John Spence, Contributor
The future success of your company is directly dependent on the quality of the people you can get, grow, and keep on your team.
Therefore, talent acquisition, development, and retention should be major strategies in your business. In this article, I’d like to focus on retention.
The Society of Human Resource Management estimates it costs $20,000 to $30,000 in recruiting and training expenses to replace a manager making $40,000 a year. This doesn’t even account for losses in terms of interview time, lost institutional knowledge, reduced productivity, or cultural impact.
The Work Institute Retention Report shows that 35% of employees may leave their jobs each year by 2023, but 77% of the reasons behind team member departures are preventable.
The single most significant factor why employees leave, by a wide margin, is their relationship with their immediate supervisor. People don’t quit jobs. They quit their boss.
In one of the most comprehensive studies of employee burnout, Gallup found five factors that pushed people out the door: unfair treatment at work; unmanageable workload; unclear communication from managers; lack of manager support; and unreasonable time pressure.
All of these have one thing in common: a bad boss.
Working for someone who treats you like this is miserable. It makes you hate your job. The stress, anxiety, and frustration can be overwhelming.
Anyone with a modicum of talent will depart the organization as quickly as possible. Those who remain will be demoralized, unproductive, and resentful.
The solution? Build leaders.
Fortunately, leadership skills can be learned. Companies should invest substantially in training and development for managers at all levels across the organization. Teaching skills that improve communications, teamwork, coaching, and emotional intelligence will show a strong ROI.
If you want to learn how to retain employees, here are seven additional ways to increase team member retention:
1. Offer a Competitive Base Salary or Hourly Wage
Compensation matters when it comes to employee retention. Offering a competitive compensation package that is attractive to talented workers helps businesses cut down on the huge expense caused by high turnover rates.
Studies have shown a direct link between competitive compensation and retention. This is no surprise.
However, you do not have to pay the highest wages to retain top talent.
This is because salaries do not drive performance, engagement, or retention beyond a certain level, and higher pay won’t buy employees’ loyalty.
Gallup polls on turnover showed that 82.8% of the employees who quit their jobs left their organizations, and 17.2% of them transferred to a new position in the same organization.
For employees who left their organizations voluntarily, “pay and benefits” was the second most frequently given answer, and only 22.4% brought it up at all.
If an employee knows that they are making roughly what they would at any other company to do the same job, money comes off the table as a significant motivator.
It is also vital to achieving parity and other aspects of compensation. Forbes reports that for nearly 60% of employees, a company’s benefits package is the most important non-salary factor they consider when assessing a job.
2. Foster a Winning Culture
Culture plays a critical role in both attracting and retaining highly talented people.
Glassdoor found that 77% of workers consider a company’s culture before applying. The Associated Press reports that nearly half of employees would leave their current job for a lower-paying one at an organization with a better culture.
Although culture cannot be dictated, it can and should be designed.
Creating an atmosphere of fun, camaraderie, empowerment, pride, purpose, and recognition does not happen by chance. Senior leaders must be a living example of the organization’s values and act according to the sort of culture they want to nurture.
Organizations with a great culture have much higher team member engagement and customer satisfaction levels.
A winning culture can lift a company to success. A dysfunctional culture can drive it into the ground.
3. Provide Professional Development Opportunities
Investing in your team’s professional development is one of the most crucial employee retention strategies. Learning is essential for employees to develop new skills and find fulfillment in their work.
The need for new skills is one of the biggest business challenges facing leaders today, but offering the opportunity for an employee to learn new skills and knowledge on the job lets them know you are invested in their future.
Organizations that provide opportunities for growth and development attract highly-skilled candidates. Millennials and Gen-Z workers often choose a job with lower pay if they see that the organization makes it a priority to help them learn new skills.
Some of the ways an organization can show that they are serious about professional development are to offer in-house training programs, tuition reimbursement, mentoring, and sponsoring attendance at conferences and industry events.
Maintaining a robust development program rewards the employee and the business.
Research has shown that professional development is the second most important driver of workplace happiness, and those workers who are “heavy learners” are more confident, successful, and happy at work—which makes it more likely they’ll stay.
4. Help Employees with Career Pathing
Along with developing their skills, employees want to know they have a future in the organization. This is why career pathing should be an essential component of any retention strategy.
Career paths refers to a worker’s career progression and can include, “vertical career ladders, dual career ladders, horizontal career lattices, career progression outside the organization, and encore careers.”
This can function hand-in-hand with the learning and professional development opportunities employees are provided as part of an employee sustainability strategy.
When leaders help employees to determine the next steps on their career path, leading to promotions or vertical moves in the organization that are more fulfilling to the employee, it improves long-term retention.
