When the job market gets competitive, hanging onto staff becomes an unexpected challenge. But while competitors might offer everything from big salaries to employee perks to lure away your top talent, that doesn’t mean you’re powerless to stop them. There’s plenty your company can do to convince valued employees to stick around.
Employee retention is more than just a metric to track the turnover of staff. In practice, employee retention is something you can proactively invest in and improve on.
In this article, we’ll take a closer look at some of the reasons why employees quit their jobs, and what measures can be put in place to encourage them to stay put. But first, let’s define what we mean when we talk about employee retention.
What is employee retention?
The term “employee retention” refers to how well a company can retain its existing employees. Determined by an organization’s staff turnover, it tracks the rate at which people leave a business over a given period.
When people discuss the topic of employee retention, they tend to focus on workers who voluntarily quit, but employee retention also includes workers who leave the company involuntarily. However, redundancies—that is, when job roles are eliminated and staff aren’t replaced—typically aren’t included when tracking employee retention.
Why employee retention is so important for your company
Retaining the employees you already have is important for many reasons, but chief among them is that hiring and training new employees is expensive. As staff turnover creeps upward, the cost of replacing and upskilling new hires can start to snowball.
If employee retention becomes a real problem, a company can lose invaluable knowledge, experience, and skills, as there won’t be enough veteran employees around to help onboard the newbies. If left unchecked, this situation can create a negative feedback loop, in which new employees feel discouraged by a lack of coherent leadership and become more likely to quit themselves.
Why employees leave a company: main causes
There are a number of reasons employees might leave a company. These are among the top reasons for seeking a job elsewhere.
- Low salary. Poor compensation can be a major driver of job dissatisfaction. If there’s a significant gap between your company’s pay scale and that of a nearby competitor, this creates an opportunity for your top talent to be lured away by the prospect of better pay.
- No benefits. A lack of benefits makes the role less enticing for potential recruits, but drags on employee retention too, particularly in competitive business environments where other companies can offer better perks.
- They’re overworked. Now more than ever, employees are seeking a healthy work-life balance. Too much work, disorganized processes, or chronic understaffing can all lead to stress and burnout, which can drive employees away from your company.
- They don’t feel recognized. An employee who feels that their career is stalling is likely to look for opportunities for advancement somewhere else. Feeling underappreciated or overlooked for promotions is a big reason why many people jump ship.
- They get bored. People need to do work that leaves them feeling engaged and stimulated. When tasks become repetitive, employees might consider searching for a new and more exciting role somewhere else.
- Bad management. Unhappiness with management is regularly cited as a reason for leaving a job. When an employee feels that their boss doesn’t have their back, they’re way more likely to quit.
- Job opportunities. At every level of business, employees can stumble across or be offered a role at another company that’s better suited to their circumstances. Getting a better job offer elsewhere is a big driver of resignations.
- No growth plan. When company growth slows down or starts to enter a decline, all but the most invested employees will start heading for the lifeboats rather than go down with a sinking ship.
Employee retention strategies
There are ways that employers can improve their company’s employee retention. By incorporating most if not all of the following strategies, you might find that an increasing number of employees stay with the company longer.
- Create growth paths. Consider increasing the frequency of performance reviews while making them less formal. This gives managers and employees the bandwidth to continuously discuss professional goals and create clear pathways for career progression.
- Respect work-life balance. Without a conscious effort to prevent it, an unspoken culture of overworking can creep into almost any workplace. Set expectations and lead by example. Be mindful of when your employees are active and available, especially when working remotely or asynchronously, to help ensure they’re achieving a healthy work-life balance.
- Build good teams. Working collaboratively leads to better business outcomes, as teams draw on a more diverse range of expertise and perspectives to solve a problem. Good teams also create opportunities for employees to have their ideas heard and to see them implemented, which boosts engagement and helps retention rates.
- Encourage socialization. Create space in your company for fun events and socialization. Regular opportunities to relax with colleagues helps to relieve stress and unwind, and bonding with other team members fosters an invaluable sense of belonging.
- Hire great leaders. A fraught relationship with bosses is a big driver of employee resignations. Remedy this by hiring great leaders and promoting the best people into management roles. Good leaders don’t just enable the smooth running of business operations. They also act as guides and mentors to employees who might feel they’re struggling to engage with the work.
- Make them feel valued. How you make employees feel valued depends on the type of company in question, but recognizing and acknowledging hard work is universal. A formal reward program can work for some teams, but even small changes such as asking for employee feedback on important business decisions can have a positive impact.
- Offer training. Invest in your employees’ professional development by providing training opportunities and further education to those who want it. Not only do workers benefit directly from new competencies, but a more skillful and knowledgeable workforce boosts the business as well.
- Provide fair compensation. As pay is one of the most important contributing factors when it comes to low employee retention, ensuring that your workers are fairly compensated is one of the most effective ways to keep them around. If increasing salaries isn’t an option, consider one-off bonuses as an alternative.
Employee retention and ROI
It’s possible to compare the costs of retaining staff versus recruiting a replacement. By doing this, you’re better able to track your potential return on investment when planning your company’s employee retention strategies.
According to research carried out by the Center for American Progress, it costs businesses between 16 and 20 percent of an employee’s salary to replace them. This percentage factors in the practical costs of searching for talent and conducting interviews, as well as the hidden costs of things like lost productivity.
In simplified terms, that means it makes more sense to spend this amount, or less, on the right employee retention measures—such as increasing wages—rather than risk losing them and spending even more.
The role of flexible workspace in employee retention
Space strategy plays a key role in attracting and keeping company talent. Employees prefer to stay put when they have access to a flexible workspace that meets their needs close to where they live. WeWork All Access can support your teams with hundreds of dedicated workspaces around the world, so they always have room to collaborate and do their best work.
For the ultimate in last-minute flexibility, WeWork On Demand lets you access workspaces and meeting rooms in hundreds of city locations, without the hassle or constraints of a monthly commitment.
Steve Hogarty is a writer and journalist based in London. He is the travel editor of City AM newspaper and the deputy editor of City AM Magazine, where his work focuses on technology, travel, and entertainment.