Concern over employee retention has increased sharply in the US — where unemployment is now below 4% — but, also, around the world. A 2017 study by Towers Watson uncovered that more than 50% of all organizations globally struggle to retain their most valuable employees.[i] More than 80% of HR leaders believe improving retention is a high priority for the next five years, and half of the HR leaders say burnout is a leading cause of turnover.[ii]
The US Bureau of Labor Statistics found that 3 million employees voluntarily quit their jobs every month since June of 2017.[iii] Roughly the population of the City of Chicago is walking out the door every month. Every month! That is an alarming number. The cost of turnover can be 16% of annual salary for retail workers, 50% for engineers and 200% for a VP. Turnover is expensive, but because it doesn’t show up on the balance sheet, many CEOS and CFOs don’t understand its effect.
Research shows (and I know this from years of experience) that employees who decide to leave make the decision months before their resignation, and it’s usually because of some action taken by management or their immediate supervisor that they believed was not fair.[iv] Their decision can also be a result of their loss of trust in top management, the company’s business strategies, or management’s ability to implement those strategies.
What can you do to increase the retention of your employees?
Here are seven strategies to use with your employees.
- Tell your high potential employees in one-to-one private meetings that you value them and that they have an essential role in the company. Many companies take their best people for granted. While their immediate leaders have probably “shared the love,” top management also needs to meet with its best employees to acknowledge their outstanding contributions, ask them what roles they want in the future, and tell them of the company’s plans for future growth and how they fit into that growth.
- Have a career discussion with your employees—and follow up on the plans you set. Be sure your managers meet with all your employees and especially your high potential and critical technical employees and ask them how they feel about their jobs and working for the company. Ask them what they like about the company, don’t like, and if they had a magic wand what they would change. Ask them what they want to be doing in a year, three years, and five years? First, having this conversation shows your interest in the employee and that you want to find out what it will take to keep them for the long term. It will also help you prioritize the type of assignments, development, and career moves that it will take to retain these employees. Having the conversation is one thing, following through is another. The onus is on you. At the meeting, management should commit to implementing one of the changes the employee would like or at least to looking into it and getting back to the employee in two weeks. At the two-week point, management should also follow up with a more detailed plan on career opportunities for the employee, identifying the skills the employee will need to develop to fulfil their career goals.
- Show the love to your workforce with pay. All employees expect to be paid competitive rates, and your high potential employees expect to be paid a premium. In a tight labor market, employees will leave companies for employers that pay them more, often easily getting a premium package of 15% or higher.[v] A 2014 survey by Glassdoor showed that half of the workforce expect a pay raise of 3% to 5% and 35% of employees were so dissatisfied with their pay they were willing to leave their companies for higher pay.[vi] Are you planning to make pay increases of at least 3% to 5% and higher for your best employees? If you haven’t benchmarked your pay structure against a large compensation database that matches your company’s jobs, this is a good time to start. The survey also found that 62% of the workforce, including men and women, don’t believe men and women are paid equally.[vii] Have you conducted a pay audit to see that women in the same job families and job titles who have the same experience and performance are paid equally? Besides, you should pay your best workers a premium, at least 10% above the market, for their superior contributions. These employees should also receive higher levels of bonuses and stock options. If you don’t, another employer will.
- Make sure you are hiring the right employees based on skill, values, and alignment to the company’s mission. Many firms have shoddy or misaligned recruiting practices. They often have not put in place the screening practices to make sure they are hiring employees who have the skill set they need (although this is often the easiest item to hire for). Or to see that they are hiring employees who share the company’s values on critical issues such as collaboration and respect. Or to see that the employees value the company’s mission and culture. The result is that companies can hire someone who doesn’t like the company’s purpose or who may have preferred a different culture than you have. The result is turnover. Better screening is easy to implement and is less expensive than turnover.
- Offer effective onboarding to improve your retention and help new hires achieve full productivity faster. A 2014 study by BambooHR found that 31% of employees quit their job in the first six months. Much of this turnover is due to bad hiring decisions, but no doubt much of it is because of poorly designed or misunderstood onboarding. Many companies believe effective onboarding is having an employee handbook online and an online Applicant Tracking System or Payroll/HRIS system that enables the new employee to input their personal information such as address, contact information, and W-4 tax information and benefit selections. These steps are only the beginning. Effective onboarding also means making sure the employee’s work station, PC, other devices, and system access are available and working on the first day on the job. But what really drives effective onboarding are these four cultural items:
- Build great relationships beginning day one. Carve out time for the manager and employee to meet and introduce the employee to his or her team, clients and support staff. This includes setting up time for the employee to meet one-on-one with these people.
