Even amid the “Great Resignation” and the tech layoffs of 2023, there are still more vacant jobs than people to fill them. Employees have more choices now than ever and remote work has compounded this trend. Of course, this is not the only factor, but it was a driving force behind PwC’s projection that 1 in 5 employees globally planned on quitting their jobs in 2022. And this wasn’t a far-off projection. By March of 2022, over 8.6 million people had quit their jobs before the first quarter of the year had even come to a close.
It’s not only dropping out of the corporate rat race that is impacting employee retention rates. It’s also an ongoing trend of people changing careers entirely. A recent survey concluded that 1 in 4 employees are considering a change in career paths in 2023 with most respondents willing to fork out for up to 2 years of additional studies to facilitate a career change. This makes employee development and path planning imperative for management hoping to retain top talent within their organizations.
So with the trend of mass resignations, layoffs, and career changes showing no signs of slowing down, employers need to be prepared to put employee retention strategies into place that will motivate and encourage employees to stay put instead of looking for greener pastures.
Why does top talent keep leaving?
Many employers don’t understand how far-reaching the implications of losing top talent actually are. In fact, 70% of businesses report the financial impact that high staff turnover has on their bottom line. Here’s a little-known fact…when an employee leaves, it costs a company around 6 to 9 months of the former employee’s salary. These costs are associated with advertising the vacancy, payouts due to the former employee, and hiring temps, along with many other hidden costs.
These alarming figures make it clear that businesses need a comprehensive employee retention program in place to improve employee satisfaction and retention rates.
- Inadequate Salary
Surveys have shown that up to 65% of employees plan on leaving a job because the salary is not competitive.
- No Benefits
Research shows that up to 25% of employees will leave their current job for one that offers better benefits.
- Unsustainable Workload
Many employees report they are overwhelmed by their workload and feel they are doing two or three people’s jobs while being compensated for one with poor balance. Many feel they are being abused by colleagues or managers who keep adding more work to their overloaded plates. An increased workload may occasionally happen such as during peak season or if a colleague is absent; however, if it becomes a daily norm, an overworked employee is not a happy one, and will not stick around.
- Lack of Support
Mentorship and development opportunities are key to not only improving performance but instilling confidence in employees. We are human after all and even the most talented employees need a sounding board. When employees feel they’ve been thrown into the deep end with no support and no opportunity to upskill, they will soon get itchy feet and jump ship.
- Poor Work-Life Balance
The importance of work-life balance became clearer than ever before during the pandemic when most businesses introduced remote work and employees demonstrated working from home was indeed possible. However, many corporations required a return to the office in 2021 and it was back to the grind of daily commutes, endless meetings and late nights at the office.
- No Recognition
It is human nature to want recognition and appreciation for a job well done. So it comes as no surprise that Forbes found that 66% of employees would quit if they didn’t receive the recognition they deserved. This number jumped to a whopping 76% when millennial employees were surveyed.
- Bleak Future Prospects
If there is no talk of promotions or future prospects, employees will feel demotivated and feel they cannot progress any further in the company.
- Boredom
Boredom accounts for a large chunk of the wave of resignations. A survey of 4900 people uncovered that one-third of respondents reported they felt bored in their current role and would leave their employer for a new challenge. Boredom is dangerous because the daily grind becomes tedious and a drag.
- Weak Management
Management issues come up frequently in exit interviews and are a driving force behind many resignations. The harsh reality is many managers simply do not possess the soft skills necessary to lead a team. Managers need empathy, patience and good communication skills in order to relate to their employees. A bad manager or personality clash can make work so unbearable for employees that they have no choice but to leave.
- Worries About Companies Financial Well-Being and/or Future
If a company is in a bad way financially (e.g. not giving out bonuses, retrenching), it makes employees feel nervous and insecure. This is understandable as most do not want to be without a job, so instead of waiting around to see if they get let go they’d rather be proactive and find employment elsewhere.
- Company Culture Clash
Weak, unclear, or unhealthy company culture can result in miserable and demotivated employees. Look at how the shift in culture at Twitter resulted in sweeping resignations because the work culture became toxic. Most employees are not willing to put up with a toxic work culture anymore, so companies who are yet to modernize their cultures need to make swift changes.
Employee Retention Strategies That Actually Work
We’ve now established that the cost of losing employees can have a serious knock-on effect on finances and productivity. It can be very challenging to get a team to gel and work well together if they never get a chance to develop good relationships with one another. So an employee retention strategy becomes non-negotiable in these turbulent times. Here is what an employee retention strategy should hone in on:
- Compensate Fairly
As we mentioned in the previous section, compensation is an important factor in keeping employees feeling motivated and that their efforts are being fairly rewarded. In addition, economic times are tough for employees. With interest rates soaring, the cost of living creeping up and many people just scraping by, if an employee is being compensated below the market average, you can bet your bottom dollar they’ll be looking for new opportunities.
