You’ve hired the best employees for open positions, but how do you keep them? When companies focus solely on recruitment strategies and ignore employee retention techniques, that’s like having someone agree to go on a date with you but totally forgetting your manners on the big night. This is a relationship, albeit a professional one, and without a retention policy you’re going to have a high employee turnover rate.
While most employers know this, at least in theory, not all of them have an actual retention policy in place. This is especially true of small businesses. However, even larger corporations may have a “retention policy” in place, but how often is it re-visited? Are key managers clued in to what the policy is and how to execute it? If a retention policy isn’t regularly updated and visited, it’s simply lip service.
But let’s start from the beginning. Why have a retention policy at all?
Employee Retention Planning
You need a written, fluid, and evolving employee retention policy because you want to keep your best workers. They’re the foundation of your company, the key to your success, and the best built-in recruiters you could ask for. High turnover rates are costly to the company. Without an employee retention policy, you risk:
- Increased turnover rates. A high turnover rate means higher costs to the company and low employee morale. Employees stay where they’re happy and feel respected. Not all positions (such as entry-level positions) were designed to be long-term. However, many positions should and could keep quality employees for long stretches of time.
- Managers who don’t understand how to retain employees. Every manager is different. You don’t magically have all-knowing managerial powers when you get that title. Managers need directions, too, and many times this may be their first experience charged with retaining employees. They need guidance from HR, which includes written policies with concrete strategies they can implement.
- Employees who feel unappreciated. A big part of retaining employees is showing that they are appreciated and important within the company. Numerous studies have shown that employees who feel like their contributions make a difference are happier, more productive, and less likely to leave.
Employee Retention Techniques
So, what exactly does an employee retention policy look like? It’s going to be different for every company. It’s also a living document, that should change over time, and should reflect the actual desires of the employees you want to keep. There are countless types of employee retention techniques, but a few popular options include:
- Including employees in creating their job descriptions. Your employees know better than anyone what they do on a daily basis, what’s important, and what should be included in their job description. Like a retention policy, job descriptions should also be living. Encourage your employees to be part of updating their job description and make this collaboration part of your retention policy.
- Consider updates to benefits and perks. Benefits and perks can mean a lot of things, and they don’t always have to be monetary. Survey your employees and take a look at your competitors to see what the most desirable perks might be. It may be flexible work schedules where you allow your employees to choose their arrival and departure times. Maybe it’s a complimentary gym membership, the option to telecommute, or reduced childcare costs. Get creative, and get your employees’ input.
- Show appreciation. Appreciation can come in many forms, and it’s usually not the obligatory sheet cake once a month for birthdays. Something like a hand-written card from management for a job well done, training on cultural sensitivity for managers, or giving paid birthdays off can make a real difference. Appreciation does not have to equate to monetary perks (but of course it can).
When designing your employee retention strategies and programs, it’s always a good idea to look into what’s trending in your industry. However, the best source of information is right in front of you. When you allow your employees to have their voice heard, you’re going to enjoy the best outcomes.
Cost of Retention
You may think that offering benefits like gym memberships is a costly endeavor, and it can be. However, it’s unlikely that it will end up being costlier than high turnover rates in the long run. You’ll find a wide range of answers on how much it costs to hire a new employee, but an average (as reported by SHRM) is six to nine month’s salary. For example, someone making $40,000 per year will cost around $25,000 to replace. That’s just for one employee!
The cost of recruiting and training a new employee isn’t always easy to see. However, HR personnel know exactly how much work goes into even finding the right employee—let alone securing them. It’s an expensive endeavor, and an investment you want to protect.
Employees are, after all, investments. You’re investing in them because you believe they will help grow your company. If that’s the case, you’ll want to keep them as long as possible. There’s no telling if the next person you hire will be as effective. Hopefully they will be, especially if you have solid recruitment strategies in place, but it’s always a bit of a gamble. The stakes are pretty high in this gamble when you consider it costs nearly a year’s salary simply to hire and train a new employee.
So, what exactly is the cost of retention? It depends, based on how you design your employee retention policy. You should be able to break it down on a per-employee basis. For instance, if your retention policy includes offering a gym membership to every employee, you’ll know exactly how much that’s costing you. However, if it’s flexible schedules and the arrival/departure time of employees doesn’t impact your business’ profits, there is no financial cost.
You can customize the cost of employee retention plans just like you do the retention policy itself. This makes it an accessible and highly important strategy for every business regardless of financial health. In fact, implementing an employee retention policy should be saving you money, sometimes immediately.
Employee Retention Plan Template
Your template can look many ways, from an infographic to a simple Word or Excel document. However, it should have a few key items including:
- Objective. What is the goal of the particular item you’re including in the employee retention plan? Include both quantitative and qualitative aspects (if applicable).
- Strategies. Exactly what will you be enacting to reach this objective?
- Desired outcomes. What, beyond the objective, might you hope to gain from this policy?
- Measurements and analyses. How do you plan to measure the outcomes? This is pretty simple for quantitative measures, but what about qualitative ones? Will you be issuing an anonymous survey at certain intervals? When, where, and how?
Your employee retention plan doesn’t need to be fancy. Remember that only a few key people will be seeing it, including those in HR and management positions. It’s an internal document that will always be changed and updated—this means it won’t necessarily be pretty. It’s more important for it to be a useful tool that’s intuitive and simple to execute.
Disadvantage to Employee Retention
Expect to get some push-back from some employees if you broach the idea of implementing an employee retention plan. Humans are naturally standoffish to change. It might seem like it’s going to be more work, expensive, or maybe even not useful. However, there are no disadvantages to employee retention—unless, of course you retain employees who aren’t the best fit for the position.
You only want to retain those who are helping you move the company forward. However, this doesn’t mean that you should focus solely on retaining employees who you consider top quality at the moment. It’s possible other, lower-performing employees aren’t productive because they’re unhappy, don’t feel motivated, or aren’t appreciated. Determining whether that’s the case is key in deciding how to move forward with their retention (or not).
Not even the best HR manager hires right every time. That’s impossible. Still, some employees can be encouraged to move into a more productive employee status. Remember that employees are one half of a relationship, and not all relationships last forever. How does that help you with your employee retention? It’s a reminder that you should figure out if you actually want to retain this employee or not. Do they have the potential and desire to become a high-performing employee?
When implementing an employee retention plan, fairness is a must. All employees, perhaps within certain levels, need to be treated the same. This means offering telecommuting options, for example, to all employees who hold certain positions—not to just a select few. HR is the stakeholder in ensuring legality and fairness with all new policies, including your employee retention policy.