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Employee Retention: Why it Matters & How You Can Increase It

Employee retention is more than just an HR buzzword—it’s something that every company should be committed to.

The global pandemic has led to significant challenges with employee engagement and retention. Certain industries are struggling to hire, let alone retain, talent. Others are facing massive attrition rates due to employees finding remote work at another company. Still others are finding what worked in the past is not working now—employees want change.

So, it’s time to change our perspective about employee retention. It’s not just about keeping staff in seats but engaging employees in a meaningful way so that they can do their best work.

 

Employee Engagement and Retention: Why it Matters

We all know how much the pandemic shifted our work world—we were there for it! But the single biggest shift was the rise in remote working, which has empowered employees to seek jobs elsewhere if they are unsatisfied, a trend that has been observed in significant numbers. This influx in people leaving their jobs or shifting roles is also known as the Great Resignation.

And whether it’s a true phenomenon or a bit of hype, one thing remains: employee engagement is more important than ever. Employee engagement—i.e., employees who are happy and satisfied in their roles—naturally leads to higher retention. But it has other benefits, too. Gallup reports that highly engaged business units in their study had:

  •         81% decrease in absenteeism
  •         58% decrease in safety incidents
  •         18% decrease in turnover in high-turnover industries
  •         10% increase in customer loyalty and engagement
  •         18% increase in productivity (measured by sales)
  •         23% increase in profitability

It is equally undeniable that employee retention also saves employers revenue in the long run by reducing the cost of hiring new people to fill in turnover gaps.

When taking into consideration factors such as recruitment, onboarding and training investments, decreased productivity rates and even cultural impact, recruiting a new candidate is significantly more expensive than retaining qualified employees. In most cases, it can cost up to nine months’ salary worth for a business to replace a full-time employee.

The importance of employee engagement cannot be overstated. It matters for retention and all-around business success.

 

What Can Employers Do to Increase Employee Retention

As we outlined, employee engagement is the basis for employee retention. Here are seven motivating factors that businesses need to focus on:

1. Autonomy: Autonomy is the opposite of micromanaging—it’s trusting employees to do their best work as the skilled professionals they are. When people are given trust, they’re more likely to do their best and stay committed.

– Research demonstrates the link between autonomy and increased job and leisure satisfaction.

 

2. Engagement: People want to work somewhere they enjoy! Being engaged in your work comes down to the right amount of challenge and being interested in the specific projects and tasks.

– Interestingly, studies find that happy workers are 13% more productive! So being engaged is good for both the employee and the overall company outcomes.

 

3. Growth: Providing growth opportunities through professional development training supports retention. When employees feel that they’re being invested in, they can then invest in the work and workplace.

 

4. Purpose: Having a sense of purpose is a fundamental human need. Employees want to work somewhere where they align with the values and goals of an organization, and where they are brought into something that’s bigger than just themselves.

 

5. Clarity: Clear communication is essential for employee engagement and retention. Instead of having people wonder what’s expected of them or how the company will manage certain situations, make it a priority to be open, transparent, and clear. This also applies to hiring and promotion policies in the company—show a clear pathway to future opportunities and employees will be more likely to stick around.

–  One study showed that, during the COVID19 pandemic, employees whose manager was not good at communicating were 23% more likely to have declining mental health.

 

6. Flexibility: The pandemic has forced a lot of employers to be more flexible – a positive development. It promotes work-life balance and mental health for all employees. Flexible policies might include options for remote work, parental leave, sick days, and lieu time.

 

7. Recognition: Feeling appreciated and recognized for your work is a great feeling, and it can make a huge difference for employees. Managers and leaders can think of meaningful ways to recognize their teams… and it should be more than just a free lunch! Individual, personal recognition is key here.

 

Companies differ in size, industry, and mission. This means that each employer needs to take their own unique approach to employee engagement and retention. However, these seven underlying factors will make all the difference for talent retention across any workplace.

Managers and leaders should start by auditing their operations, policies, and procedures and ask if they’re creating an environment in which autonomy, flexibility, clarity, and the other factors are present.

And if not? It’s time to make some changes. The future of your employee retention depends on it.

 

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