Employee Retention Strategies to Beat the Great Resignation

July 06, 2022

Leverage an employee retention strategy based on evidence-based best practices.

Blog Post

Over 47 million workers in the U.S. quit their jobs in 2021, the highest national turnover rate in over 20 years of the Bureau of Labor Statistics records. Turnover remains high in 2022 as employees continue exploring what work means to them and what they seek in a work environment. The days of employees only engaging with punching in and clocking out are in the past as the labor market enters an era of unprecedented change.

Employees look to employers for an immersive experience touching everything from connection to shared values to social consciousness, with the lines between work life and homelife blurring more and more. HR professionals across the country are under immense pressure and in a unique position to create an employee retention strategy that engages employees from their first days on the job and throughout their time at the organization.

This talent retention guide will walk you through the most up-to-date employee retention ideas. Turnover happens, and fortunately, you can improve staff retention by understanding why they leave in the first place.

Why Do Employees Leave?

The top three reasons employees quit their jobs in 2021 were low pay, few opportunities for advancement, and feeling disrespected at work, in that order. The employees of today not only want engaging work environments, but they also want to be engaged by their employers through talent retention strategies that genuinely see them. Employees that feel invisible may lose faith in your organization, risking high turnover rates. 

So what is turnover? Turnover is the number of employees that leave an organization during a given time period. Even one employee choosing to find alternative employment can cause an organization to incur monetary and other costs.

When organizations fail to embrace innovative employee retention strategies, turnover can impact productivity plus the organization’s reputation, which in turn impacts how well you can attract top talent.

Losing an employee can cost an organization 33% of that employee’s base pay. And that percentage can increase depending on the employee's level, with employees in leadership positions costing organizations even more. In 2021, turnover cost organizations across the U.S. over $700 billion. While you won’t find these costs on profit and loss statements, they’re like leaks in your pipes, causing damage over time. When an employee decides to leave for greener pastures, organizations rack up costs:

  • Exit interviews
  • Administrative time
  • Job vacancy posting
  • Recruiting
  • Onboarding and training a replacement
  • Decreased productivity for current employees
  • Loss of morale

And that’s just the tip of the iceberg. Think of turnover like a flood; once the waters recede, there’s a lot of cleanup that costs time and money before you’re back to optimal workflow.

2021 saw a historical surge in turnover dubbed “The Great Resignation,” though it goes by other names, too, like “The Great Regret.” Exacerbated by the COVID-19 pandemic, turnover rates steadily increased each year in the last decade. That’s to say, employee turnover has been an issue for a long time, but it’s under the spotlight right now.

Moreover, millions of job vacancies paired with an employee-driven market mean HR professionals must know how to attract, recruit, and retain top talent. With hiring increasing 9.8% year-over-year from May 2021 to May 2022, it’s vital HR professionals think about retention when hiring new employees so engagement can start and gain momentum early.

Your best bet is to understand why employees do stay to capitalize on what’s working.

Why Do Employees Stay?

While it’s common for HR professionals to champion perks like free chocolate croissants and organization-wide dodgeball leagues, it’s a mistake to think employees just want snacks and fun.

Paylocity conducted an employee sentiment survey of 1,600 employees across roles and industries that found a disconnect between what employees want and what HR professionals think they want. If you want to know how to retain employees, ditch the guesswork and pay attention to the data.

Competitive Compensation

Employees often leave organizations for better pay. A recent Gallup poll found that 64% of respondents rate high pay as very important, taking the top spot out of all factors influencing whether an employee stays or goes.

Your employee value proposition (EVP), what your organization offers employees in exchange for their labor, needs to be communicated during the recruitment process and on an ongoing basis as part of your staff retention program. Consider what employees gain from your organization, whether it’s top-tier pay, excellent benefits, or world-class career-building experience. Communicate and reinforce this value ad libitum. 

Opportunities to Advance

Employees are 10% more likely to stay at your organization if you provide opportunities for them to grow. Yes, a management track can appeal to the advancement-minded employee, but more and more employees look for an infrastructure that supports their growth and development in all directions. Many employees look to make lateral moves or switch to different departments. Others may want to train up and explore a new role, from account management to sales, for example.

Flexible Work Environments

Throughout the course of the COVID-19 pandemic, employee preferences for work environments have evolved, but as of August 2021, research revealed that 19% of employees prefer all remote, 22% prefer all in-person, and 37% prefer something in-between.

Consider that employees are individuals, and do their best work in different environments. Some thrive working from home, and others are relieved to return to the office. Bottom-line, employees want you to provide a work environment that sets them up to succeed and flexibility is the name of the game.

Robust Benefits

Employees that exhibit higher levels of well-being are 18% less likely to change employers in an 18-month period. Additionally, they are 59% less likely to look for a job with a new organization in the next 12 months. Expansive benefits offerings are a way to ensure that employees can achieve well-being while at your organization, and ultimately stay for a long time.

