Reading Between the lines of Employee Retention

Employee retention is more than simply how long an employee stays with a company. It has lots of hidden meanings for both organisations and employees, present and future.

1. Financial burden

According to the AFR, it costs an average of six to nine months of an employee’s salary to locate, train and onboard a replacement.

On top of the direct hiring costs, you also have indirect costs.

Indirect costs include:

• Lower productivity of the staff member leaving
• Overworked team members picking up the slack
• Lost knowledge
• Onboarding and training costs
• Interview costs (and the productivity lost by interviewers)
• Mistakes the new hire might make while learning the role

Often the cost of giving existing staff the $10,000 payrise they want/deserve is a lot cheaper than hiring new staff, especially in the current market where your new hire might only accept an offer with a higher salary.

The financial burden to an organisation with low retention rates is huge.

2. Prioritise staff

There are so many links between employee engagement and job satisfaction with the performance and profitability of a business.

Similarly, employee retention and turnover rates provide a strong indicator about how well the business is taking care of its staff.

Companies with low turnover and high retention are often linked to competitive salaries, training and promotion opportunities, a good work/life balance, employee perks and effective management.

On the opposite side of the spectrum, high turnover and low retention often signal problems with culture, poor management, and unwillingness to grow and develop staff.

3. Leadership

Good retention is a metric owned by the entire organisation, but it can often be linked to leadership or managers.

Within an organisation there may be some departments with high turnover while other departments remain loyal. If this is the case, it is often an issue with individual managers.

The greatest singular impact on employee retention is the employee’s manager. Poor managers are consistently named across retention and turnover studies as a top reason why an employee leaves, and good ones are the reason people stay.

In a Gallup study, 52% of employees who voluntarily left a company said their managers could have taken steps to prevent them from leaving. Additionally, more than half said in the three months before they left, no one – a manager or any other leader in the organisation – spoke to them about their job satisfaction or future career plans.

Managers are often the main touch point for solving, or at least discussing, many of the issues that cause voluntary turnover; including compensation, lack of a career path and a need for better work-life balance.

Knowing this, we have compiled some steps to help you reduce employee turnover.

• Give regular pay rises and don’t wait until staff ask for them. When your manager tells you, “You’ve been doing a great job, we’d love to give you a $5,000 raise”, it makes you feel appreciated and less likely to leave.
• Being recognised for your hard work.?There’s nothing more frustrating than working hard and it not being noticed or not receiving a ‘thank you’ for your efforts. Employee recognition is often overlooked but it can be vital in keeping top performing staff.
• Rewards to feel appreciated.?Similar to being recognised, being rewarded for your hard work goes a long way. A pay raise is great, but don’t underestimate the power of a $50 gift card, or even better if you can personalise it.
• Improve communication methods.?Communication is key for any business. Creating an environment of meaningful and constructive feedback and building rapport with colleagues is very important too.
• Employee engagement surveys and pulse surveys.?Conducting frequent surveys (quarterly or bi-annually works well) which are anonymous will help you understand how employees are feeling and outcomes to work towards.?
• Weekly 1:1 between managers and direct reports.?It’s best to have weekly or fortnightly meetings which are structured. Additionally, having quarterly check-ins to discuss projects they enjoyed working on, things that didn’t go to plan, future projects they want to be part of, what the business can be doing to better support them, etc. are great conversation starters and helps give you an insight into keeping staff engaged, motivated and loyal.

Just as organisations want to know why you’re leaving your current position, it’s important to ask in an interview why the last 3 staff have resigned. You can also ask about retention and turnover rates which will help give you an insight into how they treat and manage their staff.