If talented employees cannot see a place for them in the organization five to seven years out, they will begin looking for another organization that offers a better career track.
This may be a particularly important strategy for recruiting and retaining female workers who have left the workforce over the course of the pandemic.
A Verizon survey from 2021 found that, out of the 2,001 female workers in the U.S. who were interviewed, 62% of these workers who plan on rejoining the workforce after the pandemic claim they will seek a new job in an area that provides better opportunities for advancement and skills development.
5. Invest In Their Wellness
Smart companies understand that they must take care of the “whole person.”
To take great care of their people, they offer myriad programs to assist their employees’ wellness physically, financially, and mentally. Mindfulness classes, financial planning, counseling, nutrition programs, and reimbursement for fitness classes are just a few ways businesses can support their people’s health.
Another aspect of wellness is encouraging work/life balance.
Managers need to understand that their employees have a life outside of work. This means that they respect sensible boundaries.
They do not ask workers to come in early and work late consistently. They don’t send texts after work hours and expect the employee to stop what they are doing and respond. They encourage employees to take their vacation time and mental health days when necessary.
Showing this kind of care and consideration for employees’ personal lives demonstrates to them that they work for a company that makes employee well-being a priority.
When organizations don’t do this, it will negatively impact the mental health and wellness of their workers. When an employee’s job is taking a toll on their personal life, they will want to leave that situation.
And yet, many companies don’t focus enough attention on employee wellness.
In companies where employees are in a constant state of overwork, aren’t receiving recognition, aren’t given the autonomy they need to do their jobs well or the flexibility they need to do well in their personal lives, retention will suffer.
Recruitment will also suffer. Top talent is not interested in working for organizations where these working conditions are the norm.
6. Unite Employees with a Sense of Purpose
Employees crave a sense of purpose in their work.
A recent study showed that 70% of employees say they wouldn’t work for a company that didn’t have a strong purpose.
Even more interesting, 60% would take a cut in pay to work at a purpose-focused company, and 90% of employees who work for companies with a strong sense of purpose say they’re more inspired, motivated, and loyal.
People want to know that they’re working for something more than just a paycheck. They want their work to have a meaning that is valuable to them.
When employees feel a sense of purpose in their jobs, and when they can take a wider view of their work and see how it makes an impact, they will be more loyal to the organization and more likely to stay put.
It is important for employees to contribute to a compelling purpose. In fact, a recent report found that 89% of employees say they are more likely to be loyal to purpose-driven companies.
In some organizations, like hospitals, it is easy to see the direct connection between one’s work and the impact it has on other people. For other companies, it may be a bit more challenging.
Still, employees must see that their work makes a positive difference.
7. Give Frequent Recognition
A good system of feedback is essential for building trust between employees and employers, and recognition should always be a component of that process.
Some managers are quick to point out mistakes, even minor ones, but they often don’t acknowledge employees for doing something good.
One of the most potent retention tools is to show your employees that you genuinely appreciate them. Recognizing the achievements of employees meets a core human need for both the employee and the manager.
Regularly recognizing employees demonstrates to them that leadership values them and is aware of the day-to-day contributions they make to help the organization be successful.
What should this recognition look like? While it may depend on the organization and the different factors that are conducive to a strong culture of recognition, it should always be specific and regular.
A winning organizational culture is one in which leaders frequently give genuine, specific praise. In this kind of culture, leaders avoid the generic “You’re doing a great job,” and they go out of their way to let people know exactly how they did a great job.
This specific praise lets people know that you were observing them and looking for an opportunity to point out when they do something well.
Leaders don’t have to make grand gestures to convey this appreciation. It can actually be pretty simple.
Celebrate wins, both big and small. Create a culture of catching people doing things right. Give abundant praise. Many workers report that they can’t remember the last time their boss complimented or thanked them for their work.
Organizations that create team member recognition and rewards programs foster higher engagement, motivation, and loyalty.
I want to finish back where we started.
The single most significant factor in your company’s success is your people. When talented people leave, it damages an organization in multiple ways.
The hiring process is slow and costly. When turnover is high, it’s hard to build a cohesive team. When someone walks out the door, they take a lot of valuable skills and institutional knowledge with them.
There is also a good chance they will take those skills and expertise and go to work for one of your competitors. When star employees move to another organization, other key employees will look at the door too. The list goes on.
To avoid this pain and expense, it is essential that you put in place the processes and programs mentioned above to create a solid retention strategy.
John Spence is a keynote speaker, consultant, and executive coach, who was named by the American Management Association as one of America’s Top 50 Leaders to Watch along with Sergey Brin and Larry Page of Google and Jeff Bezos of Amazon. He is the author of the acclaimed book on business excellence, Awesomely Simple.