What is Retention & Why is it so Important for Businesses?
Employee retention is a key component of a company’s stability—it is one of the ways HR teams can demonstrate they’re on the right track. It allows businesses to set reliable long-term goals and to plan beyond the next business day. As companies try to grow their profits and be awarded a Great Place to Work certification, the ability to keep top talent from slipping through to the competition becomes not just a strategic advantage but a matter of business continuity.
It’s simple—retaining employees directly impacts business metrics like productivity and profitability, ultimately determining bottom-line outcomes.
Retaining good employees also plays an important role in shaping an organization’s overall success. And HR teams who succeed at it will help their companies get a competitive edge that could make them come out on top as each quarterly report reaches the investors’ inboxes.
One of the comprehensive strategies HR teams can rely on to excel at retention is following a human-centric approach. We'll discuss the human-centric element of key employee retention strategies and the tools that can help HR teams stand by it. We’ll also elaborate on tested ways to drive up and include ways to ensure employees are motivated and happy, setting the stage for long-term success.
What is Employee Retention?
It is the organization's ability to keep their employees working there long-term, thus decreasing employee turnover rates. A healthy employee retention rate varies from company to company, but an employee retention rate above 90% is usually considered adequate.
Examples of an Employee Retention Strategy
Some typical employee retention strategies—long-standing and contemporary—are offering more money, allowing remote work, offering flexible schedules, steering overworked employees toward a healthy work-life balance, or offering perks for employee satisfaction. The TV show Better Call Saul (2015) has a whole subplot where the protagonist won’t leave a company just because of competitive pay and the perks. But more effective strategies involve things beyond just cash and employee benefits.
Understanding Employee Retention Strategies in 2024
Traditionally, some firms have associated increased employee retention with more dollars on their worker’s paychecks—even at the expense of other lower-achieving employees. This is far from an ideal retention plan for 2024. There’s more to work than just money.
Consider this: According to studies, engaged employees are 59% less likely to seek new job opportunities and 18% less likely to change employers within a year. And even if an employee's salary is important, to increase employee engagement, more money might not be the answer.
Even with certain sectors, such as tech, continually increasing their salaries, turnover rates have been soaring ever since the Great Reshuffle struck the job market. In order to deal with it, companies and HR departments must take measures to keep motivated employees by their side—and ones that are happy to keep contributing to their own workplace culture.
One of those measures for an effective retention strategy is adopting a human-centric approach to work. This way of working puts employees' happiness and well-being at the top of the organization's priorities—right next to quarterly profit reports as the most critical benchmarks to keep an eye on.
Organizations that focus on keeping employees, then, should make sure that their team members feel valued, supported, and motivated to be part of the fold.
The Costs of High Employee Turnover
Statistics from the Job Openings and Labor Turnover Survey paint a troubling picture of the magnitude of employee turnover in the United States: With approximately 3 to 4.5 million employees resigning from their positions each month, talent seems to be walking in and out through a revolving door as employees leave without explaining why.
The effects of such a high turnover are costly. On average, each departing employee costs a company 33% of their annual salary in replacement expenses alone, some studies show.
Some other adverse effects of a failed employee retention strategy are not so obvious, but just as difficult to solve. For example, each departure could mean losing in-house knowledge for good—including the nooks and crannies that don’t show up at the Knowledge Base wiki. Technical debt stacks up faster when employees quit and there’s heavy rotation. Training costs will also start piling when a recent hire has to learn undocumented knowledge from scratch. Also, remaining employees could feel disheartened when they need to devote their workday to teaching because of unwanted turnover. This could be especially frustrating for remote employees, who could be exposed to burnout more quickly.
This situation could also create the expectation that the HR department has to come up with a perfect replacement out of the blue. Not even the best hiring process can handle those expectations.
Human-Centric Employee Retention Strategies
Fortunately, there are welcoming employee retention strategies to motivate employees and help companies keep their employees by their side—by taking care of what employees feel. In the interest of retaining talent, organizations are moving towards human-centric strategies that focus on employees' individual needs and experiences.
This paradigm shift acknowledges that employees are more than just contributors to the bottom line who’ll only feel motivated by a larger paycheck. Rather than that, it puts mental health and employee morale at the forefront, making them feel valued community members, each with their aspirations and strengths.
HR teams that adopt human-centric strategies will have the edge. Personalized development plans, unique recognition programs, and clearly-defined paths are three top human resource management strategies for 2024.
Personalized Development Plans
These plans recognize new employees as individuals with unique skills, interests, and career aspirations, aligning organizational goals with employees’ personal growth trajectories. Giving employees different chances to grow makes them feel more motivated and committed.
Take, for example, the software company Adobe, which implements personalized professional development plans to encourage employees through its Career Check-In program. Employees regularly discuss with their managers to identify growth areas aligned with their professional and personal interests.
Unique Employee Recognition Programs
Employee appreciation gestures for skilled employees work very well because they're memorable. People are likely to remember gestures of recognition, especially from senior management. Retail giant Zappos incorporates personalized recognition into its company culture, encouraging employees to express gratitude to their peers through handwritten notes and small tokens of appreciation.
Moreover, Google offers a peer-to-peer employee feedback platform, where employees can nominate their colleagues for outstanding contributions, with rewards ranging from gift cards to extra paid time out. Similarly, companies like Salesforce host milestone celebrations that go beyond the standard cake-and-coffee get-together.
Clear Paths for Growth
A human-centric strategy for job satisfaction offers a clear path for growth. If you’re an analyst, then what comes next? As a manager, how will you straight-up tell your employees they’re doing well? This kind of perceived progress can help build employee engagement and is known as employee development. Surveys have consistently proved that employees are more likely to stay at a company when they feel they’re growing and learning.
At an annual performance review, the best employees should know what comes next, and know their job security is looking solid. More compelling job opportunities within the organization will help retain talent that is looking sideways at an attractive job offer.
Protecting Work-Life Balance to Retain Employees
None of these plans will work with an inadequate salary or an unhealthy work environment. Employees feel valued through human-centric measures if they're recognized for being highly engaged employees first. Current employees will expect flexible hours and flexible work arrangements.
Solutions to Win at Employee Retention
Retaining top employees saves resources and cultivates a culture of employee loyalty and commitment. Or was it the other way around? It’s a virtuous cycle—and HR teams can get it started now.
Solutions like TalentHR allow HR professionals to manage people and simplify tasks like time-off management, employee job satisfaction surveys, hiring, and onboarding. The platform also allows running honest reviews, manager to employee, with transparent online forms. By integrating customizable career pages and AI-driven job descriptions, TalentHR offers an inviting recruitment-to-onboarding experience to new hires. Register now for free.
To learn more about well-rounded solutions for HR Teams, visit TalentHR.
