Employee retention is essential for any company to undertake its businesses smoothly as they are the most important resources for any organization. Hence, companies invest a lot in their employees while onboarding them, as well as, while developing their careers through dedicated initiatives.
Such investments in top talent in the form of time, money and efforts are laid to waste when the employee decides to switch to a new job at another company. Hence, it is essential to ensure that proficient employees who are planning to leave the organization are retained with effective human resource management.
Businesses should also ensure that the employees who are staying with their organization for longer are rewarded in the form of competitive salaries, recognition for their work, attractive benefits, supportive work culture, and more. It will provide them with enough incentives to stay back and be an asset to their company.
In this blog, we will give you an insight into the employee retention meaning, employee retention strategies, the importance of retaining employees, the mere objective of retention, factors affecting employee retention, and more.
What is Employee Retention?
Employee retention is the company’s ability to keep its employees retained in the organization by keeping them motivated, and engaged in productive tasks. It is a way to reduce employee turnover by involving strategies that will help enhance the job satisfaction in employees.
It involves techniques such as pay parity, enhancement in employee engagement, attractive compensation and benefits, recognition and rewards for proficient working, providing healthy work culture, work-life balance, and career advancement opportunities. To improve employee retention strategy, the mentioned techniques are crucial to be implemented because employees are more likely to stay in a positive work culture where their work is recognized and paid well and given growth and development for the future without compromising their mental health.
Objectives of Employee Retention
The primary objective of employee retention strategy is to keep the employees rooted in the organization. However, there are other major objectives of retaining employees organization, which are As follows:
- Enhance cost efficiency and eliminate wastage of company finance in hiring and firing.
- To improve the company’s reputation in the market as the job satisfaction metric surges, which highlights the healthy work culture of the organization in the market.
- Surge productivity by retaining proficient employees.
- Strategies for succession planning include retaining top talents who possess the capabilities of becoming proficient leaders in the future.
- Enhancing the employee connection with the organization and more.
7 Best Employee Retention Strategies
Since employee retention is essential for the correct functioning of any organization, it is essential to have some handy tactics that provide the employees with multiple reasons to stay back with their company.
Such tactics will ensure that your best employees decide to stay longer, helping you avoid repetitive hiring and training as well as leaving you with long-term staff who are engaged and satisfied with your organization.
Here are some robust employee retention tactics that will enhance the retention rate of the organization and will also increase productivity.
1. Provide Competitive Salaries
The most basic tactic to ensure employee retention is to provide them with competitive pay and salaries. It is extremely important to pay your employees adequate salaries on time to let them feel valued.
Additionally, employees expect their wages to be appraised according to the inflation rate to ensure that their efforts are valued and are noticed by the employees. Hence, you should start by understanding the standard of living in the location of your organization and the salaries being offered by your competitors in the market to ensure you pay equal to or more than that for retaining employees and eliminating their distractions.
2. Provide Hybrid & Remote Work
Another opportunity for improvement is to provide your staff with enhanced flexibility in terms of how they undertake their work. Use robust attendance management system to track the attendance of employees working from remote or hybrid setup.
For example, you can provide remote work opportunities to enable your new employee as well as existing ones to work from their homes, helping them maintain a better work-life balance. You can also provide hybrid working facilities where employees will have to work from the office for any 2-3 days and rest days from home to provide convenience to both the employer and the employee.
3. Create Flexible Schedules
You can also provide flexible working hours, which will further enhance their lifestyle, making it easier for them to complete their tasks on time, while also enabling you to retain them longer.
Such features also help them understand the trust and responsibility conferred on them, improving their engagement with your company.
4. Promote Healthy Work-Life Balance
By providing flexible work opportunities and remote work options, you can ensure a better work-life balance for your workforce. The HRMS software plays a vital role in ensuring easy management of the workforce and promoting work-life balance.
You can also go one step further by avoiding frequent meetings as well as any contact with your staff during their non-working hours unless it is an emergency.
