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The overall cost of replacing an employee can be anywhere from 90 to 200% of their annual wages. To illustrate, an employee who makes $50,000 a year can cost you up to $100,000 to replace!
Whether you’re a small, medium-sized, or large business, this isn’t a cost you can ignore. Think about the prospect of needing to replace multiple employees in a year and the cost can be astronomical.
The good news is this is an avoidable cost. Sure, it’s normal for employees to leave, but if your organization can maintain a high employee retention rate, you won’t need to worry too much about the cost of replacing employees.
The big question is, how can you improve employee retention in your organization? Keep reading for some of the best employee retention strategies!
Keep Employee Retention in Mind When Hiring
Employee retention starts during recruitment.
Unfortunately, most small businesses owners or managers don’t keep this in mind when making their first hires. This is understandable because at this time you’re mostly thinking about bringing people who can get the job done. But without keeping retention in mind you’ll only be shooting yourself in the arm
During recruitment, focus on hiring employees who’re likely to stay with your company for a long time.
How do you do this?
Find people whose values match those of your organization. For example, if your organization’s values include boldness and commitment to environmental sustainability, an employee who’s bold and passionate about the environment will likely want to be loyal to your organization because of the shared values. Increased employee retention is one of the benefits of organizational values.
Also, look at the employment record of a job applicant before hiring. If you can see from their resume that they have held multiple jobs within a short period of time, it’s clear they don’t have a good record of loyalty. What makes you think they’re going to change their job-hopping habit once they start working for you?
Build a Conducive Workplace Environment
Employees hate to wake up in the morning to go to work if they’re going to spend time in a terrible workplace environment.
A terrible or less-than-ideal workplace doesn’t necessarily mean it’s located in an aging building or it has old desks and computers. Though these factors will negatively affect employee satisfaction, it’s often more about bad workplace policies.
Imagine working in a fancy office but where the boss is disrespectful and condescending – will you look forward to going to work just because of the fancy furniture and machines? Your answer is as good as ours.
As such, one of the most effective ways to increase employee retention is to build an ideal workplace environment. Besides a conducive physical/structural environment, design and implement policies that make employees love working at your organization. Things like sexual harassment, gender inequality, and employee-manager conflicts should be no-existent in your workplace.
Also, strive to build a culturally diverse workforce. If most of your employees belong to a certain race, for instance, the few who belong to other races may struggle to feel at home. This can force them to quit and find jobs in companies with inclusive workplaces.
Provide Adequate Advancement/Development Opportunities
The same way you want to grow your organization is the same way your employees want to grow in their careers. As an employer, you hold a lot of power over your employees’ job advancement prospects.
Ensure your organization provides adequate employee development opportunities. You can do this by organizing training workshops where employees can advance their knowledge and skills. As the organization grows, create positions that enable employees to climb the career ladder.
For instance, creating more departments (while still maintaining a lean structure) enables the creation of positions such as head of department. Instead of hiring an external worker to fill this position, promote from within.
If employee development opportunities in your organization are limited, it’s only a matter of time before your employees start feeling like their careers have stagnated. And when this feeling sets in, they’ll start looking for better opportunities elsewhere.
Offer Attractive Compensation
In a 2019 Glassdoor survey, over 50 percent of the 5,000 respondents said company mission and culture are more important than salary when applying for a job.
Well, this doesn’t mean you can get away with compensation packages that aren’t competitive in your industry. Company mission and culture will attract the right talent, but those alone aren’t enough to keep them there. A good salary and other benefits will keep them content.
Therefore, ensure your organization at least matches the competition in terms of employee salary. Add in extra benefits, such as health insurance, pension plans, and paid vacations.
Utilize Exit Surveys
Even at the happiest workplaces, employees still leave.
Regardless of your best efforts to improve retention, some of your workers will leave from time to time. There’s nothing wrong with this, as long as your overall employee retention rate still meets or beats industry standards.
Departing employees are a valuable source of information that you can use to improve retention. To gather this information, utilize exit surveys. Employees who are leaving can use these surveys to anonymously provide feedback about their experience with your organization.
Is there something about your organization that prompted them to leave?
If yes, act on the feedback.
Keep Employee Retention Rate High
A high employee retention rate is good for your organization. You get to keep your best talent and don’t have to lose money replacing employees who leave. Use these tips to enhance employee retention in your company.
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