Employees more and more want benefits that match their lifestyles and priorities, including shorter work weeks, unlimited vacation time, pet insurance, on-site psychologists, remote work options, and other innovative benefits that go beyond traditional health and dental insurance.

Manager Engagement

Management involvement can make or break your team retention. As your employees’ primary source of guidance and support, managers can heavily influence retention rates.

Employees who feel their managers respect their work are 32% less likely to think about leaving their current organization.

When managers are transparent and clearly communicate expectations retention issues diminish.

Culture Drives Retention

An engaging culture can help employees feel a sense of belonging, which provides stability. Employees that feel negative about their organization’s culture are 15% more likely to think about a new job compared to coworkers who don’t. Despite the rise in remote and hybrid work environments, employees still need to be able to orient to organization culture and participate in it as well. Without that connection, they can feel like they’re floating in the ocean without an anchor and may paddle to somebody else’s island.

Diversity, Equity, and Inclusion

Since organizations interface with and reflect the issues facing society at large, employees today expect organizations to be more vocal and actionable about where they stand. In fact, 42% of people want their organization to be diverse and inclusive of all people. Employees want to be recognized and embraced for who they are, and they want to know their coworkers have the same experience. Incorporate unconscious bias and anti-discrimination training to show your people that DE&I isn’t just something you say; it’s something you do. Ultimately, a diverse, equitable, and inclusive environment fosters productivity, connection, and success.

How to Calculate Retention Data

Before you design and implement your talent retention strategy, take a few minutes to look at your retention-related data. Calculate where your organization is now, and where you want to be by establishing KPIs that reflect improvement.

Check out the following metrics and give your organization a grade.

Employee retention rate: Divide the number of employees that stay at your organization during a defined time period (one month, six months, one year, etc.) by the number of employees you started with at the beginning of that time period. Then, multiply by 100 for your employee retention rate.

Employee Retention Rate

Employee turnover rate: Divide the number of separations by your organization’s average number of employees. Then, multiply by 100 for your employee turnover rate.

 Employee Turnover Rate

Once you know your starting point, you can periodically assess these metrics during and after implementing your employee retention solutions. Utilizing these numbers can help your HR team identify gaps in your retention strategy and lean into what’s working. You can even hone in on your organization’s employee retention best practices, which can be documented and prioritized by your HR department.

A comprehensive HR suite should offer human capital analytics, allowing you to pull real-time reports, no calculations necessary. Leadership appreciates access to crucial data and a record of improvement led by your HR team.

Understanding Your Talent Market

While an internal focus is imperative for identifying employee retention issues, you must zoom out and look at your industry, competitors, and the talent market to make strides. Plus, you can gain valuable insights that tell you how to retain employees.

Before you start implementing any talent retention strategies, start by asking questions about your employee marketplace:

  • Who are your competitors?
  • Are your market competitors the same as your talent competitors?
  • What are your competitors doing to attract and retain top talent?
  • What are your organization’s business goals?
  • What’s missing from your current team that your organization needs to achieve its goals?
  • Who in your industry is developing these skills in the talent market?

There are many ways to go about gathering these insights. Check out competitors’ organization websites, job postings, and social media accounts. Additionally, take note of what organizations your current employees came from. Look for trends in skill sets and contributions.

Keep a running list of what your competitors are doing to attract and retain top talent. Consider whether your organization can make a few adjustments to level the playing field.

Top 9 Employee Retention Strategies

There are opportunities to improve talent retention at every step of the employee journey. Your HR department can lead your organization by creating a winning employee retention strategy that finds common ground between the evolving labor market and your organization’s mission.

1. Start retention efforts during hiring.

Retention in the workplace starts with the first time a prospective employee hears about your company. This means putting your best foot forward in all external-facing communication and illuminating your benefits, culture, and people to top talent looking to join your team – this is especially critical for retaining new employees. Display your employee experience in your job postings, company website, social media accounts, and more.

Many employees, especially those from younger generations, expect a digital-forward experience in their organizations. Set the tone with technology by having employees complete onboarding paperwork through an online portal before they start, sending videos from coworkers and leaders to humanize your organization, and utilizing social collaboration tools to make work a part of their world.

2. Invest in your employees with learning and development.

Since employees are motivated by growth and development, sometimes just as much or even more than pay rate, a smart employee retention program includes high-quality learning and development options. A learning management system (LMS) can make employee education easy and engaging with learning formats to accommodate learning styles and bite-sized learning modules. Plus, mobile capabilities mean employees can take their learning anywhere, showing them development is on their terms.

3. Build a connected culture.

When COVID-19 first spread across the U.S., many organizations went into crisis mode, implementing novel ways to maintain connection and collaboration. However, two years in, employees say they’re feeling less connected. Chalk it up to Zoom fatigue or the shine of virtual happy hours growing dim; employees need to feel connected beyond the bells and whistles. Connection comes from everyday moments when employees can be part of the organization. What that looks like depends on your organization, but connection should be part of the workflow.

