Even though retention is listed as the last step in the employee journey, preventing turnover isn't actually something you can wait to do until an employee is about to (or already has) quit. It's a continuous process that extends throughout an employee's tenure. Read on for the resources that will guide you.
You probably already know that attrition as a bad thing, but just in case you needed confirmation, here are some hard numbers that prove the value of employee retention:
SHRM finds that the total costs of replacing employees range from 90% to 200% of their annual income. Those are stark numbers for any organization to face.
Finances aren’t the only thing employers should be concerned with either. AARP notes that potential indirect costs include:
- Lost productivity
- Low employee morale
- Cost of formal and informal training to get new hires up to speed
- Costs for advertising and promotional materials, referral bonuses, relocation expenses, and background checks
One of the biggest drivers of turnover is burnout. And one of the causes of burnout is too much work. Here's why excessive overtime is bad for your retention rate — not to mention quality of work and employee health:
Scientific studies show employees working overtime are more frustrated and dissatisfied. A Circadian study evaluated factory shift workers and discovered employee morale was considerably lower in plants offering or requiring overtime. Absenteeism and turnover increased, and the study cited work-life balance as a primary contributor to these trends.
Working excessive hours has also been linked to higher incidents of cardiovascular disease, high blood pressure, on-the-job injuries, and other health issues.
The best way to avoid burnout is to keep your employees from getting burnt out in the first place. It's a lot harder to bring an overworked, overstressed employee back from the brink than to be proactive in establishing a healthy work-life balance:
Everyone’s always talking about striving for work-life balance. Our numbers show that employees who have a positive work-life balance are 12% more likely to see themselves staying with their employer.
Here’s where planning comes in handy. Don’t try to wring out the most out of your employees. This is a quick recipe for burnout and high turnover. Instead, work on prioritizing their workload and setting reasonable goals. Doing this will save you effort and money long-term by not having to recruit new employees.
Here are some other examples of great strategies for employee retention, from successful companies who are worth imitating:
Digital note-taking service Evernote knows that its hard-working employees are spending valuable time in their office, when they could be at home taking care of basic errands and chores. To pay them back for their work, Evernote sends a cleaning service to every single one of the 250 full-time employees' homes twice a month. Yes, that means everyone from the executives down to the office assistants.
We gathered extensive TINYpulse data for an analysis on the factors that affect turnover. Set aside a little time to learn just what can drive an employee to quit — or stay:
Think about all the day-to-day interactions you have with your colleagues and peers. It would be pretty crummy if you had to work frequently with people that failed to respect you and your work, let alone failed to show their appreciation. Sure enough, the value of our peers impacts our likelihood to want to stay on board or leave.
Let’s just look at respect to begin with. Employees who noted that they did not have high levels of respect from their peers were nearly 10% less likely to see themselves with a long term tenure at their organization (r = .24 , p < .001, n = 400).
Peer recognition plays a similar role too. When we asked employees about the amount of appreciation and recognition that they get from their peers, those citing low levels of recognition were 11% less likely to plan on staying put (r = .24 , p < .001, n = 400).
Take a lesson from another leader's experience. Here's how Justin Swanberg, Director of Finance & Operations at Stratacore, saved a valuable employee from quitting:
The Challenge: Identifying Unhappy Employees
Retention is vital because losing an employee goes beyond the individual. According to TalentWise, employees who leave take about 70% of their knowledge with them, so the company’s collective expertise takes a hit. For a start-up like Stratacore, that loss can be devastating.
The Tools: Benchmarking and Anonymous Messaging
Swanberg leverages two different but related tools in order to fight turnover. One of them is tracking employee happiness by creating a numerical benchmark. The employee engagement survey used by Stratacore features a regular question asking workers to rate their happiness on a scale of 1 to 10. “At first, because it was so frequent, a lot of our company kind of scoffed at it, because we’re happy,” Swanberg says. “Why wouldn’t we be?”
But having that benchmark has proven valuable. “[T]here was a time when there was a non-happy person,” Swanberg shares. “There was a score that was below our benchmark. And since we had that benchmark and we were asking so often, it was a huge red flag for us.”
Alerted to the disgruntled employee, the company used its second tool: an anonymous private messaging system. Swanberg says, “We were able to have a conversation with the individual — without knowing who it was — to the point where they felt comfortable coming to us and explaining why it is that they were unhappy.”
Establishing a level of trust through the anonymous conversation allowed Swanberg to help the employee in a way that wouldn’t be possible through traditional communication. The two parties worked through the issue, and the employee stayed on board, much happier than before.
We hope you've enjoyed our TINYinstitute primers! You should now be equipped to recruit, engage, and retain a stellar workforce.
We want to hear from you! What would you like to see from TINYinstitute? What resources do you need to become a better leader?