Is employee retention important in your organization? Do you have a formal strategy in place to maximize retention and minimize absenteeism?
There are several reasons to reduce employee turnover and absenteeism rates but here are the major benefits.
- Loss of profits- The costs associated with a high employee turnover rate are tremendous. Experts indicate that it costs 50-150% of an employee’s annual salary to replace them in direct costs. For a company with 200 employees and an annual turnover rate of 20% where the average salary earned is $50,000 annually this represents $1,000,000 annually in lost profit. (200 x.2=40 employees and 25,000, using a 50% of salary replacement cost factor-the low end of replacement costs)
- Indirect costs- this includes lost productivity, quality issues, service issues, overtime, impact on morale and stresses on remaining employees…
It is important that the ownership and senior leadership team commit to an employee retention strategy. Without this it is difficult to build the programs, complete the necessary training, procure the financing and resources necessary to make retention successful and reduce turnover.
Here are a few key questions and considerations as you plan your employee retention strategy.
Who is responsible for employee retention? This is a very important question to consider. Is this senior leadership? is this HR department? Is this the manager? Or is this the employee’s responsibility? The reality is everyone must play a role. The employee has to assume some responsibility for these issues BUT they cannot do it alone and management has to offer assistance and support. Senior leaders may not have time, BUT they can commit to building strategy and provide the capital and budgets for retention programs. Is this the HR Department? HR depts do not interact with employees daily and are often busy with compensation-payroll/benefits, hiring and recruiting, compliance and workplace safety, training and development needs, etc- they play an important role in employee retention strategy and programs BUT again they cannot do it alone. Lastly, we have the managers who interact daily with the employee, are in the best position to understand the employees likes and desires, their strengths and skills. No one group can do this all alone. We suggest each player above has a defined role that needs to be agreed to and this needs to be properly executed. Example: If managers need training in people skills and building engagement and a regarding employee engagement and their experience and career development plans – this must be provided.
Examine who is in the best position and role to support and act on employee engagement and employee retention drivers? Ask questions such as:
- Who is responsible for employee engagement?
- Who is responsible for building a rewarding employee experience?
- Who is responsible for employee recognition?
- Who is responsible for conducting stay interviews?
- Who is responsible for understanding and supporting the employee’s personal needs and goals?
- Who is responsible for creating a positive and fulfilling work environment that appeals to employees?
- Who can help the employee build key relationships and a sense of connectedness to the company and its mission and values?
- Who is in the best position to know what employee’s interests are? What their strengths are? What their career expectations and goals are? And whether these are being met or there is career dissatisfaction.
- Who is responsible for the employee’s career development? And ‘
- Who is responsible for employee retention?
Who in each of the three groups listed above who is in the best position to help ensure the employee’s needs and career expectations are met?
What is Needed for a Successful Employee Retention Strategy?
Once you answer some of these questions on who next explore what- what they will need to fulfil their role.
Senior leaders may need details on the business case to invest in an employee retention strategy. What would the goals and expectations be? What capital and resources could be provided to create a successful retention strategy? What is the targeted rate of employee turnover you can live with and accept?
HR Depts- You may charge your HR department with procuring the programs and resources necessary to improve employee retention. Their needs could include, authority to implement the needed programs, the proper funding to purchase and implement programs, feedback on metrics (turnover rate and costs) to properly monitor programs and ensure that improvements are being achieved.
Managers- What would they need? They may need training to understand how their role is critical in the employee retention process. They may need coaching and training on the people skills and processes needed to build stronger working relationships with their employees, how to make the employee experience more rewarding and how they can support and act on the personal needs of employees to create loyal employees and lengthy tenures.
In today’s workplace, employees want a rewarding and fulfilling career. If your organization is interested in minimizing employee absenteeism and maximizing employee retention perhaps the first step is to ask some these key questions above.
Who is in the best position to meet the psychological, personal, individual and emotional needs and desires of employees to make their career rewarding and fulfilling. What would they need to ensure improvement and strong results?
Survey Observations and Considerations
- Employee retention is listed as a top priority, yet many companies don’t yet have fully developed retention programs beyond compensation related strategies.
- Compensation is still listed as a major reason for employee turnover, but this is often not the top reason selected by employees. A close second is Management Related Issues followed by organization culture. As such, management related issues and a positive workplace culture are also top concerns, and these areas also deserve focused attention in planning strategy
- A common theme in some of these results is lack of manager training. This is important as if you need managers to be more involved with building stronger relationships with their employees and to achieve this training for managers must be provided.
- Employees want more control over their work-life balance.
- On what top management related issues have been implemented to improve retention- Only 11.1% selected well trained people managers.
- On the top culture related practices implemented to improve retention- Only 11.1% selected cultivate good employee experiences.
- Of the following talent-management-related issues, “which do you believe are most responsible for employee turnover in your organization?” The percentages selected are shown below
- Lack of advancement opportunities scored 60.2%
- Lack of appreciation/recognition at work scored 53.1%
- Lack of skilled managers 44.5%
- Lack of opportunities to learn at work 35.9%
- Lack of flexible work arrangements 35.2%
- Lack of empowerment/autonomy at work 35.2%
See our blog article on “The Great Retention” and for more details.
Employee and Executive, Manager and HR Challenges On which HR Related issues most responsible for employee turnover- 75 % cited lack of overall training for managers and 33.3% cited retention-specific training for managers.
Executives are so overwhelmed that nearly 70% recently told Deloitte they’re considering resigning from their jobs. That’s a lot of stress!
Why employees and HR just aren’t seeing eye to eye? “This particular piece of research shows that there has been quite a disconnect between HR and employees, and it’s been exacerbated because of the experience that we’ve all just come through,” said Jane Kennelly GM of Skills Consulting Group. The company has released the findings of their annual Work Wellbeing Index Survey. This year’s research found that although the Work Wellbeing Index was holding steady, there were areas showing signs of cracks so have produced a series of reports that delve deeper into these issues.
Where are the disconnects?
72% of HR professionals thought their employees felt their company genuinely cared for their wellbeing, but only 58% of employees agreed.
72% of HR professionals thought their employees felt their organisation enabled them to look after their own wellbeing, but only 64% of employees agreed.
81% of HR professionals thought their employees felt their manager genuinely cares for their wellbeing and acts upon it, but only 64% of employees agreed.
72% of HR professionals thought their employees felt their organisation had structures and programs in place to ensure their wellbeing, but only 54% of employees agreed.
Strategies and Solutions
A successful employee retention program must be balanced and include several factors that appeal to the individual needs of employees such as: compensation, communication and relationships with managers, the employee work experience, as well as organizational culture! Managers have a significant impact on all of these issues yet they must receive the training, support and guidance necessary to achieve desired results and make a significant difference in reducing employee turnover and decreasing absenteeism.
One of the first steps is for senior leadership and owners to determine what role they want managers to play in the retention process. Do you need them to build stronger relationships and connections that increase trust, improve communication with employees, support employee needs to build engagement and a rewarding experience. Should they hold managers accountable for retention levels? If yes, and you want managers actively involved in the retention process, give them the training and resources necessary to create a successful employee retention strategy.
Need managers help to improve employee retention?
Contact us. We can help. We are employee retention experts.
manage2retain.com info@manage2retain.com 519-500-0251