Your workplace may be a “good” place to work, but the truth is, your top performers may be just a LinkedIn message away from being head-hunted to another company.
Of course, it's only natural for employees to grow. People’s needs and wants for their career change and employers that aren’t willing to grow and change with them are likely to see high instances of turnover. More than that, though, employees simply aren’t staying with one organization for their entire careers like many previous generations.
However, employee turnover is costly. Research shows that “depending on your industry and the position, replacing a trained employee costs anywhere from 33% to 213% of their annual salary”. If your organization is experiencing this struggle, it's time to re-evaluate your retention strategy.
In LinkedIn’s 2023 Workplace Learning Report, they list the following 5 employee retention factors as the most important:
- Compensation and benefits
- Flexibility to work when and where I want
- Doing challenging and impactful work
- Opportunities for career growth within the company
- Opportunities to learn and develop new skills
Let’s explore the above and some other employee retention strategies.
Compensation and benefits
The relationship between compensation and retention is not as straightforward as you may think. It may surprise you to learn that salary isn't the end-all-be-all for every employee.
In a study on the Determining Factors of Employee Retention, researchers concluded that "improved compensation can only increase retention capability in the short-term. For organizations to be more efficient in their attempt to make more employees stay in the organization for a long period, improved compensation should be coupled with quality of worklife". In other words, compensation is not the sole reason for employee turnover; it’s usually coupled with another major factor such as work-life balance, which we see coming in at #2 in 2023 with employees prioritizing flexibility.
It goes without saying that having competitive, market-level wages is the first step. The next step is getting to know your employees, their motivations, and their goals. Make sure that you offer a reasonable salary and balance it out with a stimulating and flexible work environment.
When it comes to benefits and workplace perks, what comes to mind? For many of us, happy hours and catered lunches are what make up the office perks we’ve come to expect, but in a world of remote and hybrid work, in-office perks no longer hold the same appeal.
Group health benefits have now become the standard rather than a bonus.
Whereas, previously, compensation and benefits were viewed as two separate employee retention factors, they’re now viewed as equally important. Fair compensation and competitive benefits are “table stakes” for employee retention and recruitment.
Recent studies found that “nearly 78% of employees say that they would be more likely to stay in their current role if they had better benefits”. And what do better benefits look like to employees? After basic health coverage, “Canadian employees rank these four benefits in this order of importance: Disability, Retirement, Death, and Wellness Programs”.
Offering a competitive health benefits package, including health and life insurance together with a retirement plan, is a retention strategy that’s worth investing in. When you support health and wellness throughout your company, it alleviates stress and allows employees to focus on doing their best work.
Essentially, a comprehensive and competitive benefits plan helps eliminate employees’ anxiety and stress. Many employers don’t realize the cost that stress can have on their organization. Not convinced that you need to start supporting your employees in their overall health and well-being? Here are a few eye-opening facts that might make you change your mind:
- Unchecked stress is contributing to a national mental health epidemic which costs the country more than $200B annually (BCG)
- Health care expenditures are nearly 50% greater for workers who report high levels of stress. (Statscan)
- Approximately one quarter of Canadians experience quite a bit of or extreme levels of stress nearly every day. (CMHA)
The way today's workforce approaches work is different from past generations. The old clock-in, clock-out mindset is an element of the past. Employers must prepare to accommodate the new workforce's sense of individualism. Workers today value flexibility and the autonomy to choose when and where they work.
Though we have seen a greater increase in work flexibility in the past couple of years (primarily driven by COVID-19), many employers are still resistant to change. However, studies suggest that “many Canadians would consider changing jobs if forced back to their offices full time”.
Data is actually quite split when it comes to the preference for in-person versus remote work. Research has found that approximately a quarter of employees would prefer to work entirely in-person, as it’s a valuable social outlet. Whereas, one third of employees want to be completely remote.
As the approach to work continues to change, the nature of work itself will evolve as well. Although work flexibility may not be possible for every company, it should be a discussion employers are willing to have. Parents or other caretakers appreciate the flexibility to work remotely for parts of their week, and a position that offers such flexibility will play heavily into employee retention.
Challenging and meaningful work
Now more than ever, employees want to do work that is personally rewarding to them. The pandemic and forced isolation as a result of it has really had people evaluating how they spend their time and the value they get from their jobs.
With research showing that employees who derive meaning from their work are three times more likely to stay at their organization, it’s no wonder that it’s one of the top employee retention factors.
Employees need to know that their work is valued and that they have the opportunity to grow with your organization. Many employees will not be okay with their career stagnating.
As the 2023 LinkedIn Learning Report notes, “at the two-year mark, an employee who has made an internal move has a greater chance of staying with their company,” reporting a 75% likelihood that they will stay with the company. This is compared to a 56% chance of staying with the organization from someone who has not made an internal move in two years.
It’s important to have advancement opportunities and hire internally whenever possible. Career growth can also look like supporting learning and development better with different initiatives and programs, as will be discussed below.
Opportunities for personal development should be available for all employees. After all, when an employee learns and grows with their position, the business does better overall. A lack of additional training could have top employees looking for another role that provides more opportunity for growth.
Be sure to have an open personal development policy. Empower your people to improve in the areas they wish to. Earmark a part of the budget for courses and conferences, and offer open lines of communication for employee feedback.
Learning and development opportunities encourage a culture of growth for everyone in the company. It lets employees know your company is one that values initiative rather than complacency. This is what’s required to keep the best employees happy in their positions—knowing that your workplace is one where they can not only succeed but grow.
There are, of course, some additional employee retention factors to consider.
Top performer recognition and rewards
It may seem like a no-brainer to reward employees for their achievements and milestones—but even the best managers can slip up on recognition. This may lead to an environment where going the extra mile just isn't worth the effort for a top performer.
Onboarding and training
As stated in a report on managing employee turnover from SHRM: "evidence suggests that recruitment practices strongly influence turnover. Considerable research shows that presenting applicants with a realistic job preview during the recruitment process has a positive effect on retention of those new hires". The keyword here is realistic. New hires tend to turn over faster because their expectations don't align with reality.
The report also mentions socialization with other employees as a large retention factor. Research has shown that social wellness practices in the workplace—delivered via a strategic onboarding and assimilation program—can help new hires become embedded in the company and thus more likely to stay.
These practices include shared and individualized learning experiences, formal and informal activities that help people get to know one another, and the assignment of more seasoned employees as role models for new hires. Set yourself and your new hires up for success by planning an unbeatable onboarding process and having it ready to go before you start hiring.
Retention and turnover affect everyone in the company, not to mention your bottom line. Getting a handle on employee retention factors is no easy task, but doing so pays dividends far into the future. It never hurts to regularly review your retention strategy to ensure you're doing the best you can to provide stellar working conditions and keep your team happy and healthy.