According to a recent report by the U.S. Bureau of Labor and Statistics, 3.3 million Americans voluntarily left their jobs in December 2017. That number accounts for 63% of total separations between employees and their employer.
According to this 2016 Human Capital Benchmarking Report, the average cost per hire to replace an employee is $4,129 and the average time it takes to fill a position is 42 days. Both could rise in 2018.
It’s expensive, time-consuming, and a drain on company resources to hire and train an employee to replace a great team member who leaves. And in a strong economy with plenty of job opportunities, it’s more important than ever to retain top talent at your business.
In this article, I’ll offer 5 proven strategies which can help you improve job satisfaction and retain your best team members for the long haul.
But first, it’s important to understand exactly why employees stay (or leave) your business.
The Harvard Business Review describes the primary reason employees stay with a company as similar to the physics law of inertia. Most employees tend to remain at the company they currently work for until they are acted upon by some force.
This could be a negative force that drives workers to leave your company (a bad experience with a manager or co-worker, a pay cut, or the feeling that they cannot grow with your company), or a positive force (recruitment from an outside entity).
Many companies rely solely on exit interviews to understand why their employees leave, but the Wall Street Journal recommends conducting “stay interviews” to understand the qualities your workplace has that appeal to workers who stay.
Improving upon what you do well can be even more effective than working to resolve issues that drive employees away (though I recommend you do both).
5 Established Ways to Retain Your Best Employees
In my view, these are the five best ways to keep your team’s top talent working hard for your business:
1. Competitive Benefits & Annual Salary Growth
It is basic, but it works. Offering great pay and benefits is one of the best ways to keep employees satisfied in their job and willing to stay with your company.
It’s a good idea to annually review your health benefits, life insurance, and retirement offerings to see if there are areas where you can improve and offer more. While it can be expensive to buy the best coverage and to offer your employees competitive retirement matching programs, it’s something your best employees expect and will look for elsewhere if you aren’t offering a competitive package.
Providing a path for improved earnings for employees can be even more important.
Consider a combination of short-term and long-term salary growth incentives, which pair annual performance-based bonuses with percentage-based annual salary increases to reward your valued employees.
You can also consider offering employees the chance to have partial ownership of your company through stock options which vest over time.
Competitive and comprehensive benefits paired with a combination of tenure-based and performance-based opportunities to earn more will make it difficult for your best employees to leave.
2. Work-Life Balance
It’s much less expensive to offer your top-performing employees an extra week of paid vacation each year than it is to replace them. So consider offering additional vacation time to reward and retain your top team members.
These 25 companies all benefit from offering their employees creative paid time off arrangements, and it’s worth taking a close look at what works for them.
If you feel that you simply can’t justify additional vacation time to all of your employees, I recommend surprising your team by telling them to take a few extra days off around the holidays. This unexpected freedom can be a great way to boost morale, and reward your employees for their hard work.
Another technique that you could use to improve work-life balance at your company is to offer a more flexible schedule, allowing employees to work from home a couple of days per pay cycle if it wouldn’t interrupt your business’ workflow to do so (and providing production does not dip too much).
Being flexible with scheduling and paid time off will make it clear to your employees that you value their life outside your office. This can go a long way toward earning the loyalty of existing employees and attracting top talent to your business. It’s great for morale.
3. Small Perks That Add Up to A Grateful Team
Providing free coffee for your employees, hiring a service to provide bagels or a catered breakfast one morning every week, paying for employees to attend conferences or receive specialized training, or even providing dry-cleaning services to managers and executives can go a long way to improving the way your team feels about working for you.
Yes, these office perks are added expenses, but the cost can be viewed as an investment in employee retention, and are a way to boost mood, productivity, and morale.
If you want your employees to stay for the long term, give them things that they would miss if they left.
I’ve heard of one company that rewards people who turn down recruitment offers by giving that loyal employee an expensive bottle of wine. This creates an environment of transparency (your employees will share with you when they are approached by another company or recruiter), and it is a way to publicly reward your team members for choosing to remain with your company vs. taking a job with a competitor. It’s also a way for employees to take pride in the skills they have gained with you.
Invest in creature-comforts and get creative with incentives to drive professional growth. This can help to create a company culture where your employees feel comfortable, valued, and proud to work.
4. Invest in Your Office Environment
Complacency can kill a business, as The New York Times notes, but complacency can extend beyond slow growth, to accepting the status-quo in the physical design and infrastructure of your workplace.
Make a point each year to improve something in your office. It could be something small like a fresh coat of paint, new plants, or the addition of wall art. Or it could be a larger expense like investing in the latest trend in desks, new ergonomic office seating, new carpeting, larger computer monitors, etc.
Nearly half of employees ranked “a pleasant work environment” as their top criteria for job satisfaction in a Randstad Study according to Recruiter.com, meaning that investment in creating and maintaining a well-lit, comfortable workspace with the latest technology is a responsibility businesses have to shoulder if they want to retain their best employees.
If you’re not investing (and reinvesting) in providing a welcoming, comfortable workspace where your team can do their best work, then you’re inviting your top-performers to look for that environment elsewhere.
5. Give Respect, Get Loyalty
Harvard Business Review published a study of nearly 20,000 employees at all levels of business, and Inc. summarized the results well saying that respecting employees can be the single largest factor determining their productivity, happiness, and how likely they are to remain with your business for the long haul.
Not only were employees 1.1 times more likely to remain in their current position if they felt respected, but 92% reported having greater focus and prioritization while on the job, with 55% saying they were more engaged at work.
What may surprise you is that 54% of employees surveyed reported that they did not feel respected at work.
Think about that for a moment.
Over half of employees do not feel respected in their workplace. Talk about a hiring and retention advantage to employers and business owners who make respecting team members their mantra!
Offering respect to your employees costs you nothing (other than time), but statistics show that it can pay huge dividends in terms of employee retention, productivity, and morale. It can also help you to attract top talent from competitors as your company earns a reputation as a great place to work.
So how can you make your employees feel respected? Marcel Schwantes of Leadership from the Core recommends that you:
- Ask for feedback on your best behaviors as a co-worker/manager, and look for patterns in what your employees and colleagues have to say. Build on those strengths.
- Identify a few trusted co-workers or employees who will provide direct and honest feedback and ask them to identify areas where you could improve.
- Reflect on the feedback you receive and identify ways in which you can build on your success and turn failures and shortcomings into opportunities to grow.
Take time to examine the way you interact with your employees and co-workers. Reflect on how you could be more respectful, and be serious about changing your approach as a leader if needed.
Retain Top Talent or Oil the Revolving Door
While there are many different strategies small businesses and managers can use to retain top talent at their corporation, investing your time, effort, and money in these 5 areas will help you keep your best workers driving growth at your organization.
If you haven’t made employee retention a priority at your business, this year is a great time to start. Investing in your workers is the best investment you can make for your business.