Why is employee retention important for your business?
Research shows that better employee retention is better for business. Fostering a workplace of happy and engaged employees lifts productivity and drives business growth.
It improves the employer brand, as the organisation is perceived to be a good place to work. It’s also good for your customers, as engaged employees are highly motivated to provide a high level of customer service.
What happens when they go?
- Costs are estimated to be 150% of an annual salary
- Loss of corporate intelligence
- Others have to pick up the slack
- There’s a drop in staff morale
What’s a good employee retention rate?
This depends a great deal on your industry. Google, for example, despite the fact that it’s considered to be a great place to work, has a high turnover rate. The reason? IT is a very competitive industry.
If, for example the retention rate for your industry is 75% and yours is 60%, you may well want your business goal to be 70%.
It also depends on who’s leaving. If your top talent is walking out the door, it’s a concern but if it’s your lower performers, then this could provide the opportunity to get the best talent to replace them.
You should be concerned if you have a low retention rate, as your employees are your most valuable resource. It’s an indicator that your business is not as profitable as it could be.
How do I work out my Employee Retention rate?
This is the percentage of employees who have stayed with you over a certain period of time. What you do is divide the number of employees who left during a period by the total number of employees at the end of a period to get the percentage.
For example, if you started with 30 employees at the beginning of the year and 4 left, then you have 26 at the end of the year. Divide this by the original no (26/30=0.86. 86%)
What’s employee engagement?
An engaged employee, is one who is highly committed to their organisation and its values and is strongly motivated to contribute to its short and long term goals.
This is want you would want, so it pays to value and reward your employees.
‘If you look after your staff well, they will look after your customers. Simple.’
— Richard Branson.
How do I measure Employee Engagement?
The best way to do this is to conduct an online survey of employees, asking them what they think of your organisation. You can ask, for example, what they think of the culture, is it a positive work environment, or not. It’s also a good way to ask for suggestions for improvement.
If you want to find out more about what they think of a particular area, for example, work/life balance, a focus group can often be a good way to get them talking about possible improvements. Make sure though, that you set up a non-threatening environment, so they feel comfortable making suggestions
If my staff are telling me, we could do better with work/life balance strategies, what would this look like?
These can be low-cost to implement and are very much appreciated by employees.
Here are some suggestions:
- Flexible work arrangements, (anything outside of the normal 9-5 Mon – Fri) This provides control over employee work arrangements and makes it easier for them to manage their non job- related responsibilities. There’s also a business rationale behind the concept, as if it’s easier to deal with pressures on the home-front, employees are likely to be more productive.
- Flextime. Employees are expected to be on the job during certain core hours, so long as they work the required number of hrs each day.
- Compressed workweek. The most common example is the 4/10, 4 days p.w. for 10 hrs, so that it provides an extra day at home.
- Job-sharing. Two part-time employees share the same full-time job. Both people need to be qualified and must be able to work harmoniously together.
- Telecommuting. Staff work a pre-determined time from home or from another non-company site. Working from home could save an employee $100 per week in day care expenses, which equates to about $4,800 p.a.
- Organisations offering time off in lieu instead of overtime have resignation rates of 9.8% instead of 10.9%, according to an Australian Institute of Management Survey in 2017.
- Opportunities to work part-time. Management, as well as other positions can be filled on a part-time basis, offering flexibility to employees. Women returning from maternity leave can benefit from this option, whereby they can balance home and work responsibilities. Employees also benefit, as the expertise and experience can be retained within the organisation.
What about Reward and Recognition programs?
It’s all about valuing your staff
The concept behind these programs is that outstanding performance deserves recognition & validation. When expected recognition isn’t provided, employees can become disenchanted.
Reward and recognition programs increase engagement & productivity. They should align with company values and be authentic, not automatic.
Regular recognition events such as banquets or breakfasts, employee of the month or year recognition. A job well done can also be recognized by providing additional support or empowering the employee in ways such as greater choice of assignments, increased authority, or naming the employee as an internal consultant to other staff.
How do I keep my staff motivated? Creating the right culture.
- Establish and retain a diverse workforce in terms of age, gender and ethnic background to cultivate diversity in thought and encourage creativity.
- Provide the best technology and encourage the utilisation of new technologies, so you and your employees can be as productive and efficient as possible.
- Provide your employees with challenges. The Institute of Managers and Leaders National Salary Survey found that 81% of employees left because they were seeking a new challenge.
- Ensure you create a sense of belonging Loneliness and social isolation are considered by many to be the global epidemic of our times. Social events, such as group lunches and evenings out, bring employees, managers and owners together informally and enhance the sense of belonging to the tribe.
How do I provide effective feedback?
- Ensure you provide regular communication and meetings, where performance is discussed, as well as career path opportunities.
- Yearly performance reviews are losing favour, especially with the millennials, in favour of more targeted and timely feedback.
- Performance reviews are moving away from just achieving targets, to emotional intelligence, behaviour and improving performance.
Performance reviews should be SMART:
S – Specific: M – Measurable :A – Attainable: R – Relevant:
T – Time bound: and give employees the opportunity to stretch.
What’s a Learning Organisation and why do staff want to work in one?
- According to the 2017 Institute of Managers and Leaders’ study, more than 18% of employees reported resigning because of a lack of professional development and training.
- Here are some suggestions for implementing a learning culture:
- Tuition reimbursement
- Mentoring opportunities, either internal or external or both.
- Online learning and workshops
- Support for further study
Sanitarium has a 1% turnover rate p.a. and attributes it in part, to the range of e-learning programs provided, for example, on and off-the-job training, retreats, peer coaching and webinars.
Why do I need to have a Wellness Program for my staff?
The cost of work-related injury, and illness to the Australian economy is estimated to be $57.5 billion, of which employers pay over $10 billion.
The question then needs to be asked, can organisations really afford to ignore Wellness Programs even from an economic perspective?
Economics aside, many organisations are realising that ensuring the workplace is safe and individualised wellness programs are in place, developed in consultation with staff, can have very positive results, increasing employee health and happiness and a sense of self-worth, as it’s recognised that the organisation has a strong commitment to their employees.
- Wellness Programs need to be tailored to individual needs. If you have a diverse workforce, in terms of age, gender and ethnicity, then it’s likely they will appreciate different work environments. Yoga classes, programs on healthy eating, fun-runs and discounted gym memberships, are all useful options, but ask your employees first, so you know what will work for them.
What is an Employee Assistance program and how will it help my employees?
Employee Assistance Programs are free and confidential counselling services offered to employees on personal and job-related issues which may affect their work performance.
Providing this service to your employees will assist them in addressing areas of concern, such as stress, financial issues, legal issues, family problems, office conflicts, and alcohol and substance abuse.
Employees who can make use of this facility where required, have a stronger ability to contribute positively to your business. They will need less sick leave and will also appreciate the fact that their workplace takes care of their psychological needs.
Is remuneration a key issue for employees?
According to the Institute of Managers and Leaders 2017 National survey, 44.4% of staff left because of insufficient financial reward.
Clearly it is. It’s a good policy to check what your competitors are paying, to ensure your salary packages are competitive. Employees need to be valued financially but also need to pay their rent or mortgages, go on hols and enjoy life.