Employers: Why Develop an Employee Retention Plan?

With hiring on a seemingly healthier path to growth, it’s an important time to think about how your current employees are doing in their jobs – that is, it’s time to examine and evaluate your organization’s employee retention capability.

The fact is, for employers, the return of better business conditions and new hiring mean potential job candidates have more choices in picking their next job. It’s no longer the case, for example, that your typical job posting will automatically attract high-volume interest, giving you many candidates from which to choose. In addition to better economic conditions, job seekers are more savvy at finding new opportunities by leveraging their networks and making direct contact with employers for whom they’re interested in working.

The bottom line is employers, now more than recent times, can’t afford to lose their talent. A more fluid job market means employees and job seekers have more options. So now it’s all about employee retention. We know employees voluntarily quit their jobs for a variety of reasons, including relations with their managers, low engagement in their work, lackluster benefit packages, or non-recognition for their work. In many cases, it’s often not just about the paycheck.

With members of Gen X and the Millennials generation, for example, one common trait they tend to share is their need to have meaning in and recognition for their work. Putting this into further perspective, a 2016 Gallup poll found 67% of U.S. workers are “disengaged” or “actively disengaged” in their jobs.

In addition, it’s expensive to see your employees quit their positions. Some estimates show turnover costs can run anywhere from 50 percent to 200 percent of an employee’s annual pay. Indirect costs tend to manifest in lost productivity and discontinuity with current staff on projects and workflows.

So for employers, one way to stay ahead of this new era in the business cycle is to consider creating a formal employee retention plan. To start, you would want to determine the extent to which turnover is (or isn’t) a problem in your organization. Diagnosing your turnover, for instance, involves knowing how many employees leave voluntarily relative to those involuntarily dismissed.

Your turnover rate may be the occasional exit of poor performers, which may not be a detriment to maintaining your daily operations. Your rate may be related to unavoidable factors, such as when an employee has health problems or they return to school. Your turnover rate can be impacted by relatively avoidable factors such as not doing more to provide more internal job opportunities and promotions.

So, as an employer, here are some key questions ultimately to ask yourself: is turnover a problem in my organization? How many people are leaving over a period of time? Who is leaving in terms of roles? What are the relative costs and benefits of our current turnover? It’s also important know if your employees are happy and satisfied and whether you’re meeting their needs – both professionally and personally.

A troubling turnover rate can lead to dysfunction internally when the wrong people are leaving, or when the turnover rate becomes so high the accompanying costs and instabilility outweigh the benefits.

The key is taking time to set up a system in which you can evaluate your turnover rate, understand the extent to which your organization is affected for better or worse, and then take the critical steps to retain those employees you can’t afford to see walk out the door.