How to Design an Employee Retention Strategy
Introduction
?A recurring question that continues to perplex business leaders is how to improve employee retention. While most companies are mindful of the detrimental impact that voluntary turnover can have on their bottom line, many still struggle to design and deploy strategies that can effectively minimize their employees’ intentions to leave. Companies are also tempted to ‘throw money at the problem’ – which explains their gravitation towards more traditional retention tactics (e.g., retention bonuses). But while these expensive solutions are assumed to retain ‘restless employees’, they ultimately just ‘postpone’ their inevitable departure (Source: Clark 2024). So business leaders are at a loss for which tactics they can take to effectively target voluntary turnover and bolster employee retention.
However, emerging schools of thought illustrate that there is new hope for companies looking to effectively improve their employee retention numbers. While traditional retention approaches have been more ‘reactive’ in nature (i.e., deploying them only when an employee decides to leave), growing numbers of HR experts are advocating for a more ‘proactive’ employee retention strategy. This involves creating a multi-prong strategy that aims to “proactively enrich [different aspects of] the employee experience” (Source: Clark 2022) – improving work conditions that could potentially compel staff to leave. Also, this strategy needs to be tailored to the company’s size, budget, and work environment – in order for it to be targeted and scalable.
Here are the 3x key stages required in designing an effective employee retention strategy:
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Stage #1: Assess the Factors Fueling Turnover Intentions
The first stage is understanding the reasons that are compelling employees to leave. While “some of these ‘push’ and ‘pull’ factors may be outside of your control – such as the economy” (Source: Orr 2021), they can help companies understand which issues are potentially fueling turnover intentions – and whether they can be resolved internally. In order to identify potential ‘push’ and ‘pull’ factors, you need to gather insights from your employees directly. Implementing a series of employee listening channels (e.g., pulse surveys, focus groups, stay interviews) can help you collect employee sentiment/perspectives on a wide range of employee experience (EX) topics. Some of these EX topics include (but are not limited to) the following:
Once you have gathered insights from your employees, you then need to analyze your findings – to better understand which EX issues are potentially compelling them to leave. When reviewing your survey data, look at the lowest-scoring EX areas – as well as the lowest-scoring divisions/teams; you should also pay attention to the most common themes highlighted in employee’s comments. Unsatisfactory results signal employee discontent/frustration in those specific work-related aspects – which are ‘breeding grounds’ for fueling turnover intentions. And when reviewing captured employee data, it’s important to forego any preconceived notions of voluntary turnover drivers. For example, most companies traditionally believed that compensation was the primary factor for employee-initiated departures; however, it only ranks third – behind bad management and lack of career development (Source: Clark 2024). So your analysis should help you determine which EX areas could potentially be fueling voluntary turnover – so you can better channel your efforts to address them.
Stage #2: Design and Deploy Data-Driven Retention Tactics
Once you have reviewed your findings (and determine which EX aspects to target), it’s time to design and deploy a series of appropriate, proactive retention tactics. These approaches should be designed to target specific EX areas of concern (i.e., lack of recognition or engagement) and be tailored to your specific workforce. While some of these tactics can be deployed immediately, others will take several months to fund, design, and implement.
Immediate Tactics
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There is a plethora of retention tactics that your company could implement immediately. If your employees reported a lack of recognition or acknowledge, then you could create and launch an employee recognition program (Source: Clark 2023A). Or if your staff reported a desire for more upskilling or career development opportunities, then you could purchase a company license for a learning management system (LMS). Other tactics include introducing flexible hours (to address burnout complaints), organizing networking events (to foster more cross-functional interaction), or DE&I initiatives (to foster a stronger sense of employee belonging). Moreover, these tactics are intended to address identified areas of opportunity – to stall and/or mitigate any current voluntary turnover intentions.
Gradual Tactics
Some larger-scale, formal tactics may require more time and resources to implement. One core recommendation is incorporating a ‘turnover propensity index’ into your existing/new employee surveys. Designed as a composite measure fed by several survey questions, this metric can help identify employees who are at a greater risk of leaving – enabling “leaders to intervene to increase the odds of retaining [them]” (Source: Holtom & Allen 2019). Additionally, formal manager coaching/training programs could be developed (to address management challenges) – while formal mentorship/sponsorship programs could also be configured (to help enhance career mobility). While gradual tactics may take a while to establish, they are proven mitigators of voluntary turnover intentions in the long run.
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Stage #3: Measure the Impact of Your Retention Tactics
Once you have selected and implemented several retention tactics for your company, it’s important to measure their impact on a regular basis. Start by capturing data/feedback on a more frequent basis (i.e., monthly or quarterly) initially – and then scale back to an extended timeframe (i.e., biannually or annually) as needed. This will enable to capture initial insights from the start, to identify any ‘glaring issues’ that may need to be resolved/modified. And as is the case with other people-centric initiatives, measuring the impact of an employee retention strategy is not easy as analyzing financial figures. Rather, it requires a more creative comparison of both business metrics & employee insights collected before and after the deployment of the initiatives.
In terms of business metrics, you could simply compare/contrast the company’s retention & turnover rates over time; be sure you are focusing just on employee-initiated, ‘voluntary’ turnover (not company-initiated turnover). However, employee insights require more analytical effort – to determine the retention strategy’s measurable success. Begin with analyzing data collected via employee listening mechanisms (e.g., surveys, focus groups, interviews) – comparing results both before and after the launch of your retention tactics. Note any improvements in key EX aspects (e.g., sense of belonging, employee motivation) that your retention tactics were aligned to. Then see if there was a reduction in the number of comments related to any previously concerning topics. Similar to other company-funded initiatives, “analyzing stakeholder feedback… is critical for highlighting the return-on-investment (ROI) of employee [retention] initiatives” (Source: Clark 2023B). So analyzing regularly-collected employee insights can help you determine the overall effectiveness of your employee retention strategy.
Conclusion
Traditional retention tactics are no longer effective at resolving the underlying issues prompting voluntary employee departures. So there is a growing need for companies to design more ‘proactive’, data-driven retention strategy (based on insights from their own stakeholders) to be more successful at mitigating intentions to leave and boosting intentions to stay. But while these strategies can help measurably improve employee retention numbers, it’s important to understand that there is no ‘one-size-fits-all’ solution. Each retention strategy has to be customizable and scalable to the specific company – given the multitude of different nuances involved (company size, organizational culture, industry, geography, etc.). Without a strategy based on captured feedback/insights from employees, companies will continue to struggle with improving their employee retention rates.
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