave an organisation and are replaced by new hires.

Why does employee retention matter?

Low employee retention can be costly, affecting productivity, morale, company culture and employer image – and it is usually a sign that employees are unhappy about something in the organisation. In organisations with low retention rates, the answer is not to quickly fill the resource gap with a new hire who might leave during the trial period, but to really look at the ‘why.’

The most common reasons for low employee retention are a mismatch of values, cultural or role fit, lack of career development opportunities, poorly functioning relationships between coworkers or leader and team member, lack of good leadership altogether, uncompetitive salaries or pay structure, and a poor or even toxic work environment or work-life balance.

How do you measure employee retention?

To understand the current level of employee retention, an organisation can benefit from taking a look at data and trends. Reporting in an Excel spreadsheet may be sufficient, but a more effective way to track both employee retention and turnover rates is to use Human Resource Information Systems (HRIS).

These systems allow centralised storage and management of all HR data, including hire and termination dates and reasons for leaving. They usually provide basic HR-reporting on the most common KPI's and reporting needs whereas they may lack the more comprehensive analytics capabilities, that some more advanced analytics tools offer. However, knowing the rates only tells half the truth – understanding the reasons why people stay or leave the organisation allows you to make a real difference.

Conducting exit interviews is one valuable way to gather information about why employees are leaving and what they think needs to be improved (if they are willing to tell you). Analysing trends from exit interviews can reveal common themes and areas for improvement. Still, it is a rather reactive way of developing an organisation.

Incorporating stay interviews into the company’s employee retention strategy can help you learn what the high performers, the key people you would hate to see go, like and dislike about their role and your organization, long before they decide to look for another opportunity.

How can you improve employee retention?

To not focus only on what is important to your personnel right now, you might want to design and implement an Employee Value Proposition (EVP) – a system for long-term focus on four interrelated factors: material offerings, opportunities to grow and develop, a sense of community and connection, and last but not least, a sense of purpose and meaning. These all have a significant impact on employee retention. Let’s look at them from different angles.

1. Pay attention to recruitment and attractive employer image

A successful company needs the right talent to retain. Ensuring a smooth and respectful recruitment process is essential. Build a job description that matches the actual job and work environment, and focus on cultural fit to create a desired first impression that lasts a long time and is hard to change later. Don’t forget your employer image, for your employees are your most effective ambassadors, for better or for worse.

2. Prolong the honeymoon as much as possible

A new employee is usually like an air balloon full of positive energy who can’t wait to get going, excel and be useful. Have a comprehensive yet rational onboarding process in place to ensure quick successes in the new position and a smooth transition to the team and whole organization. They chose you. It is a costly mistake to make them regret it.

3. Focus on building a positive company culture and community of like-minded professionals

People usually want to belong and be a part of a group. It is up to you how you foster this natural need of a human being. Create an energizing company culture where your employees feel trusted, appreciated and valued for who they are, and communication is open and honest. Articulate why you exist as an organisation, your reason of being, and ensure that every employee shares this thought. Celebrate wins, both big and small, that take you towards this common goal and give your employees a sense of meaning.

Read more: How to build a positive work environment

4. Invest in great leadership and healthy feedback culture

It starts at the top. Companies with engaged employees have leaders who are ambitious, result-oriented, yet humane, and are committed to the long-term success of your organisation. Investing in leadership development has a powerful impact on company culture and employee retention. It is also important to have a healthy and well-led feedback culture where employees feel comfortable to openly voice their thoughts and opinions, rather too often than too rarely, to catch any issues well before they develop into problems. More importantly, show employees that their opinions matter by making changes based on their suggestions and tell them it’s because of them.

5. Be competitive with salary and benefits

Regularly review and adjust salaries and benefits to remain competitive in the industry. Consider offering extensive occupational health services, bonus models and other incentives, and other benefits that meet the market’s standards. It might not be a bad idea to ask the employees what they would appreciate. The rough market standard is somewhat easy to get by asking around from old colleagues, business associates, employer organizations, relatives and friends or LinkedIn and other social media.

6. Have the ‘better’ mindset and build a good talent management process

Strive to be ‘better’, not ‘best’. ‘Better’ suggests a journey of constant improvement and makes us feel like we are being invited to contribute our talents and energies to make progress in that journey.” (S. Sinek, The Infinite Game) Talent management ensures that employees have the necessary skills, resources, and support to excel in their roles, leading to improved overall performance and engagement. Focus on goal setting and have continuous dialogue about the progress with focus on employee’s development throughout the year. Build the vision for long tenures by outlining career opportunities within the company. Employees feel empowered to grow and develop, leading to higher levels of job satisfaction and retention.

7. Enable good work-life balance for employees

To enable good work-life balance for employees, organisations need to prioritise flexibility and support. Allow employees to choose their working hours or work remotely if it is possible for the nature of your company’s work. Provide resources for mental health and well-being and encourage regular breaks throughout the day. Additionally, promoting a culture that respects personal time, such as discouraging after-hours emails and meetings, can significantly reduce stress.

In conclusion, it’s clear that nurturing a loyal and satisfied workforce is essential for business success. Understanding the needs of employees, creating a positive work environment and investing in professional development are all critical elements that support employee retention.

In a world where talent is a key differentiator, let’s commit to creating workplaces where people feel valued and motivated to stay. Investing in your people is investing in your future.