Such initiatives would further strengthen the trust placed by your staff in your company, enhancing your retention rate.
5. Recognize & Reward your Staff
By recognizing the top performers from the performance management system and rewarding them with adequate promotions and compensation, for their contributions, you let them understand their value to the company.
Such employees would also be more productive and remain engaged with their work since they understand that they matter. Hence, it is essential to recognize your staff for their efforts and reward the ones who work well.
6. Build Employee Engagement
If you implement all the tactics from this article, we can ensure that your staff will stay engaged with your company for longer.
While employee engagement and job satisfaction are dependent on multiple factors, they can be increased by letting your staff know how relevant they are to the team building your company’s culture. By having employees who are engaged, you will also be able to retain your top talent for longer.
Employees who are engaged and satisfied with their workplace have reduced burnout, while others may experience burnout despite the workload remaining the same. Hence, it is essential to avoid employee burnout with the help of these statistics.
7. Offer Professional Development
You should offer your staff multiple opportunities to upskill themselves as it improves their skills and makes them more productive. On the other hand, it also lets them understand that their company is genuinely investing in their staff.
Such realization will help them in staying longer with their organization since they will want to remain associated with an organization that enables them to better their skills.
How to Calculate Employee Retention Rate?
Employee retention rate is the measurement of the employees staying in the company versus the number of employees who left the company within a specific period. It is usually measured in percentage for added clarity.
The formula for the calculation of the Employee Retention Rate is:
Employee Retention Rate for a Period = (No. of Current Employees / No. of Employees at the Start of the Period) * 100
Benefits of Employee Retention
Employee retention is essential for the smooth functioning of any business. Retaining employees with employee retention strategies has multiple benefits for the company since it ensures that the employee training and other resources spent on them stay within the company. Apart from that, there are numerous other benefits of employee retention, such as:
1. Engaged Employees
Employees who have been working for longer with an organization remain highly engaged in their workplace. They would be well-versed in the ins and outs of the company culture, the organization’s ability, and the company’s inner workings.
They would also have a clear idea about the working of the different departments too helping them stay engaged with their company.
2. Better Employer Branding
With the retention of long-term employees, your company will become better as an employer since your HR departments and management would be able to understand your staff better and resolve their problems in the workplace.
Long-term employees would also be more vocal about any issues they might be facing, enabling you to make any required changes. Being employee-centric, results in increased revenue and better employer branding for your company.
3. Surges Growth
Engaged employees will also be more productive as they have a personal stake in ensuring the profitability of the brand they work for.
Additionally, they would also be well-versed with the systems and software required to undertake their tasks, improving their productivity further.
4. Increased Morale
Since the employees understand their relevance for the company and are actively engaged with it, they have increased morale to undertake their daily tasks as well as provide their inputs in improving the processes and operations.
Due to improved employee morale and additional support from the management, the staff remains engaged, leading to an improved retention rate.
5. Enhanced Customer Service
Since experienced employees can undertake their tasks well, it leads to better products and services, making it easier to service the clients and customers.
It leads to increased customer satisfaction, which is essential for improving your business. Due to enhanced customer service, you also gain long-term customers who would further promote your brand.
Importance of Employee Retention
The importance of employee retention for a company is crucial and holds greater significance in long term sustainability of the business. Let us understand in details.
➔ Improve Productivity
Employee retention helps in improving the prodctivity of the company as your company dont have to waste time in hiring process which not only consumes a lot of time but also resources and finance in training the new hires.
Also, your employees already are acquainted with the work culture, they wont waste time and will perform in their finest capabilities to achieve the business goals.
➔ Reduce Turnover
The importance of employee retention is the reduction of turnover rate which majorly affects the company’s turnover rate and contributes to saving costs, time, and proficient resources that are valuable for the organization.
➔ Enhance Company’s Reputation
The enhancement in the retention rate of employees surges the company’s reputation and goodwill in the competitive market. Also, it showcases the company’s credibility to keep employees satisfied in their jobs and productive at the same time.
