The most important asset of an organization is not its financial capital or the products and services it renders. All of the aforementioned are very important to the running of any successful business but ultimately, the greatest strength of an organization is its employees or human capital which are the driving force of the organization.
This is why businesses spend considerable time and resources looking for top talents that can help them grow. But finding suitable employees is the first hurdle companies need to overcome in the search for short and long-term success. The other challenge is to retain valuable and high-performing employees.
Employee retention doesn’t happen magically. It requires conscious effort and planning by upper management and this is why employee retention is defined as the sum total of strategies and processes businesses used to reduce turnover and retain employees. It’s common to see organizations using different processes to hold onto employees and the reasons for this are discussed in detail below.
Why Is It Important For Small Businesses To Retain Their Employees?
Replacing employees is a costly and time-consuming process. It’s a potentially frustrating situation that employers aren’t fond of. Below, we highlight some of the negative impacts of employee turnover:
Monetary Expenses And Time/Effort
The higher the rate of employee turnover, the higher the costs needed to fill vacant positions. Experts estimate that replacing an employee can cost up to two times the annual salary of the employee and depending on the level of seniority of the departing employee, the costs of replacement can quickly become significant.
Companies also spend money on adverts for vacant positions and onboarding/training of new hires. The business may experience difficulties internally or even missed/delayed revenue during the time vacant positions are unfilled.
Employee turnover has negative effects on remaining staff members and the business as a whole. The workload of the departing employee(s) has to go somewhere and this means some or all of your remaining team.
This can lead to missed deadlines or delays in essential projects. Productivity drops, albeit temporarily, but the temporary drop can mean missed revenue failure or failure to achieve quarterly goals.
Increased workload due to employee turnover can significantly increase the workload of remaining staff members and lead to burnout. When this happens, frustration and resentment set especially in small businesses without enough employees.
Overworked employees may start to reevaluate their relationship with the organization and consider looking for opportunities elsewhere if the situation doesn’t improve or occur too frequently for their liking.
Effective Strategies To Retain Employees And Reduce Turnover
Employee retention requires understanding employees’ concerns and addressing them before they escalate and upper management finds themselves in an exit interview. Common reasons why employees leave their jobs include poor leadership, little to no flexibility, low pay, high workload, lack of recognition, and lack of opportunities for advancement.
That said, you’ll find some effective employee retention strategies that are worth considering and implementing to hold on to your employees and reduce turnover. Here they are:
An Intentional Onboarding Process
Employee retention starts from onboarding which is the process where new hires are introduced to their roles and helped to adjust to it as quickly and smoothly as possible. The onboarding process presents employers with a unique opportunity to introduce new employees to organizational culture, values, and policies. Done right, an effective onboarding makes an employee feel valued and less likely to leave.
This is why businesses shouldn’t cut corners during the onboarding process. Some thinking should be done to create an intentional and thoughtful onboarding process which should involve the following:
- Introduction to all team members.
- Clear explanation of their roles and responsibilities.
- Tour of the workplace and seminars. Opportunity to shadow experienced employees.
- Ensuring old staff members are welcoming and open to help new hires any way they can.
- Providing important resources like documents that will help new employees understand their roles better.
Improve Employee Recognition
While competitive compensation and other incentives like bonuses are important to employee retention, employees need more than that to feel valued in an organization. They need to know their hardwork is seen and valued.
It’s human nature to want recognition and feel valued, something upper management can easily achieve with some thoughtfulness. Employers should brainstorm work anniversary ideas for employees, leadership award ideas for those that have proven to be good leaders, an employee of the month recognition, a stand-out performer award, and so on.
There are several opportunities for organizations to recognize employees. And the most interesting thing about recognizing employees is that it’s more about the thought than the prize which can be a trophy, award, wall of fame, surprise treat, or even a sticky note. Management can even spice things up by adding a touch of humor to the awards. A well-meaning joke every now and now hurts no one.
Offer Opportunities For Professional Growth
Employees are more likely to stay in an organization if they feel like their employers care about their growth, something management can achieve by conducting regular performance reviews to reveal the strengths and weaknesses of employees. Areas where employees are found lacking can be improved through systematic coaching at regular intervals.
Workshops or working groups, mentoring, and job rotation are other ways businesses can help employees grow. Doing all these results in highly capable employees that can perform their jobs better and help the organization achieve short and long-term goals.
Encourage Work-Life Balance
Employees are increasingly prioritizing roles or organizations that help them achieve a healthy balance between their personal and professional lives. So, whether a business encourages work-life balance or not has a significant effect on employee retention rate.
It takes two to tango and both the employer and employee have their part to play in achieving work-life balance. However, This business has to play its part which could be offering opportunities for remote/hybrid working models, reviewing workload periodically to ensure staff isn’t overworked, focusing more on productivity rather than hours, and encouraging breaks. It’s also important not to contact employees about work-related issues outside work until it’s absolutely necessary as this helps workers to separate their personal lives from their professional lives.
Michael Zhou is a Senior VP of Business Intelligence Development and has assisted the Fortune 1000 company with expertise in the web as a whole, including ground-zero marketing efforts that benefit both consumer and vendor. He is also a contributor on Esprittoday.