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The days of employee engagement beginning with punching in and ending with clocking out are in the past.
Today's employees look to employers for an immersive experience touching everything from social connection to shared values and social consciousness, with the lines between work life and home life 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 entire time at the organization.
While some turnover is inevitable, a critical step in improving staff retention is understanding why employees leave in the first place. To get at this question, we'll examine current macro trends affecting employee movement, and then present nine strategies to keep your workers from heading for the door.
Why Do Employees Leave?
Let's start with why employees leave. According to Pew Research, 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.
Modern employees don't just want free snacks and a ping-pong table. Employee engagement for them is to feel they are genuinely "seen" and understood by their employer. Employees that feel invisible may become complacent and "quietly quit," if they don't leave the company altogether. This feeling can cascade across your organization, risking high turnover rates, which is the number of employees that leave an organization in a given period.
When organizations fail to embrace innovative employee retention strategies, turnover can impact productivity and the organization’s reputation, impacting how well you can attract top talen.
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
- 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 historic surge in turnover dubbed “The Great Resignation." While COVID-19 pandemic was a major factor, turnover rates have actually steadily risen each year in the last decade. In other words, this isn't a new issue - but today it's definitely under the spotlight.
Moreover, millions of job vacancies paired with an employee-driven market means it’s increasingly critical that HR professionals 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 gain early momentum.
So, rather than constantly chasing new talent, your best bet is to fiercely fight to retain the talent you already have. And that starts by understanding why employees choose to stick around at all.
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. 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 and communicate this value ad libitum.
- Opportunities to advance: 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: Consider that employees are individuals, and each does 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: 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, flexible 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. Retention issues diminish when managers are transparent and clearly communicate expectations.
- Culture drives retention: An engaging culture can help employees feel a sense of belonging, which provides stability. Despite the rise in remote and hybrid work environments, employees still require company culture orientation so that they can meaningfully participate in it. 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, inclusion, and accessibility: 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. Incorporate unconscious bias and anti-discrimination training to show your people that DEI&A isn’t just something you say -- it’s something you do. Ultimately, a diverse, equitable, and inclusive environment fosters productivity, connection, and success.
Top 10 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. Understand your talent market.
Before you start implementing sweeping changes to your retention strategy, it’s important to have a firm understanding of your industry’s talent market. 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. This should be a consideration as you develop and refine your own retention strategy.
2. Start retention efforts during hiring.
Retention in the workplace begins the moment a prospective employee hears about your company. This means you must put your best foot forward in all external-facing communication. Illuminate all the best feature of your benefits, culture, and people in your job postings, company website, social media accounts, and more. This is especially critical for younger employees.
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 use social collaboration tools to make work a natural part of their world.
3. Invest in your employees with learning and development.
Since employees are motivated by growth and development (sometimes just as much or 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.
4. 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. Post-pandemic, however, employees say they’re feeling less connected.
Chalk it up to Zoom fatigue or the shine of virtual happy hours growing dim. In any case, employees need to feel connected beyond the bells and whistles. And that connection comes from everyday moments when employees can be part of the organization. This will look different depending on your organization, but you should strive to make connection a natural part of the workflow.
A few quick ideas: Try fostering a culture peer recognition. Schedule monthly team luncheons. Create breakout groups during video calls to give everybody the opportunity to participate. Improving company culture can be done in many ways, but it must be intentional.
5. Ask for feedback.
Want to get a read on whether your employees are in it for the long haul or looking for the door? Try asking them. Today's workers are rewriting workplace norms and 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 — but don't just go through the motions. Act on the insights your employees give you, advocate for policy changes, share information with higher leadership, and follow up with them on results.
6. 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.
7. Offer top-tier benefits.
Employees want to know you’re willing to treat them like a whole person, not just a task-taker. And with employee health and wellbeing becoming a hotter topic in today's workplace, the benefits you offer demonstrate the extent to which you care. In fact, studies have shown that more than three in four employees say they’ll stay at an organization because of the benefits program.
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, counseling 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.
8. 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. For example, make it easy for your employees to switch shifts and request time off when they need it.
9. 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.
10. 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 should be reflected in 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.
Then be sure showcase your activities and offerings across all your marketing channels. Think of this less as showing off and more as clear communication.
How to Calculate Retention Data
So, you've taken our advice to heart and implemented sweeping employee retention strategies. Great job! Now how do you measure if it's working?
Well, besides interviews and anecdotes, there are some more scientific methods you can employ that'll help sell these ideas to executives. Basically, you'll want to calculate where your organization is now, and where you want to be by establishing measurable key performance indicators (KPIs) that reflect improvement.
Try the following formulas to 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 turnover rate: Divide the number of separations by your organization’s average number of employees. Then, multiply by 100 for your 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.
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.
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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