While you don’t need to take out a loan to pay the highest base salaries, Chron suggests companies that low-ball salary offers will not attract or retain top talent, so your compensation strategy should always be paying above the average in the top bracket.
- Offer Competitive Benefits Packages
Further to the above, offer your employees enticing benefits packages. This could be in the form of bigger benefits like health insurance, paid leave, commission and bonus schemes or smaller incentives like birthdays off or free lunches.
- Support Development Through Training Initiatives
Change is constant thanks to technology, laws and social norms which means almost no industry is immune to finding ways to stay ahead of the change. Thus providing employees with regular opportunities to upskill through training and development initiatives is non-negotiable in this day and age. It could be as simple as providing free access to Udemy courses or having regular check-ins with staff to determine if/when there is a need for training.
- Build a Positive Work Culture
The days of toxic work cultures are numbered if not over. While a toxic work culture is not always intentional, it can creep in faster than you realize. It starts with a few employees feeling unheard, disrespected or unable to express their opinions and before you know it, it spreads through the office. A bad manager who disrespects employee’s boundaries and personal lives can also foster a negative company culture.
- Provide Opportunities for Flexible Work Arrangements
The necessary move to remote working and flexible work arrangements driven by the pandemic proved that most employees can work just as productively from home. A Stanford University study found that working remotely increased employee productivity by 13% over a period of 9 months. This is due to less interruptions, fewer sick days and no lengthy commutes. A WFH policy can encourage employees to adopt a better work-life balance which in itself increases productivity.
- Prioritize Open Communication
Open communication between colleagues and management is vital for a harmonious workplace and happy staff. Everyone from management down to admin staff should be able to express their ideas and opinions honestly, respectfully and without judgment. In fact, research has shown that teams who adopt an open line of communication are 60% more likely to achieve their shared goals faster than teams with poor communication.
- Avoid Micromanaging
Micromanagement is when a manager picks apart the minute details of every task an employee undertakes and aims to control almost everything the employee attempts to do. It prevents employees from taking ownership and responsibility for their tasks and stifles creativity and motivation while greatly reducing job satisfaction scores. A micromanaged employee will feel their boss does not trust them and develop feelings of resentment, frustration and boredom.
Instead, giving employees autonomy over their work encourages them to be more productive and ensures they feel valued by their managers.
- Invest in Team Building
Team building activities foster a sense of connection between colleagues, develop trust and respect and create an atmosphere of collaboration. It can also nurture the relationships between departments and management to create open channels of communication to freely share ideas and address problems. Team building exercises can make employees feel a part of the organization’s shared vision and as such, they are more likely to remain on board.
- Recognize Achievements & Celebrate Success
Employee recognition ensures your team feels appreciated and valued within the larger organizational framework and can reduce employee churn by 31%. Not only does it boost employee morale and productivity but it demonstrates that hard work and dedication will be rewarded. When employees feel seen by management, they are inspired to continue putting in an effort and doing their best for the company. A culture of recognition and celebrating achievements can also be a drawcard when recruiting top talent.
- Ensure There Are Good Support Structures In Place
Having adequate support structures in place for employees fosters a workplace culture of trust, collaboration and cooperation. Mentorship programmes by senior staff members or external experts provide employees with opportunities to learn new skills or build upon existing ones that will ensure they feel well-equipped and confident to succeed in their current roles.
- Develop Thorough Onboarding Procedures
An onboarding process ensures the smooth integration of new employees into the workplace. It should provide a clear structure and plan that will help new employees learn about the company values, and their specific functions, get them up to a high level of productivity faster and establish relationships with their colleagues. Turnover rates are reduced when employees feel welcomed and supported during their first weeks and months in their new role so this should be a priority for every business.
- Encourage Healthy Habits
Employees who take care of their mental, physical and emotional well-being are less sick, happier and more productive. By demonstrating you care about employees’ overall well-being, your staff will feel valued and be more likely to remain committed to your organization. Consider offering healthy lunches at your canteen, a gym membership, free therapy sessions or the option for standing desks to foster a workplace culture that takes care of health before profits!
Final Takeaway
Employee retention is vital to the long-term success of your business. When you have a better understanding of the motivations behind the many reasons people stay or leave their jobs, you can put the necessary measures in place that will instead foster loyalty and lasting relationships with your employees. From developing career paths aligned with personal ambitions to providing enticing remuneration packages, your employee retention strategy can help you build a strong, committed workforce that feels valued, motivated and rewarded for their efforts.
