6 Effective Employee Retention Strategies
Author:
Clarisa Wong
Published:
January 25, 2024
Last Update:
October 23, 2024
Organisations today face a classic and enduring challenge: how to retain good talent and prevent them from walking out of the door.
The merging factors of talent leaving and the volatility in the labour market can disrupt or destabilise a company’s culture – increasing the company’s turnover rate and costs, and causing the loss of institutional knowledge as well as incur extra resources to train new employees for a job role. Employee retention strategies are crucial, if not mandatory for all organisations to understand what employees really value and improve retention rates.
Employee retention matters – and here’s why
Most employers understand the importance of solving employee retention issues, but many may have overlooked why it really matters. Quick-fix solutions such as increasing compensation or basic work flexibility arrangements may be temporary bandaids on how to retain employees issues, but planning retention for the long term can manifest the following benefits:1 2
- More costs saved
Replacing an employee costs somewhere between one-third to double their annual income when you recruit and train new hires – which can escalate costs and become an expensive annual affair when turnover rates are high. - Improved team morale and performance
Often when an employee leaves, it leaves an open vacancy for a period of time in which the rest of the team has to pick up the workload left behind. Work pressure and stress can accumulate, and as a result cause a negative impact on performance. Employee retention can prevent this, and can help boost the overall team morale. - Improved stakeholder interactions and key business relationships
As experienced employees stay longer in your company, they can confidently speak to customers, clients, or investors on your behalf – making it easier to communicate with stakeholders and improve key business relationships. - Sustainable business growth
When you have high employee retention rates, your company relies less on hiring new employees to fill open vacancies – leading to better long-term growth and a sustainable business. - Easier succession planning process
Long-term employees can make mapping out succession planning much easier and more effective as upper management is aware of their competencies, trustworthiness, and willingness to grow alongside the company.
There can be more benefits from retaining employees for the long term, and in a nutshell, an organisation should look into focused actions with a solid understanding to solve employee retention issues. We can begin doing so by understanding the link between employee motivation and employee retention in the next section below.
We’re here to help you on your journey to hire, manage and pay.
Understanding employee retention through employee motivation
Distinguished American psychologist Frederick Herzberg had a famous “Two-Factor Theory” that explains the relationship between employee retention and employee motivation. According to Herzberg, employee motivation is dependent on the job conditions itself and can motivate employees to perform better in their work. Here are some examples of critical motivational drivers that can make employees stay:3
- Healthy work environment
- Achievements
- Rewards and recognition
- Opportunities for growth and development
Knowing what motivates employees can shed light on how to select important criteria when planning on how to retain employees – and a know-how of the elements of employee retention next can complete the planning process.
The 4 essential elements of employee retention
In order to retain employees, there are a few factors that need to be in place:4
- Leadership alignment
Leaders of a company need to have a solid understanding of the company’s culture and vision so as to align them when delivering this message to their employees. Leaders who are on the same page create a unified culture, vision, and work environment that employees want to be a part of. - Employee development
Employees thrive on opportunities for growth and development. Many would happily take on new challenges at work when offered, especially when they see that these will contribute to their professional development. Allowing employees to speak up freely through a culture of transparency and authenticity can encourage employees to stay – and developing your employees help improve your company and keep talent. - Succession planning
In order to future-proof your succession strategy, employers should train employees at every level. Team training helps to prepare employees for jobs that will be available to them in the future. By keeping employees in the pipeline, you can further your employee retention goals. Having a succession strategy helps your employees to be promoted as well, and it gives your best talent an opportunity to move up their career ladder – which gives a positive impact on your company’s culture. - Recruitment
When hiring new employees, job role descriptions are important to serve as the foundation for your interview questions. It can make a difference to ask skills-based questions to reveal whether a potential candidate fits your job requirements. As you are looking to build a competency model, understanding a candidate’s scorecard can help you determine if they are the right fit for your company and its culture. Being the right fit will keep your new employee around for the long run.
Now that we have a solid understanding of employee motivation and employee retention factors, we can craft employee retention strategies to retain the best talent and keep the organisation on high growth momentum.
6 effective employee retention strategies
1. Start at the leadership level
A Gallup poll of 1 million workers had revealed a clear and somewhat uncomfortable insight: 75% of voluntary leavers quit because of how they were managed.5 The first step to get employees to stay is to begin with leaders at the helm. Having leaders who engage with their teams can prove effective for employee engagement. Businesses should allow for tracking of leadership engagement metrics, as this can provide essential data for human resources to monitor.6
2. Create professional development opportunities or programs
In a LinkedIn survey for 2018 Workplace Learning Report, 94% of employees acknowledged that they would stay longer at a company if it invested in their professional development.7 Employee growth is an essential part and also an ongoing process throughout an individual’s professional life cycle. As employee growth is crucial to employees’ personal and professional development, employers that contribute to it will increase their overall job satisfaction, motivation and success.8
3. Improve employee’s onboarding process
Glassdoor research has shown that organisations with a strong onboarding process improve new hire retention by 82% and productivity by over 70%. By optimising the onboarding process for new hires, employers can help them feel more comfortable and appreciated – therefore encouraging employees to stay longer at their companies.9
4. Create working arrangements that are flexible
Boston Consulting Group (BCG) ran a research study that indicates up to 75% of digital workers look to change jobs within 2 to 3 years.10
In today’s workforce, many employees prefer hybrid or remote work environments due to the flexibility and work-life balance that they afford to the employees.11 Allowing these working arrangements to be implemented in your company can motivate employees to stay and perform better at their work.
5. Implement and support an inclusive company culture
When employees feel that they can trust their employers and colleagues to treat them fairly regardless of factors such as race, gender, or age, they are:
- 9.8 times more likely to look forward to going to work
- 6.3 times more likely to feel pride in their work
- 5.4 times more likely to want to stay longer at their company
Creating an inclusive workplace environment will not only help to attract a diverse set of talent, but it will help you to retain them longer too.12
6. Explore exit interviews thoroughly
Research has shown that high turnover rates predict low performance, and if an organisation has a lower turnover rate than its competitors, it can have a considerable advantage – particularly if it retains its top performers. Figuring out why an ever increasing number of employees leave an organisation is significant and crucial – and the most useful tool for doing so can be an unpopular one: exit interviews.13
AYP is your trusted HR partner with award-winning HR solutions for your business needs and requirements. Discover our EOR and PEO solutions, and read our blog posts for more HR insights and information here.
