Employee retention programs can help you protect your most valuable assets: your people. High turnover rates cost time and money and indicate that your organization is a stepping stone, rather than a destination.
Surveys show that each employee replacement costs about 6 to 9 months salary, considering recruiting, onboarding and training. You lose former employees’ knowledge and your remaining team’s productivity can suffer.
You might think you don’t have time to develop new employee retention strategies. But what you really don’t have time for is losing your best employees. Here’s how to create an employee retention program that actually works.
Measure your turnover rate
The first step in creating or improving an employee retention program is knowing where you stand compared to industry benchmarks. Use the appropriate formulas and tools to calculate your employee turnover rate, compare it to your industry’s average and analyze your findings. Depending on whether your turnover is high or low, you can improve or maintain your rates.
Ultimately, you should aspire to create a work environment where employees are engaged and aim to deliver their best.
1. Employee compensation strategies
When deciding your compensation strategies, there’s only one question you should answer: “Is this employee’s work valuable to the company?” Reward accordingly. It definitely helps if your salary ranges are above (or at least equal to) your competitors’–but this isn’t always possible, particularly for smaller companies.
Employee compensation is only one piece of the puzzle. If all of the other pieces–workplace, relationships, support and growth strategies–don’t fit together, then a 10% raise isn’t a surefire way to retain employees. In the past, companies paid people for their time. Today, more companies pay for performance–in every position, not just sales. To retain employees, your compensation plan needs to incorporate this trend. Set performance goals for your team and give incentive bonuses. Offering stock options can also be a good idea. You might also want to consider giving extra benefits to your employees, like tickets and discounts, when they exceed your expectations.
Also keep in mind that your compensation plan should include meaningful benefits that show you respect your employees. ‘Meaningful’ is the key. You don’t want to waste money on things your employees won’t use. Instead, find out what matters to them and offer some benefits they will actually appreciate. Netflix offers employees unlimited vacation time and up to a year of paid parental leave. And WorkAngel has built a system where companies can reward their employees with a set of personalized benefits. Employees can choose between customized healthcare packages, individual employee wellness programs or even exclusive discounts to purchase items they care about. It’s a great way to help your employees save money by offering services they would normally pay for themselves.
2. Working environment
Although compensation is a factor, ultimately, people stay in jobs they enjoy. You should, therefore, make sure that your work environment attracts, retains and nourishes great people. Casual dress codes or free lunches, snacks and gym memberships are great perks that don’t cost much.
Whole Foods encourages their people to be their true selves at work. Whole Foods employees don’t have to wear uniforms. Instead, they’re free to showcase their unique style. Though this kind of dress code policy may seem simple, it shows that employees don’t have to pretend to be someone else at work.
Work-life balance is now a major employee engagement factor. Offering flexible work schedules, setting up a work from home policy and encouraging employees to take time off could help you keep your best people.
3. Relationship with managers
Steve Miranda, Managing Director of the Center for Advanced Human Resource Studies at Cornell University knows a lot about employee engagement. And this is what he thinks:
Employees don’t quit jobs. They quit managers.
Bad managers lose good employees. You should train managers to act as mentors and build healthy relationships with their teams. Communication is always the key to prevent conflicts and misunderstandings at work. You don’t have to become best friends, but being an active listener will help your employees feel at ease. Ultimately, good relationships create a friendly atmosphere.
4. Personal development and growth
Good employees are interested in growing. Perks and other benefits are good, but aren’t easily personalized to satisfy all employees. Besides, how long would an ambitious employee stay at your company if you only offered some free snacks as a perk? In the long-term, everyone is interested in personal development.
Ask your employees about their personal goals and discover what motivates them. Let them move between departments and collaborate with different teams, suggest seminars they could attend or courses they might be interested in. Even training that has little to do with their current job can be beneficial, as it sets you apart from other employers and shows that you truly care about your people.