- Offer great on-the-job training in the first two weeks. If you did your job, you selected an employee with the right knowledge, skills, and abilities to do their job and fit into the company’s culture. What the employee needs is training on how work is done in your company, and especially on your work systems and processes, and how decisions are made. It is critically important to provide this training in the first week. Employees want much of this training from their mangers, but if the manger does not have all the expertise it is better to assign one or more coaches who will take the time to train, tutor and coach the employee. The manager, however, needs to follow up daily to make sure the employee feels welcome and understands the training.
- Help new employees begin advancing their careers in the first month. One of the most popular onboarding events I have organized is a half day when current directors of the company tell their career stories about how they moved ahead. What was their career path, assignments, learning and who were their mentors? The new employees loved these sessions and it helped them meet more employees from outside of their immediate circle of contacts.
- Have agile leaders who break through visual diversity to build relationships and align and motivate everyone on their teams. This style of leadership is particularly important for leaders of young employees, known today as Millennials and Generation Z, and for companies that need innovative cultures and agile organizations. I define leadership agility with the acronym ACE, which stands for agile and aligning, constantly communicating and empathetic and e Agile leaders can relate to workers who have a different background from their own and can align their teams to the company’s purpose, mission and strategies. Agile leaders are constantly communicating and clarifying changing business realities, goals and operating norms. Finally, agile leaders are empathic, build relationships, and empower their employees to perform at their best. They get to know the motivations and skills of each employee and figure out the best ways to assign duties to let each one shine. They do this with ongoing performance and development feedback and coaching that empowers employees to overcome obstacles and attain high performance.
- Provide flexible work arrangements, leading to higher morale and less turnover. A 2017 study by OWL Labs found that companies that support remote work had 25% less turnover than companies that don’t support it. Other studies show that as much as 80% of the workforce want flexible work arrangements. In my own implementation of a flexible work arrangement, more than 30% of the workforce (more than 40% with sales) was able to work remotely three to four days a week depending on their job duties. The result? Morale and productivity increased, turnover dropped and our ability to recruit increased. Learn more here. Companies that embrace remote work will reduce their turnover and enjoy these other benefits.
In the US we are in the ninth year of economic growth. Retention will remain a concern for the foreseeable future. Without integrated talent strategies to retain your employees, you will be the recruiting source for your competition.
Victor Assad is the CEO of Victor Assad Strategic Human Resources Consulting and is a Managing Partner of InnovationOne. He consults and provides “hands-on” support for innovation, global talent strategies, developing agile leaders and teams, and other strategic initiatives. Contact Victor Assad at VA@VictorHRConsultant.com. Visit http://www.victorhrconsultant.com for valuable free reports. For research on innovation visit http://www.InnovationOne.io.
[i] Lucia Carrera, Richard Luss and Jing Wang, (June 2015), “Seven Things to Know About Employee Retention Risks,” Towers Watson. Found at https://www.towerswatson.com/en-US/Insights/Newsletters/Americas/insider/2015/06/seven-things-to-know-about-employee-retention-risks.
[ii] “The Employee Burnout Crisis: Study Reveals Big Workplace Challenge in 2017” (Jan. 2017). Found at:
[iii] Economic News Release. US Department of Labor, Bureau of Labor Statistics. https://www.bls.gov/news.release/jolts.t04.htm
[iv] Leigh Branham (2005) The 7 Hidden Reasons Employees Leave: How to Recognize the Subtle Signs and Act Before It’s Too Late, AMACOM, American Management Association.
[v] “Escape to Comptopia: 2016 Compensation Best Practices Report,” Payscale Research Report. February, 2016. Found at https://hub.payscale.com/i/645228-payscales-2016-compensation-best-practices-report?utm_source=Marketo&utm_medium=Newsletter&utm_campaign=Mar2&utm_content=cbpr-flipbook&mkt_tok=3RkMMJWWfF9wsRonuavPeu%2FhmjTEU5z17%2B4oWqGwgp141El3fuXBP2XqjvpVQctqPL7YDBceEJhqyQJxPr3BLdcN1Nl2R
[vi] “Glassdoor Q4 2014 Employment Confidence Survey.” Found at https://press-content.glassdoor.com/app/uploads/files_mf/gdecsq414surveysupplement.pdf.
[vii] Ibid.
I am so impressed by the information. Well Done.
Thank you!