A quick summary:
Employee retention is the lifeblood of a successful business. As every HR professional and business leader knows, it’s people who build great things.
Not only are there hurdles to tackle in hiring the very best employees; those with the necessary expertise to take your project to the next level; but making sure they stick around, well that’s a whole other story.
What’s often overlooked is the truth of the matter… it doesn’t have to feel like you’re running through the same hoops and ending up back where you started. You can build high-performing teams that stick around to see out the success of your team, project or business.
To put it simply, in the modern workplace employee retention isn’t black and white, and there are a ton of inventive, forward-thinking ways to approach employee retention strategies. Below, we’ve explored everything you need to know and more.
By the time you’ve read this, you’ll know why your team members vanish in front of your very eyes. How to properly measure retention, turnover, job satisfaction and more. And ultimately why a culture of health and wellbeing is a recipe for retention success.
What is employee retention and why does it matter?
What good would an “ultimate guide” really be without a solid definition? According to the CIPD, employee retention refers to:
“the extent to which an employer retains its employees and may be measured as the proportion of employees with a specified length of service (typically one year or more) expressed as a percentage of overall workforce numbers.”
Or to put it into fewer words… the length of service by an employee and an employers’ ability to keep headcount stable and/or growing. It’s as simple as that.
While the definition lacks a bit of colour and sounds like tedious HR maths, employee retention strategies are where things get interesting. For decades, companies of all shapes and sizes, and throughout every industry have searched for the winning ticket when it comes to building healthier, happier teams.
You only have to look at the list of never-ending employee benefits some companies offer. From the classic cycle-to-work scheme to “pizza Fridays”, it almost seems like anything can be an incentive in the workplace these days.
Ultimately, however, the definition of employee retention and its intended outcome remains the same. Here are some of the key reasons you must take employee retention strategies much more seriously…
Reduce employee turnover
Quite obviously, great employee retention strategies achieve the most important result - reducing employee turnover. No business nor team can move on to bigger and better things if people are constantly coming and going.
With the average employee costing around £12K to replace, including time spent recruiting and training, businesses can take a critical blow financially by high turnover rates. And your team members who are having to continually train new starters? Well you can bet on them suffering from low morale.
Reducing employee turnover is almost like the turning point; the changing tides. If you want to achieve any of the following three points, this is where it all begins. Your company simply can’t build a reputation with high turnover rates. People speak to people, and your high turnover rate won’t go unnoticed!
Likewise, you also can’t eradicate toxic workplace culture, because those who leave don’t do so without making their emotions known. This could heavily influence the very best of your talent. Swaying their opinions of your company.
Build a solid reputation as an employer
Prior to the rise of the internet, researching and learning about a particular employer was quite difficult. Unless you knew someone who worked there, the chances are it was about first-hand experience.
Fast-forward a decade, and there are a ton of employer review websites, think Glassdoor.co.uk. Whether it’s pay ranges or anonymous thoughts and feelings, it’s all readily available online. In reality, this is insight is amazing for anyone and everyone in the workplace.
Not only does it provide the information candidates rightfully deserve, but it can ensure companies act legitimately. Returning back to the point at hand, as an employer or HR professional, it’s your duty to ensure brand reputation isn’t crumbling left, right and centre.
For instance, if employee turnover rates are on the up, your company is wide open to huge criticism and poor reviews left by departing employees. Improved employee retention strategies mean fewer reviews, as more people stick around for the long haul.
Ultimately, better retention levels equal a solid reputation. Put people first and not only can you boost your brand image and the happiness of your people, but success is destined to come your way!
Save cash on recruitment and training
Moving on to point three, taking your employee retention strategies seriously means saving on the costs of recruitment and training. As you saw above, departing workers do not come without costs.
According to Biz Library, companies with 100 to 999 employees spent an average of $1,678 (£1,270) per annum on training and development in 2020. This takes into consideration courses, learning platforms, licences and much more. Long story short, it’s not a simple and easy game to upskill or train employees.
With a solid team that sticks, you can expect team collaboration that leads to learning. For many of us, we learn by doing, and by working alongside a great team, people can go a long way without courses and external, costly training.
However, that isn’t all, by improving your employee retention strategies, you can cut out the requirement to train people from the ground up. The fewer people leaving, the less demand for training there is. It’s that simple.
Eradicates toxic workplace culture
Workplace culture is very complex, and it’s often one of the things a lot of companies get wrong from the beginning. In fact, it can be extremely difficult to transform company culture, as it’s often an atmosphere and environment established by the majority of employees, i.e their values, opinions and ideas.
Reshaping company culture can’t be an overnight success, but is likely to be the most profound outcome when you set about improving employee retention. Ultimately, people may be leaving due to poor management, a toxic approach to working, and feeling mistreated in the workplace.