Clif Bar & Company creates personalized growth and development plans for their employees, an initiative that has helped them earn numerous workplace awards. And, in exchange for agreeing to a two-year contract, My Maid Service offers each employee customized career training and free classes at local community colleges. As a result, their turnover rate for employees who work in the company for a two-year period went from 300% to 0% within three years.
Some employers think awards like ‘employee of the month’ are significant to employees, but this isn’t really the rule. Usually, employees want to receive recognition for their work when they actually do the work and not much later, otherwise they don’t feel valued. Even if it’s just a quick “Hey, great work on that project,” simple praise will do wonders for your employees’ motivation.
Everyone knows employees like to get recognition from their supervisor. But praise from colleagues can be just as important. Employees feel valued when their peers recognize their efforts. Managers could use messaging apps like Slack (or other communication tools) to announce great results and give public credit to their team members’ achievements.
6. Support strategies
Employee support strategies involve giving people the tools and equipment they need to get their job done. When employees feel they have what they need to perform, their job satisfaction increases drastically.
Resources also include information on specific job requirements. If employees know what they are doing and what is expected of them, they’re able to deliver better. Let your employees see the ‘big picture’ and involve them in the strategic planning. As a result, they will contribute to achieving goals and will be more likely to stay with you.
7. Unusual strategies that work
Employee retention programs don’t have to be costly, or confined to large organizations. Small companies and startups can implement new strategies to retain their employees using some simple, creative ideas.
- Scopely celebrates failures by holding a “Fail of the week” session, where team members share some ‘epic fails’ and what they learned from them. This weekly meeting shows employees that Scopely encourages them to take risks and doesn’t punish constructive failures. As a result, employees are more likely to experiment fearlessly.
- The digital note-taking service Evernote acknowledges that employees are spending valuable time in their office, when they could be at home taking care of basic errands and chores. In appreciation, Evernote sends a complimentary cleaning service to each employee’s home twice a month.
- Every Thursday, Gymboree employees take ‘recess’; everyone goes outside and plays recess games, like hopscotch and foursquare, to build a sense of community and friendship.
Keep in mind that an employee retention program should align with your company culture and focus on improving employees’ productivity. Making a counteroffer to an employee who has decided to leave is only a short-term solution. And ‘one-size fits all’ programs aren’t effective, because they’re not tailored to your company’s needs.
As you can see, employee retention programs come in all shapes and sizes. Remember to check in with your employees often, discover their level of job satisfaction and learn what they need to boost their productivity. If you understand your employees’ interests and values, you’ll be more likely to keep them.
Frequently asked questions
- What is the purpose of an employee retention program?
- An employee retention program is designed to keep your most valuable assets: your people. High turnover rates are costly in terms of time and money, and they can indicate that your organization is a stepping stone rather than a destination. A well-designed retention program helps to keep your best employees and enhance productivity.
- What are some effective strategies for employee retention?
- Effective strategies for employee retention include: measuring your turnover rate and comparing it to industry benchmarks, implementing thoughtful compensation strategies, creating a positive working environment, fostering healthy relationships with managers, providing opportunities for personal development and growth, recognizing employees' achievements, and implementing support strategies.
- What are some unusual strategies that work for employee retention?
- Some unusual but effective strategies include celebrating failures as learning opportunities, offering personalized benefits, and creating a sense of community and friendship among employees. For example, Scopely holds a "Fail of the week" session where team members share their 'epic fails' and what they learned from them.
- How can employers succeed in employee retention?
- Employers can succeed in employee retention by giving employees responsibilities that allow for continued growth and offering opportunities for continuing education. Hiring from within the organization whenever possible can also help employees feel like they are part of a team and more than just hired hands.
- What are examples of retention strategies?
- Examples of retention strategies include offering training and mentorship programs, ensuring excellent communication between all parties, and making employees feel valued. These strategies not only retain talented professionals but also inspire others on staff with their ideas.