A near-record 4 million Americans per month left their jobs in 2022, in what was termed the Great Resignation by economists. While the worst seems to be over, the trend hasn’t stopped entirely. On the contrary, as many as 61% of employees might be thinking about leaving their jobs in 2023.
This volume of turnover can put employers in a difficult position, escalating already-tight competition for top talent in major industries; it’s not unheard of for companies to poach experienced team leads from under their rivals’ noses. In an environment like this, smart managers need to practice smart employee retention tactics if they expect to stay ahead.
This article will help companies get that done more efficiently.
The Costs of Hiring New Employees
Many recruiters working today made their bones in the less competitive job market of the 2010s. Back then, employers had a little more leverage in their recruiting drives. There was a greater pool of candidates to choose from, so companies could afford to be more selective and spend less time on employee retention. When someone didn’t work out, it was easier to find a new worker to take their place.
The situation is much different today. Actually, the costs of hiring, onboarding, and training a new employee are rising higher than ever before, leaving cash-strapped companies scrambling to rearrange their employment incentives. Hiring costs reached a 16-year high in 2021, and they don’t look like they’re set to come down anytime soon.
This means companies have been spending more money just to advertise their open positions. Social media, once reserved for personal-life and family-oriented posting, has itself become an economic battleground for corporate recruiters looking to plug crucial vacancies. Much of the budget that used to go toward product or service marketing is now dedicated to advertising job openings.
In the same vein, companies have begun offering more comprehensive benefits programs to encourage retention. These can have a greater short-term cost, but they often pay off over the long term as more productive employees decide to stay on with the company. However, it’s not always easy for small and midsize companies to compete with the big players in this regard.
Is Replacing Talent Cost-Effective?
All of this demonstrates why retention is the smarter strategy for cost-conscious employers to pursue. A seasoned employee, someone who has been with the company for years and knows it like the back of their hand, is indispensable. They bring a skill set and workflow that would take years for a new employee to match.
In fact, many employers fail to appreciate all of the benefits that experienced workers bring to their companies. It’s about more than mere productivity. Workers who’ve been with a company for a long time often contribute to:
- Overall company culture: They’ve been there long enough to add to the company’s values and mission statement.
- Leadership development: They can act as mentors or trainers for the company’s up-and-coming employees, including future hires.
Seasoned employees often have significant experience across numerous departments as well. They probably have more than one crisis under their belt, as well as a proven ability to work and succeed under pressure. These are the soft skills that are hard to quantify but are crucial to the organization’s growth.
That’s why losing an important employee can be such a major blow. Losing the wrong employee is a setback that could reverberate for years to come. It’s worth taking whatever time is necessary to stop such a thing from happening in the first place.
Building a Culture of Employee Retention
Learning how to foster a culture of retention in the workplace is key to resolving this dilemma. A culture of retention is one that:
- Puts people first: This is done through targeted professional development or employee growth opportunities.
- Looks for continuous feedback from current employees: This helps management discern where there may be problems before they escalate.
- Recognizes employees’ achievements and rewards them accordingly: These rewards don’t have to be monetary; a simple “good job” goes a long way toward making employees feel valued.
- Looks toward the future: Instead of thinking only about short-term profits, the company should forecast its operational and personnel needs for years down the road.
Unfortunately, confusion and interoffice toxicity cause many valuable employees to resign. Management can lower the odds of this happening by setting clear and transparent goals for the workforce.
Employees need to know what the company expects of them, and that knowledge can’t be abstract. Set explicit key performance indicators (KPIs), such as number of sales made, so that employees aren’t caught off guard by a critical performance review.
This form of performance management goes a long way toward reducing the anxiety employees may feel about their workload. It gives them instant feedback about their work quality and, coupled with suggestions for improvement, makes for a powerful motivating force. Over time, management and HR teams can work together to help employees grow into their roles and become star players for the company.
The Role of Professional Development
Professional development goes hand in hand with any retention effort. Implementing learning and development programs at the workplace fosters a culture of continuous improvement; it motivates workers to constantly upskill, increasing their value to the organization. In turn, the organization increases its value to the workers themselves by rewarding and incentivizing their expanding skill sets.
Consider the organization’s needs before starting a professional development program. What skills will the company need to cultivate if it wants to thrive now, and five years from now? Some of these can be learned in-house, through HR-led workshops and video-based training programs. Others might have employees enroll in employer-funded academic degree programs.
Regardless of the path chosen, make sure that the development programs synchronize with the company’s objectives at every level. This helps the company avoid wasting resources and keeps everyone on the same page.
Pay Raises Aren’t Always the Answer
Salaries matter, but not necessarily as much as managers might think. When hiring managers want to onboard new talent, offering a higher salary is typically one of their go-to strategies. But if it were that easy, everyone would be doing it.
The truth is that salary is only part of the equation people look at when deciding where to work. Employees who leave their jobs do so for a number of reasons, such as:
- Hostile work environment
- Inefficient manager
- Lack of professional growth opportunities
- Repetitive or monotonous atmosphere
Intuitively, everyone understands that nagging Groundhog Day feeling of doing the same thing day in and day out. No one likes it, and over time, it can wear down even the most loyal employee. Skilled managers need to understand this and take steps to liven up the workplace.
Introducing new challenges is the best way to do that. The challenges don’t have to add to the employee’s workload, but they should match their skill level and professional abilities. Employees feel immersed and productive when engaged in work that matters to them.
When Raising Salary Works
That said, raising an employee’s salary is often an effective employee retention strategy when done right. If the company’s salaries are currently below the industry average, for instance, a pay raise could be just the thing to encourage someone to stay. At a minimum, it can stop rivals from fishing the organization’s top talent into their own nets.
Don’t think of a pay raise as strictly about raising someone’s salary, either. Rather, consider additional ways to increase the overall value of employment with the organization. Just as marketers look to elevate a product’s value for their customers, an employer can increase the value the company provides to its workers. Some of the ways to do this include:
- Skills training and tuition reimbursement if the worker secures a new degree
- A more expansive benefits package, including broader dental and health insurance policies for employees and their families
- More flexible working arrangements, such as additional paid time off or remote work opportunities where applicable
Obviously, solutions like these are company-specific. Their implementation should be done in close collaboration with an experienced human resources team, one that understands employees’ needs and can offer actionable advice. Doing this effectively means identifying an approach that aligns with the company’s structure and mission statement.
Boosting Retention With Resourcing Edge
Just as recruiting and training employees can be a full-time job, so is fostering employee wellness. Maintaining an optimal and healthy work environment means having an HR team that’s up to the task. It demands dedicated HR professionals who can monitor the company’s current benefits, payroll, and professional development programs, as well as offer guidance for fixing inefficiencies.
A professional employer organization (PEO) like Resourcing Edge can fill that gap. Companies that don’t have the resources to hire an in-house HR team can turn to Resourcing Edge to aid them. Our experienced staff can help chart benefits administration, salary distribution, and even performance management, all with an eye on promoting retention. If that sounds like a good fit, contact a member of our team to find out more.