These kinds of environments are no stranger to high employee turnover rates and can drive high unhappiness in the workplace - one of the major reasons people leave. In fact, people who don’t like their organisations' culture are 24% more likely to jump ship.
Company culture is everything. If leadership can’t build a sustainable and appealing workplace environment, retention will lack, and turnover will plague the company.
Why do employees leave?
People leave for all kinds of reasons. Some are within our control, and others not so much. As a HR leader, all you can do is adopt employee retention strategies to minimise team departures and maximise job satisfaction.
That said, are you aware of the most common reasons why employees leave? Take a look at the list below, and see if they reflect some of the reasons your team have left your company.
- Feeling burntout
- Feeling unappreciated and undervalued
- A lack of steady career growth and progression
- Lacking flexibility (especially after the pandemic)
- Poor mental health and wellbeing
- Poor relationship with management
- General unhappiness in the workplace
- Doesn’t fit with the company culture
- Better opportunities elsewhere
- Doesn’t work for them financially anymore
- Bad work-life balance
- Long commute times
- Due to responsibilities outside of work
Employee retention strategies for 2022
Now we’re aware of the importance of employee retention and why people leave, what employee retention strategies really make a difference? Before we jump into this list, remember - this is not an exhaustive list. To truly transform your employee retention levels, think outside the box.
Come up with inventive ways that suit your workforce. Every team, working environment and culture is unique; what may work best for one company, won’t necessarily work for yours.
Create a culture of health and wellbeing
First and foremost, building a culture of health and wellbeing isn’t just a great idea, it’s essential. We’ve already begun to see a shift in demand for a healthier and happier workplace. Employees are making their feelings known about the desire for mental health support and holistic wellbeing benefits.
A survey from 2021 found that 63% of employees say working for an employer that provides a greater level of mental health support is more important to them than it was a year ago. The evidence is clear. The pandemic has realigned a lot of employees prioritises when it comes to benefits and incentives in the workplace. The general workforce has also become more and more health-conscious over the past few years. Showing no sign of slowing down.
To create a culture of health and wellbeing, employers must devise a plan of action. This should start with discussion, finding out what kind of activities and events improve the health and happiness of team members.
Then, armed with those answers, leaders must seek out things like yoga classes, team-wide spa days, and host 1-2-1 wellbeing meetings with managers. The list goes on of inventive wellbeing driven ideas to reshape culture.
Robust leadership team
If one thing is certain, it’s that leadership plays a pivotal role in any employee retention scheme. Company culture is ultimately built by the senior team and it is their responsibility to ensure employee retention strategies are heading in the right direction.
What’s more, these few members of staff must boost morale, motivate and inspire employees to do and be their best. People turn to these individuals for support and to hear they’re doing a great job.
This is essentially leadership 101, yet so many forget the power and responsibility they have. If you manage a team and it’s your duty to ensure people are happy in their working lives, take note!
In a survey of 2,000 employees, a shocking 63% consider leaving due to a toxic relationship with their manager. Regardless of what employee retention strategies you adopt, it’s in the management and leadership team’s hands to ensure they are successful.
Communication is key in a confusing world
Have you ever been in a scenario where a lack of communication has created bigger problems than necessary? Haven’t we all! Whether it’s in the office, at home, or anywhere for that matter, a lack of communication can be detrimental to what you’re trying to achieve.
With more and more companies now opting for a hybrid or remote-first approach, communication is key to successful employee retention strategies. Not only between managers and their team but also between HR and employees. In one Gallup study, it turns out 85% of employers offer a wellness package, however, a mindboggling 40% don’t even know it exists. In the case of the manager/team member communication, this is fundamental to know if people are happy in their day-to-day working lives.
And yes, you read that right! Meetings don’t always have to be results and progress-driven. They can in fact focus on the health and happiness of employees. Actually, this kind of meeting can potentially alleviate stress and bring issues to the surface for employees - having the potential to boost your employee retention levels.
A concrete onboarding process
What good is a great employee retention scheme without a solid onboarding process? In a world plagued by the ‘Great Resignation’, employers need to take onboarding much more seriously. Recruiting top talent is no easy feat, but it is only half the job. Once they’re hired, it’s important first impressions are made and they mould well into the team, culture and role.
Believe it or not, a staggering 14.48% of respondents to one survey say they have quit a job by month six. This scary statistic proves just how short-lived some roles are filled. This is a stat that should drive employers to really up their onboarding game.
Improving your onboarding process starts with six simple and effective steps. It doesn’t have to be costly or time-consuming. If anything, having to put job advertisements back up for the same role you filled four months ago is the most cost-sensitive outcome.
