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Why Does Employee Retention Matter?
Employee retention goes beyond just reducing hiring costs. It’s about fostering the type of work environment where team members feel truly valued and are motivated to stay. High turnover can cost companies thousands in recruiting, onboarding, and lost productivity. Research suggests that the cost of hiring is only recovered after 6 months of the employee working. In tech roles or particularly senior roles, this can stretch up to a year. If an employee leaves your organization soon after joining, you are likely to never have seen any return on investment for that hire.
On the other hand, effective workforce retention boosts morale, productivity, and contributes to a strong company culture.
A study by Gallup finds a strong correlation between engaged teams and positive outcomes for organizations, including:
- Up to 51% reduction in employee turnover
- A boost of 23% in profitability
- A whopping 70% increase in wellbeing
The 3 Pillars of Employee Retention
What are the building blocks of employees staying for longer? There are three critical components that form the basis of retention – it’s important not to neglect any one piece of the puzzle. Below, we’ll deep-dive into each of these pillars in more detail.
Compensation and Attractive Benefits
One of the main drivers for employee retention is competitive pay paired with meaningful benefits. This goes beyond the initial offer you make to convince someone to join your team. To retain these team members, meaningful annual salary increases that keep up with or exceed inflation and performance bonuses also play their part.
Career Development and Growth Opportunities
Investing in professional development drives employees to stay by showcasing that they have clear pathways for growth within your organization.
Companies with staff retention strategies that include regular upskilling and budgets for training, mentorship programs, and clear pathways for promotions often see employees more committed to their roles, knowing that their career progress is prioritized.
Work-Life Balance and Flexibility
Providing flexible working conditions, like remote work options or adaptable hours, supports employees' work-life balance and improves retention. Studies show that 80% of employees feel more loyal to companies that offer flexibility in the workplace.
10 Effective Employee Retention Strategies
1. Offer Salary and Benefits That Go Beyond The Minimum
Attracting and retaining employees begins with a competitive compensation package. To set competitive salaries, follow these steps:
- Conduct thorough market research to benchmark salaries. Analyze industry trends and get reputable salary data to understand what competitive pay for the role looks like.
- Factor in the cost of benefits, bonuses and required employer contributions to offer a competitive total compensation package.
- Tailor your salary bands based on experience, qualifications, and unique skill sets. Experienced professionals or those with in-demand skills may expect higher compensation.
Offering employee benefits such as health insurance, retirement savings plans, and paid time off ensures that employees feel financially secure and valued.
Companies that go beyond statutory required benefits – offering perks like financial wellness programs, mental health resources, and flexible hours – stand out in retaining and attracting their workforce. Offering remote working options has also become an increasingly attractive perk, with a whopping 98% of workers preferring to work remotely at least some of the time. Being flexible in this area can give you the edge over organizations that mandate a full return to office.
People have to earn a living. Salary, contract payments, some benefits, a few perks are what I call “baseline rewards.” If someone’s baseline rewards aren’t adequate or equitable, her focus will be on the unfairness of her situation and the anxiety of her circumstance. The best use of money as a motivator is to pay people enough to take the issue of money off the table.
Daniel H. Pink, Author of Drive: The Surprising Truth About What Motivates Us
2. Provide A World-Class Onboarding Experience
First impressions matter. A smooth onboarding experience sets a solid foundation of success for new hires, making them feel supported from day one. It provides new employees with all the tools, resources and documentation they need to hit the ground running and integrate into the company culture.
This is especially important if you manage a global team where good communication is extra important to succeed. Some hallmarks of a good employee onboarding program include:
- A structured onboarding schedule that includes essential tasks that quickly set them up to succeed and clear expectations for their first 30, 60 and 90 days on the job.
- Set up introductions to key stakeholders and team members, and offer new hires an onboarding ‘buddy’ who can answer any questions they might have.
- Provide easy access to all the tools, policies and procedures they’ll need in their day-to-day work. Using project management software such as Monday.com, Asana, Trello or Jira is a great way to keep this organized in one place.
Want to keep your best talent?
See how an EOR like Playroll can help you provide competitive benefits and seamless global HR support, setting up the building blocks of retention from day one.
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3. Train Your Managers To Be Good Mentors
Having a bad manager is a driving reason why employees leave. Conversely, a supportive manager can play a crucial role in helping employees stay and thrive at work.
