Is Your Retention Strategy Missing Something?
Wisetail | 6 min read
Retention can be tricky. Following pandemic-driven disruptions, the entire world of work changed, and many organizations are just now adjusting to the new normal. In the face of change, employee retention remains a top concern. How best to improve your retention strategy?
What are we getting wrong about retention?
Business owners understand the need to improve retention, but addressing high turnover requires a deeper understanding of the “why” behind attrition. Because it’s natural to want to tackle problems with immediate solutions, many organizations simply gather HR leaders together to hammer out a one-size-fits-all fix. Unfortunately, handling turnover is not that simple, and in most cases, a single solution isn’t the best method. To develop a solid strategy for improving retention, leaders must investigate and understand the root causes of attrition well before they begin designing solutions to combat it.
Those solutions mustn’t be knee-jerk reactions to losses due to attrition. Before you design a strategy, it’s important to focus on exit patterns: Why are employees leaving, and where are they going? Seek feedback from workers who give notice — an exit interview, a phone call, even a quick conversation — so problem areas are defined and clarified for intervention. And rather than examining the numbers related to turnover, shift the focus to its underlying causes. Understanding why certain employees choose to leave, what factors affected their decision, and where they’re headed next yields invaluable information for deciding next steps.
The real cost of poor retention
How important is retention? The answer depends on how much money your organization can afford to lose. Employee turnover costs U.S. companies $160 billion a year. Replacing an employee can cost up to twice their annual salary. High performers, who are more productive, can cost even more. Other related costs add up quickly:
- Recruiting and hiring. Advertising open positions, screening applicants, interviewing candidates — no matter how talented your prospects are, the recruiting process is a significant expense. On average, American companies need 52 days to fill an open position, and every day costs the organization money.
- Onboarding and training. New hires need to be onboarded and trained for their roles, a process that may take days, weeks, or months. During that time, management and supervisors spend valuable time helping, mentoring, and following up on new employees’ progress.
- Lost productivity. While “soft costs” like productivity are more difficult to quantify, they still impact the bottom line. New hires aren’t immediately as productive as the person they replace, and it may take months or years for them to achieve that level of productivity. And because they are new to their roles, processes, and policies, they are more likely to make mistakes requiring a leader’s input or intervention.
- Engagement. Turnover affects everyone, not just management. When one employee leaves, others are more likely to follow. This ripple effect can lead to an uptick in employee disengagement — one that costs U.S. companies up to $550 billion per year in lost productivity.
How important is feedback and recognition?
No one would deny the critical role of salary and benefits in attracting and retaining talent, but these factors alone are no longer enough to retain your best employees. Today’s young professionals have a different set of expectations: They expect to work for several companies over the course of their careers and intentionally choose jobs and organizations that provide them with a sense of purpose and personal growth. They expect to work with people they like and enjoy collaborating with, so a good culture fit is imperative to recruit and retain them.
Recognition and feedback remain foundational to a positive culture, so raises, promotions, and recognition programs are critical to keeping employees engaged. Half of high-performing employees expect monthly face-to-face meetings with their managers, but only about half of those who do so report they are receiving the feedback they desire.
Managers must remember that employees planning to leave often do so without offering input or feedback. An employee may not ask about or fully understand their company’s purpose or vision, and unless their manager is actively sharing that information, they may feel leadership is equally unengaged. The lack of feedback from those who are leaving a business creates a cycle in which HR is unable even to attempt to address the concerns driving attrition.
Having a bidirectional conversation with employees who are on their way out, as well as with those still on board, spotlights issues and concerns, giving employers more insight into how best to improve retention. Creating a safe environment for feedback-driven conversations also helps create a more dynamic culture. Successful companies may make mistakes or fail in their endeavors, but they are willing to learn, test new strategies, and adapt as needed. Employees tend to stay at companies where they are engaged in a continuous and constructive feedback loop with leadership.
Asking for and accepting feedback can be a challenge, but acting on that feedback to create organizational changes is invaluable. It requires a level of collaboration between managers and employees that may not be comfortable for all parties at first, but active, continual participation from both sides can effect real change. And that change can drive genuine improvements in retention and culture.
To further support your employee engagement and retention strategies, join our webinar “Uncovering Effective Employee Retention,” the first part of our Putting the Human Back in HR series. Learn how to cultivate sustainable people operations strategies, especially during these times of rapid job market changes. Led by Dr. Casey Cox, Founder of Ascend Coaching Group, gain insights into the evolution of employee retention, the big myth surrounding it, its benefits, and how to improve retention rates.