Celebrate employees regularly and wholeheartedly
Finally, and certainly not least important, celebrating success and praising your team is crucial to retention. As touched on above, leadership teams are both influential and have the responsibility to boost morale and motivation. Regardless of our position in the workplace, we all like to hear we’re doing a great job. It’s what spurs us on to keep going.
What also goes overlooked is celebrating the small wins. We often get carried away assuming the end goal is the only success to celebrate. Stop looking towards the distant future, or those financial projections, and set your milestones much more realistically. This will ultimately create happier people… more productive people.
In one survey, employee recognition was most important to 37% of employees. However, despite this, a staggering 65% of employees haven’t received any form of recognition in the past year. These statistics are surprising, considering how cost-effective and simple praise really can be.
If you want to boost your employee retention strategies, start with praise, and do so regularly. Then begin to incorporate the other techniques listed above. Only then can you start to minimise turnover and boost retention.
6 Employee Retention and turnover metrics for your business
We’ve now covered nearly everything you need to know to transform your employee retention levels with new strategies, reasons people leave and more. Now, let’s turn to the 6 employee retention and turnover metrics you can utilise to track your efforts.
If you’ve begun to adopt some of the employee retention strategies laid out above, these formulas are all you need to see if they’re truly working. Remember, it’s worth using these metrics on a regular basis, and don’t be afraid to try something new if you see no improvement.
Starting with retention rate. This is quite possibly the most important one. Your retention rate will give you a clear indication of whether people are staying, and just how long. By starting with this particular metric, you can then assess employee satisfaction and happiness; looking for any patterns in between.
So, how do we calculate the retention rate? Well, it’s pretty simple…
number of single employees who remained employed for the entire measurement period ÷ number of employees at the start of measurement period x 100
Employee Turnover Rate
Once we have identified our retention rate, it’s time to consider turnover. In short, turnover is how many people leave a company in a set period of time. The formula behind employee turnover is pretty simple, and a complete must-have for every HR department. Without understanding how many people are leaving your company, you can’t put in the necessary employee retention strategies to prevent this.
Here’s how to figure out your employee turnover rate…
The number of employees leaving a job during 12 month period ÷ average actual number of employees during the same timeframe.
Employee Turnover Cost
While the turnover rate might paint a picture of how many people are leaving your company, it doesn’t tell the full story. In fact, turnover doesn’t tell us the total damage done to your company from a financial standpoint. And as we all know, the financial stability of a business dictates its efforts to grow and succeed.
To calculate the turnover cost, take a look at the following addition formula…
total costs of departure + vacancy + replacement + training
Employee satisfaction and happiness
Once you’ve calculated employee retention and turnover, the next step is to look at the happiness and satisfaction of your team. This may reveal early on, exactly why people are coming and going.
Believe it or not, many employers simply don’t record or track their team's happiness in the workplace. Yet, with so many reasons people leave because of how they feel in the workplace, it’s very surprising. We’ve written extensively about three super important metrics to track happy employees!
One of the most common satisfaction metrics is the ESI (Employee Satisfaction Index), to calculate simply ask your employees the following on a scale of 1 to 10:
- How satisfied are you with your workplace?
- How well does your workplace meet your expectations?
- How close is your workplace to your ideal job
To find the result, here’s the formula…
ESI = (question mean value/3) x 100
Go forth and improve your employee retention
There you have it, that’s our top six HR metrics to track your employee retention levels, employee turnover, and satisfaction in the workplace. Armed with our top five employee retention strategies, and the understanding of why people leave jobs, you’re one step closer to building healthier, happier teams!
One of the best employee retention strategies we believe you can implement is a culture of health and wellbeing. It works for us, it works for our customers, and it can work for you! Find out below what makes Heka such an appealing employee benefits platform for companies up and down the UK.
Using Heka to boost employee retention and build happier, healthier teams
Employee retention isn’t a single effort. It’s a combination of things designed to retain your best team members and ensure they are at their happiest. Something we completely understand at Heka.
In fact, when we choose our partners and build our platform with employee health and happiness in mind. If we don’t think it can contribute to these factors, they simply don’t make the cut.
Through Heka, employees throughout the UK are booking virtual yoga classes, online nutritionists, therapist consultations, axe-throwing in London and so much more. It’s our mission to build a platform that offers variety.
Employee retention requires great leadership, communication, training and development opportunities, and so many other initiatives. However, one of the things we’ve identified as essential to employee retention strategies is a great employee benefits scheme - and that’s where we can help!
Find out why our customers are building healthier, happier teams that thrive at work by speaking with one of our amazing wellbeing experts. First, however, take a look around and meet Heka!