Employee retention is an absolute necessity, as it is the employees that enable a company to operate smoothly, if not entirely.?Businesses that fail to prioritize employee retention pay the steep price of high turnover?and the?ensuing poor reputation. This directly affects?brand equity?and the overall state of a business.?
Despite the importance of employee retention, there are several concerning statistics when it comes to this business aspect. First off, although the average and?ideal employee retention rate is 90%, almost 4 million American employees have quit their jobs?in April 2021 alone.?
More troubling is the fact that?31% of employees have quit their job within the first 6 months of starting?with a company. Given these grim statistics, it is no wonder that almost?50% of HR leaders say employee turnover and retention is their top challenge.
Clearly,?employee retention is a key challenge?that many?companies have not been able to properly work out and fully resolve.
Key Retention Strategies and Best Practices
Effective practices in a number of areas can be especially powerful in enabling an organization to achieve its retention goals. These areas include:
- Recruitment.?Recruitment practices can strongly influence turnover, and considerable research shows that presenting applicants with a realistic job preview during the recruitment process has a positive effect on the retention of those new hires.?
- Socialization.?Turnover is often high among new employees. Socialization practices—delivered via a strategic onboarding and assimilation program—can help new hires become embedded in the company and thus more likely to stay. These practices include shared and individualized learning experiences, formal and informal activities that help people get to know one another, and the assignment of more-seasoned employees as role models for new hires.
- Training and development.?If employees are not given opportunities to continually update their skills, they are more inclined to leave.
- Compensation and rewards.?Pay levels and satisfaction are only modest predictors of an employee's decision to leave the organization; however, a company has three possible strategies:
- Lead the market with respect to compensation and rewards.?
- Tailor rewards to individual needs in a person-based pay structure.
- Explicitly link rewards to retention (e.g., tie vacation hours to seniority, offer retention bonuses or stock options to longer-term employees, or link defined benefit plan payouts to years of service).
- Supervision.?Several studies have suggested that fair treatment by a supervisor is the most important determinant of retention. This would lead a company to focus on supervisory and management development and communication skill-building.
- Employee engagement.?Engaged employees are satisfied with their jobs, enjoy their work and the organization, believe that their job is important, take pride in their company, and believe that their employer values their contributions. One study found that highly engaged employees were five times less likely to quit than employees who were not engaged.?
Broad-based strategies are directed at the entire organization or at large subsystems and are intended to address overall retention rates. Examples include providing across-the-board market-based salary increases, changing the hiring process to incorporate retention-related criteria and improving the work environment.?
The data needed to help a company determine which broad-based strategies to implement typically come from three places:
- Retention research?can shed valuable light on the primary drivers of turnover. Attendance at conferences and membership in professional associations such as SHRM can provide access to the latest research on turnover and retention.
- Effective practices?encompass the strategies that other organizations are using and are finding effective or ineffective.
- Benchmarking surveys?can provide information about how a company compares to competitors on issues such as pay, benefits, bonus plans and the like.