Make it part of the culture to share peer recognition. Schedule once monthly team luncheons. Create breakout groups during video calls to give everybody the opportunity to participate.

4. Ask for feedback.

One of the best ways to get a read on whether your employees are in it for the long haul or looking to leave is to ask them. Employees appreciate opportunities to speak up and share their perspectives. Employee surveys can paint a picture of employee satisfaction at every stage, including after onboarding, during yearly reviews, or when leaving your organization. But you don’t have to wait for major milestones to solicit feedback; one of the best employee retention techniques is to conduct stay interviews.

Before turnover spikes, sit down with your employees and talk about what’s working well, what they still need to succeed, why they might consider leaving, and what inspires them to show up.

Stay interviews are a launch pad for improving team retention. You need to take action with the insights your employees give you, advocating for policy changes, sharing information with leadership, and following up with employees, if necessary.

5. Leverage an automated HR suite.

Every touchpoint employees have with HR is an opportunity to delight employees or cause paperwork-induced headaches. An automated HR suite reduces friction during critical functionality, such as signing up for benefits, managing taxes, checking pay stubs, requesting time off, and more. When it’s all in one place, with a user-friendly interface, there’s less noise to wade through, and employees can focus more on engaging with their work and each other.

With mobile capabilities and employee self-service options, employees gain autonomy over their information and time, encouraging them to engage with the process more. And time and time again, research has shown that engaged employees are less likely to seek employment elsewhere.

6. Offer top-tier benefits.

Over 3 in 4 employees say they’ll stay at an organization because of the benefits program. The last few years have placed an emphasis on employee health and well-being, and employees want to know you’re willing to treat them like a whole person, not just a taskmaster. The benefits you offer show employees the extent to which you care. Employees want comparable pay for their contributions, healthcare benefits that ease stress, 401k options that position them financially, and more. Communicate the value of your offerings with total rewards values. Also consider more holistic offerings, like classes, employee assistant programs, counselling resources that can set you apart from competitors. Offer what you can, be willing to have conversations about what would meet your employees’ needs.

Beyond administering benefits, make sure you continually advertise all that you offer, even after the initial onboarding period. Your employees likely signed up for health insurance when they first started, but they might forget about the subsidized fitness classes or Employee Assistance Program if it was only mentioned during orientation. Communicate your benefits at regular intervals to ensure employees have many opportunities to take advantage of them.

7. Embed flexibility in your workflow.

COVID-19 was an unforeseen experiment in the way people work. By necessity, many companies went fully remote—and some still are. Employees could consider what work means to them and how they want to work. The result? Your organization’s work environment is currency for securing employee retention. Most people—82%—say they would be more loyal to their employer if they had flexible work options.

Remember that employees prioritize the freedom and autonomy to work in environments that best meet their needs, and it’s not a one-size-fits-all situation. You can even consider providing a stipend for work from home staff to sweeten the deal. And if your organization can’t offer hybrid or remote options, you can still embrace flexibility – make it easy for your employees to switch shifts and request time off when they need it.

8. Create an inclusive work environment.

Diverse organizations exhibit better financial profitability, but embracing Diversity, Equity, Inclusion, and Accessibility (DEIA) is one of many nonmonetary retention strategies that go behind the numbers and reaches the heart of your organization: your people.

More than ever, employees want their organizations to walk the walk regarding DEIA. They want to see you provide equal pay and opportunities for people of all backgrounds, races, and genders.

The modern workforce is watching to see if their organizations make empty platitudes or back their words up with tangible initiatives that create a healthy and fulfilling work environment for all. If your organization isn’t serious about DEIA, you risk losing your employees to organizations that are.

Consider that 48% of millennial workers would not accept a job from a company that did not align with their views on environmental and social issues. Employees want you to be clear about what you stand for and take a stand when necessary.

Start by being transparent about your organization’s makeup. Share workforce management reports with your teams, including hiring data. Provide space and training to have critical conversations. Promote with a purpose and hire from diverse job boards.

9. Develop a sought-after employer brand.

Brand building is not just for social media influencers. Employees expect organizations to clarify their mission, vision, and values and demonstrate what behaviors back them up. Your employer brand needs to include your Employer Value Proposition and your organization’s role in its community and employees’ lives.

Is your organization leading the industry in terms of green practices and policies? Does your organization have a well-articulated DEIA plan with documented successes? Are your benefits superior to your competitors’? Center your employer brand around what you offer your employees and let it shine. Showcase your activities and offerings across all channels, and leverage a variety of mediums to broadcast your brand.

Your Winning Employee Retention Strategy

When staring down a highly-competitive labor market, the changing nature of work, and record turnover rates, your organization can’t afford to lose top talent. The best way to attract, engage, and retain your employees is to create a comprehensive and creative retention program based on what’s happening today and agile enough to succeed tomorrow. Start by looking to the future with a technology-forward solution that delights and engages your employees. Request a demo of Paylocity's HRIS suite to see what’s possible.

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