What is an employee retention strategy?
An employee retention strategy is a plan companies create to reduce employee turnover rates. The strategy includes company policies and programs that make organizations a more appealing employer, which allows them to attract and retain qualified employees. The strategies you implement should be based on the specific needs of the employees. For example, some employees may prefer health club and investment benefits whereas other employees prefer affordable healthcare coverage.
Why create an employee retention strategy?
High turnover rates can be expensive, inconvenient and harmful to the overall success of a company. Constantly turning over employees forces the company to redistribute resources to recruit, hire and train new employees. A retention strategy can improve overall employee satisfaction rates, while also encouraging employees to focus on the success of the company.
9 Effective Employee Retention Strategies
Consider these nine effective employee retention strategies that you might consider implementing in your own organization:
- Focus on the hiring process
- Offer a competitive salary (and benefits)
- Offer additional incentives
- Train effective managers/leaders
- Encourage a culture of open communication
- Create clear work objectives
- Understand what makes employees leave/stay
- Encourage professional work relationships
- Value a work/life balance
1. Focus on the hiring process
Choosing the right candidate for the position in the first place is crucial. If an employee isn’t a good fit for their role, they will likely end up leaving the company, regardless of the other retention strategies that are in place. Focus on the hiring process by creating a job description that clearly describes the expected qualifications, skills and experience of the position. Effective hiring is especially important at the management level. Lower-level employees are more likely to leave an organization when they are not satisfied with the leadership.
2. Offer a competitive salary (And benefits)
One of the most common reasons for an employee choosing to leave a company is because they don’t feel like their value is appropriately compensated. Use Indeed Salary to understand the average salary for the intended position and make sure you are within the range. Benefits are also an important part of a compensation package and can be a great way to make up for a less competitive salary. Employees value insurance, retirement accounts, cell phone stipends and memberships to gyms or health clubs and will often include it as a part of their whole compensation package.
3. Offer additional incentives
Offering additional incentives can be a great way to show your employees that you value them. Investing in your employees’ professional success with professional development opportunities not only increases employees’ skills as they relate to the company, but also provides them with additional value as an employee. Offering the opportunity for professional development also helps the employee imagine a future with the company.
4. Train effective managers/leaders
Employees spend the majority of their workweek interacting with management. If they have a bad experience or do not feel like they are receiving clear and effective management, they are more likely to leave the company. Focus on training management with an emphasis on skills in leadership, communication and teamwork.
Related: How to Manage Employees
5. Encourage a culture of open communication
While problems in an organization cannot always be avoided, it is the process in which the company responds to them that matters the most. When employees can openly communicate with management and discuss their problems or concerns, satisfaction rates tend to be higher. A culture of open communication can also encourage trust among middle and upper-level management. Create a culture of open communication by welcoming employees’ requests and you will find that they value the company more and their place with it.
6. Create clear work objectives
Just as it is important for employees to have the opportunity to share their concerns, employees also want to know how they are doing professionally. When employees do not fully understand their duties or how their performance is measured, employee morale tends to decrease. Setting clear goals and objectives and regularly discussing progress towards those goals will not only motivate employees, but it will also give them clear expectations and help them to better understand their role in the organization. Annual reviews can provide the environment that is needed to discuss role objectives, progress and overall evaluation.
7. Understand what makes employees leave/stay
Understanding the reason why employees leave is an important part of reducing retention rates. Exit interviews give companies the opportunity to better understand the driving factors behind an employee’s decision to leave a company. Encourage open communication and keep track of the most common reasons for leaving. It can also be useful to consider why your current employees are staying. In a similar method to an exit interview, discuss with existing employees the things they enjoy the most and the things they feel could be improved about the company. This can help you understand the company’s culture as a whole.
8. Encourage professional work relationships
Employees that are engaged with a company tend to feel more connected to its goals. Encourage and develop work relationships among employees through employee outings and events. Even developing company-sponsored sports teams or volunteer events can be a great way to encourage a sense of community within your company.
9. Value a work/life balance
Employees who feel like the demands of their job are affecting their personal lives are more likely to find alternative employment. Giving employees the chance to work from home occasionally and being less rigid with work hours can improve employee satisfaction rates. Discourage management from calling or emailing employees with requests on evenings, weekends or vacation time. Regularly evaluate the expected responsibilities of each employee and consider how they are managing that workload.