➔ Strengthen Employee Connection
The employee retention strategy enhances the employee connection with the organization and keeps them rooted in the workplace. It also enhances their trust in the company as a result of which a sense of belongingness surges in them yielding productivity and efficiency in working.
➔ Cost Efficiency
Employee retention diminishes the employee turnover rate which results in reducing the cost incurred in hiring and training of new candidates. Also, the cost of the recruitment process, also is effectively saved with the retention of efficient employees.
Factors Affecting Employee Retention Adversly
The factor affecting employee retention adversly are as follows:
- Toxic Work Culture
- Zero Work-life Balance
- Incompetent Pay
- Ineffective Leadership and Management
- Substandard Geographical Location of the Office
- Lack of compensations and Benefits
These are the factors that is needed to be taken care of to keep it away from work culture for enhancement of employee retention rate.
4 Pillars of Employee Retention
Employee retention is dependent on several factors, which are centric to ensuring their well-being in the company. If your employees feel valued and are actively engaged with your organization, they will stay longer with your company.
Hence, if you wish to retain them as longer-term employees, it is essential to consider the four basic pillars of employee retention, which include:
1. Effective Onboarding
The effective onboarding process for new hires starts by attracting candidates from the job market with the right set of skills as well as those who are an ideal cultural fit for the company.
Hence, it is essential to have a well-defined job description that will help them understand the work as well as the work culture with the help of dedicated career pages. Such measures will ensure that you attract many workers who would want to work for your organization.
2. Continuous Upskilling
Monotonous repetitive work and lack of career growth opportunities are major factors for why employees leave their organizations.
Hence, it is essential to provide continuous training to the staff to help them get new skills, upskill themselves as well as ensure continued productivity.
Providing such training opportunities will help the staff to stay engaged with your company, effectively retaining them.
3. Employee Job Satisfaction
Having an engaging work culture is essential for helping your staff stay longer with your organization. An engaging work culture promotes ownership of the work, which can be achieved by clearly defining the role of each team member.
Additionally, you can also recognize them in front of their peers for their work, which promotes a culture of mutual respect and motivation too. Rewards and recognition serve as a motivating factor for the employees to perform efficiently and stay rooted to the organization.
4. Secure Environment
Another effective way of ensuring employee retention is to provide a secure environment for the staff to undertake their tasks well. It is especially relevant for companies that require their staff to work in hazardous environments.
Hence, the company should ensure that adequate health and safety protocols and measures are in place to avoid accidents, as it leads to improved employee experience.
Herzberg’s Two-Factor Theory
Frederick Irving Herzberg proposed the ‘Two-Factor Theory’ of employee satisfaction, which is also known as ‘Herzberg’s Motivation-Hygiene Theory’ or the ‘Dual-Factor Theory’. This theory explains the relation between two different sets of factors that are responsible for keeping an employee motivated and satisfied with their company.
The first set of factors is the ‘Motivators’ which help enhance staff motivation and includes factors such as recognition, responsibilities, meaningful work, decision-making, relevance, etc.
These ‘motivators’ help the employee stay motivated with their company and hence, the employer should ensure that their staff are provided with these factors to retain employees effectively.
The second set of factors is ‘Hygiene’ which is not inherent in undertaking their jobs well. However, having these factors in the workplace ensures a happy workforce who remain actively engaged with their organization.
It includes various factors such as work conditions, job security, paid holidays, and good work culture, among others.
Both these factors influence motivation and are essential to ensure job satisfaction among your staff; hence, it is essential to ensure that you provide both motivators and hygiene factors in your organization to ensure employee satisfaction and retention.
End Note
To conclude, your company needs to let your employees understand their importance to your organization. It will help them remain engaged with your company as they work for enhancing the products and services.
As a result, it will increase employee engagement and enable them to sustain longer and remain actively engaged. Implementing the ten effective employee retention strategies we provided in this article, will help you boost your retention rate and increase employee engagement too.
