Every business owner, team leader, and HR director has felt that they had to balance intensive production with employee retention. It’s a common worry that if you push employees to do better or work harder, they will quit on you or ask for a higher salary than your company can afford to provide. This is a struggle, as no one wants to deal with the costs and time suck caused by a high turnover rate.
While many businesses worry about employee retention and try to put retention programs into place, others fail to look at the facts involved with turnover – both financial costs and discovering the reasoning behind an employee quitting. We have broken down some of the general statistical information here, and have provided an easy-to-implement strategy that company can put into place right away.
Why is Employee Retention Important?
A great employee is often worth his or her weight in gold. List out the attributes of your ideal employee. It’s most likely that your list will contain these points – but there may be more, depending on your industry:
- Helpful to other staff
- Highly trained or expert in their area
- Excited to throw themselves into a new project
- Likely to provide actionable feedback
These may not be your team leads or even your executives. Some of your best employees may be those who are happy to clock in and out for eight hours a day but do a great job while they are at work. They also may be some of the people who you have employed the longest.
Many companies have to struggle with weighing the value of long-term employees with the cost of keeping them on staff. Usually, long-term employees qualify for more benefits and have a higher pay grade than shorter term staff.
However, most company executives have a gut feeling that it would be damaging to the company to get rid of long-term, experienced employees to cut salaries and make room for newbies. We’re here to tell you that your gut feeling is right.
Studies have shown that the average cost to a company of replacing an employee holding an average position (earning $75,000 annually or less) is 21% of that worker’s annual salary. This means that, while the job goes unfilled, you will be spending about one-fifth of that employee’s annual salary in recruiting costs – and once someone is hired – in training costs.
Additionally, new employees have to find their footing and ramp up their productivity to match or exceed that of your previous employee.
Now, there are occasions when it may be worth the turnover cost to replace an employee. I am sure you can think of any number of reasons why an employee may need to be let go. Perhaps they actively sabotage the work of others, or they create an upsetting environment in which high-producers cannot operate. If an employee is losing you money, it’s time to consider replacing him or her.
But usually, this is not the case. Generally, an employee leaves seeking a better job, higher income, work-at-home options, and more. Creating a better work environment for your staff may save you money in the long run.
How Can You Retain Employees Without Things Getting Cost-Prohibitive?
Many business owners worry that they cannot keep long-term employees without constantly increasing salaries, and thereby ruining their ability to hire new staff or invest in new products. It might be interesting for CEOs who worry about this to know that compensation isn’t as important to every employee as other factors may be.
Here are four steps that you can take today to increase your employee retention without spending additional money:
1. Survey your employees. You create marketing surveys to test the water when it comes to customer needs and concerns. Do the same thing with employees. It may be that employees would be happier with paid sick leave, a better maternity leave policy, health insurance options, the addition of a dental plan, employee training resources, work-from-home opportunities, a more responsive IT or HR department, and more.
Finding out what your employees need to help make their lives better while working at your company does two things. 1st, it shows that you actually care enough about each and every employee to consider their feedback valuable. 2nd, it gives you the resources to promote better employee retention rates among your existing staff.
2. Evaluate which of the suggestions are most valuable to employees (as in, how many said they wanted it vs. how many said they wanted something else). Then take a look at the cost. Some of the above items may only cost money for a short period (like employee training or longer paid maternity leave opportunities) or may cost nothing (such as work-from-home options or a more responsive HR department).
3. Next, take a look at things which have worked to keep up employee retention levels in the past. You may find that simple things like your company’s donations to charity has increased employee retention levels. It also may be that focusing on productivity instead of pulling employees into unnecessary or over-long meetings has increased retention in the past. There are many simple, even mundane actions which can motivate employees to continue to work at your company.
4. Finally, implement the most successful past actions and the most popular/cost-effective suggestions. This may take a little bit of time and effort on your part, but saving on those long-term costs associated with employee turnover can make your retention program absolutely worth it.
Your employees are the most important resources for your business. If you are at your wit’s end regarding how to manage employees effectively or properly training staff so they don’t need hand-holding, we have the perfect service for you. Contact us today to find out how we can help you resolve your HR and staffing difficulties.