With the high costs of recruitment and on-boarding, employee retention is becoming an important strategy for employers across the globe. Recent surveys show that one-third of all employees plan on conducting aover the course of the coming year. The greatest threat to firms is that the most talented employees will accept positions with key competitors, thus causing a brain drain.
While salary and benefits play a large role in employee recidivism, studies have found that employees resign for a variety of reasons: mismatch with company culture, lack of career development opportunities, non-supportive management, etc. A certain amount of turnover is inevitable, but with only minimal effort, firms can make a huge impact in reducing its frequency.
Retention strategy should include the following elements:
- Pre-employment testing. Because the full costs of recruitment, on-boarding and new employee training can be significant, it is in your company’s best interest to implement a pre-employment testing program that is able to capture a candidate’s skills, knowledge and abilities (KSAs), as well as personality traits (values, beliefs, motivation, work style, etc.) to ensure that each fits with job requirements and organizational culture.
- Post-employment testing. Testing current employees is a great method of identifying those who have the potential to become leaders in your firm. The implementation of employee testing can help your company design opportunities for professional development, as well as develop succession plans when current managers resign or retire. Post-employment testing will save your company significant costs because it will result in the retention of employees via career development rather than having to utilize the services of recruitment firms to identify managerial and senior-level staff. Post-employment testing can also help your company recognize those employees who are productive and exhibit loyalty to the firm but have been passed over. A final benefit of post-employment testing is that they allow your company to ensure that each position is filled by the most qualified employee. Studies have shown that employee retention rates increase when they believe they are well matched to their role in terms of the skill set, core values, personality and work style.
- Create an on-boarding program for new hires. The highest rate of turnover typically occurs during new employees first three months of employment. The purpose of an on-boarding program is to quickly and efficiently assimilate the new employee into the organizational culture and create a positive impression of the firm in the new employee’s mind during those first critical days of employment. In short, an effective on-boarding program helps new employees decide that they have made the right choice in joining your organization.
- Work-life balance. Most employees want to work for a firm that values work-life balance. Indeed, studies have shown that firms which provide health and wellness programs tend to retain employees for a much longer period than those firms that don’t offer these programs. You may also offer flexible work schedules that accommodate the needs of different employees, such as those with young children or who need to care for an elderly parent, or who wish to wind-down their professional lives with a part-time job, yet remain with the firm. In this age of advanced technology, more and more employers are also offering the option to telecommute. This has the added benefit of promoting your firm as being environmentally- friendly (reduced gas emissions from reduced use of employee cars).
- Provide opportunities for career growth. Most employees view the opportunity for career growth and development of new skills to be equally important as the salary they earn in their decision to remain with a company. Studies have shown that a large majority of workers would consider resigning their current position to work for another employer if the new job provided greater promotional opportunity, along with more challenging responsibilities.
- Implement employee recognition programs. Most employees want to be recognized for their efforts and employee recognition programs boost employee morale which in turn increases their productivity so that overall business performance takes a sharp turn upward. Research by the International Society of Performance Improvement has shown that productivity can increase by as much as 44 percent as a result of employee recognition programs.
- Monitor employee satisfaction. Ask employees to advise you when they hear news that valuable co-workers are thinking of resigning. Advance word will provide your company with the opportunity to take steps to prevent the resignation. One method is to arrange a meeting between dissatisfied employees and supervisory staff to discover the reasons they are thinking of leaving and together developing strategies that will motivate them to stay. This could include some of the above-noted suggestions, such as offering flex-time or professional development opportunities.
- Be aware of special triggers. Pay particular attention to employees who are going through a significant life change such as marriage, divorce, pregnancy, empty-nest syndrome, or other events that could influence their decision to resign. Encourage your employees to use “mental-health” days to attend to personal issues.
Retention strategies save the company significant costs in two important ways: 1) employees who remain with your firm reduce both recruitment and on-boarding costs; 2) retained employees also reduce the opportunity cost to an employer arising from the loss of productivity while a replacement is identified and trained. In short, employee retention strategy not only creates a positive work culture but also directly affects your company’s bottom line.