The impact of low employee retention rates
Having a consistently low employee retention rate at your company can affect your business and bottom line in several ways. When an employee quits, companies can sometimes spend twice as much as that employee’s wage in recruiting, hiring and training a replacement. If the employee was client-facing – such as a salesperson or account manager – there is the risk that the client may discontinue business with your company or follow the employee to their next employer.
Decreased employee retention can also have a negative impact on those who stay behind. Workplace morale can dip and trust in the company’s management is sometimes questioned when a large number of employees leave the company in a short time frame. A low employee retention rate can also make it difficult to hire and keep talent. When it comes to recruiting new talent into your company, those who notice that a company has a low employee retention rate may be reluctant to work with a company that sees so many employees leave.
Why employees leave
There are numerous reasons why an employee can be motivated to leave a company – from feeling burnt out in their current role to feeling like the company no longer meets their needs. When an employee grows tired of their role within a company, they often start looking for a better opportunity elsewhere. If a company isn’t able to offer the resources to establish a sufficient work-life balance, an employee may find it elsewhere with another employer. Something as simple as an improved commute or a different working environment can be very appealing to someone who is burnt out in their job. Additionally, burnout may cause employees to have a lower opinion of their work and may affect or disrupt future contributions they could make to your company.
How to increase employee retention
Hire the right employees and manage expectations
The best way to make sure that you have the right employees working for you is to find the right employees during the hiring process. Taking the time to ensure that the candidate is the kind of person who would be compatible with the company culture can go a long way in making sure that they are with your company for a long time. A candidate’s tenure with their prior employers in similar roles should be consistent with your expectations within your own company.
Additionally, clearly outline all work and wage expectations in the job description before the employee starts work with your company. Creating clear expectations for the role before they are hired can help an employee be productive from the start. Feeling as if they are hired for their specific talents will eliminate any anxiety they have about possibly taking on a role that is beyond their area of expertise.
Maintain constant communication
Many managers rely on having open communication between themselves and the employees they oversee. An open line of communication is an easy way to know about problems or concerns your employees have long before the issues become unmanageable. Frequent contact with your employees will allow you to adjust what the company can offer to help meet their personal needs.
Additionally, employees should have frequent and regular sessions to review both their work performance and wage expectations. If your company is growing, the responsibilities of your most trusted employees may grow with it. Employees expect to be compensated fairly for their time and effort, especially if their job description changes.
Outline defined career paths
If there is not a clear and defined career path for employees with established goals or changes in the title or wage, it can be difficult for an employee to see themselves with the company in the long term. Taking the time to outline a career path for each employee, including professional development and performance benchmarks, can go a long way towards increasing the employee retention rate and keeping your staff motivated.
Issue special projects or incentives
Often, a period of low morale can be resolved by issuing a unique project to an employee who may be considering leaving the company. Handing over the responsibility for a premium client or organising an all-office event can go a long way in showing that you appreciate and trust an employee. Additionally, a sales team may be motivated by a competitive incentive for a monthly or quarterly sales drive.
Adjusting company policies and workplace benefits
If low morale is contributing to your company’s retention rate, it may be worth reassessing your company’s policies. Offering benefits that allow for a work-life balance can go a long way in developing a sense of freedom and independence that can keep employees with your company for longer. Allowing for flexible schedules, four-day working weeks or remote/working-from-home solutions have been shown to increase productivity and can install a sense of trust with your employees.
Studies have shown that paid paternal leave for new fathers goes a long way in increasing morale and employee retention. Offering additional paid holiday to employees has proven to be a potential solution in reducing turnover due to burnout.