That said, the skills to be a good manager doesn’t necessarily come naturally – it’s worthwhile to invest in training that helps managers to become more effective mentors to encourage employee development.
4. Invest in Employees' Professional Development And Career
Having access to plenty of upskilling opportunities show team members that the company is willing to invest in their growth, helping to retain employees who see a future within the organization.
How do you promote professional development in practice? Offer regular skill-building workshops, certification courses, or leadership development programs. Recognize employees’ milestones in completing growth goals, whether it’s through dedicated recognition programs and channels or tangible rewards like performance bonuses.
In addition, a structured career development program helps employees visualize a future within the company, reducing the chances of losing top talent to competitors offering growth opportunities.
Outline the career paths within your organization and what employees need to achieve to progress. Specify what type of skills, experiences, and milestones are required for employees to advance.
5. Work On Maintaining Work-Life Balance For Your Team
Today’s employees prioritize companies that respect their need for personal time.
Flexible scheduling and remote work options promote better work-life balance that supports both productivity and well-being, significantly reducing turnover – 71% of remote workers say it helps to balance their work and personal lives.
Other practical ways to improve employee work-life balance include implementing mental health programmes and setting a realistic workload that is manageable to complete in work hours. Plus, encourage employees to disconnect after work hours and take their paid time off.
6. Provide Regular Feedback and Conduct Stay Interviews
Frequent feedback and stay interviews are invaluable tools for gauging employee satisfaction. These touchpoints give employees a structured way to share what they value at work, and voice their needs or concerns. In turn, this allows management to course-correct if there are gaps and problems within the organization.
Set up quarterly employee engagement surveys to gather this feedback and compare results over time. Conducting regular performance reviews also helps employees reflect on their progress and provide proactive feedback on where they need support to hit their goals.
7. Give Employees Autonomy In Their Work
For employees, few things raise a bigger red flag than a micromanager that controls every aspect of their work, decreasing trust and confidence on the job.
Giving employees autonomy over their work boosts morale and creates a sense of ownership. Empowered employees tend to feel more invested in their work, resulting in improved job satisfaction and lower turnover rates.
Human beings have an innate inner drive to be autonomous, self-determined, and connected to one another. And when that drive is liberated, people achieve more and live richer lives.
Daniel H. Pink, Author of Drive: The Surprising Truth About What Motivates Us
8. Conduct Meaningful Exit Interviews
When employees decide to leave, conducting exit interviews helps uncover underlying reasons for turnover. This feedback is essential in refining employee retention strategies and pinpointing areas for improvement.
When conducting an exit interview, make it clear that the conversation will remain confidential and won’t impact future reference. Conduct it in a neutral setting, and have it led by someone outside of their direct team.
9. Improve Your Hiring Process
A thoughtful hiring process can help set up the future success of your employees. Ensure that candidates align with the company culture and values. This approach to recruitment helps secure employees who are genuinely invested in their roles, minimizing high turnover.
To help draw employees that will build up your company culture, implement a referral program that rewards current employees for suggesting suitable applicants. Since current employees are already embedded within your company culture and know what is required for success, they are an excellent way to attract good candidates.
Additionally, add steps to your hiring process such as team-based interviews or assessments, and ask behavioral interview questions that will reveal how the candidate handles real-life scenarios.
10. Look for the Tell-Tale Symptoms of Burnout
Monitoring signs of burnout allows leaders to pick up on issues before they escalate. When employees feel proactively supported, they’re more likely to stay committed to their roles.
So, what should raise the alarm bells? Burnout symptoms include chronic exhaustion, reduced performance, and a lack of motivation. When employees experience burnout, they often feel detached, irritable, and dissatisfied with their work. Physical symptoms like headaches and sleep issues are common, as well as an increased vulnerability to illness.
Provide A World-Class Employee Experience with Playroll
As employers strive to improve employee retention rates, effective HR tools can streamline the experience for both employees and managers. Playroll offers leading EOR software that simplify global workforce management, helping organizations compliantly employ and manage teams worldwide. With hands-on support for both employers and employees, Playroll helps companies build the type of work environment where employees feel valued and supported to stay.
Book a chat with our experts to find out how we can scale and support your global team.
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