Actionable Employee Retention Strategies to Retain Your Top Talent

Guides
October 10, 2022
Praisidio, Inc
Actionable Employee Retention Strategies to Retain Your Top Talent

Employee retention is a big deal right now. At the end of May 2022, there were 11.3 million open positions in the United States, significantly more than the 9.3 million positions which were unfilled in April 2021.

This abundance of job opportunities means there’s not much pressure on employees to stay in unsatisfying positions, and employees have noticed.

42 million workers in the U.S. voluntarily quit their jobs in 2019. In 2022, the voluntary quit rate is 25 percent higher than 2019 pre-pandemic levels, a phenomenon labeled the “Great Resignation.”

High rates of employee turnover damage your company’s reputation as an employer, and constantly rehiring to patch up a leaking talent pool can be economically devastating.

Employee attrition costs U.S. businesses one trillion dollars each year.

We’ll break that figure down shortly. For now, the bottom line is that you must take employee retention seriously, regardless of whether or not you’re seeing high rates of employee turnover.

This in-depth guide will give you the foundational knowledge to efficiently and proactively tackle employee retention.

If you want the process of retaining employees to be simpler and more powerful, Praisidio can help. Our real-time employee retention dashboards (based on your existing data) give you actionable insights for keeping your entire workforce engaged and retaining top talent.

Book a demo to discover how Praisidio technology can save your company over $10 million.

What is employee retention?

Employee retention is a business’s ability to reduce employee turnover and retain talent by creating a positive work environment and a satisfying employee experience. Comprehensive employee retention programs work to improve work processes, compensation and benefits, company culture, and other aspects of the employee experience.

The ultimate goal of employee retention efforts is to retain as much of your current talent as possible. That way you can focus your energy and revenue on business growth, instead of replacing old employees and training new ones.
Tip: Increasing employee retention is one the most efficient ways to free up operating capital and accelerate business growth.

Why employee retention is a big deal for your organization

Employee turnover costs businesses in the U.S. $1 trillion each year because turnover comes with expenses that go beyond employee salaries.

The best data available shows that it costs businesses at least 50 to 60 percent of an employee’s salary to hire a replacement. On the high end, research places the total cost of replacing a team member at 90 to 200 percent of the employee’s annual salary.

In industries where specialized skills are required, the costs can be even higher. For example, a mere one percent increase in registered nurse turnover costs a hospital $337,500, on average. Employee attrition among nurses cost hospitals between $.4.4 million and $7 million in 2017.

Even at the low end, the costs of employees leaving your company can be financially devastating.

However, the same issues that cause employees to quit also impact employees who choose to stay, and having coworkers quit can exacerbate these issues.

When an employee or employees quit, they don’t take their workload with them. The same work must be done, but there are fewer people to do it.

This puts a lot of stress on the employees who stay with your business, lowers morale, and leads to burnout, which causes even more employees to quit.

Even if this situation doesn’t cause an employee exodus, overworked and burned-out employees often choose to do the bare minimum that’s outlined in their employment contract.

This tactic has become popular on social media under the name “Quiet Quitting.” In reality, it’s nothing new. Economists and social scientists have known about Quiet Quitting for decades. They call it “Malicious Compliance.”

Then there are the existential risks attached to overworked employees, like data breaches and medical malpractice, for example. 

The average cost of a data breach in the U.S. is $9.44 million. The global average data breach cost is $4.35 million. The most common cause of cybersecurity breaches is human error. 85% of cybersecurity breaches are caused by people making mistakes.

Why do people make these mistakes? 45% of people cited being distracted as the reason for falling for a cyber scam, and 37% of people said it was because they were tired.

There are also existential risks on the business end. The average cost of a medical malpractice settlement is $242,000, and medical malpractice cases that go to trial cost about $1 million. 

Ultimately, doing what you need to do to retain employees is far less expensive than being understaffed and dealing with constant employee turnover. Businesses simply cannot afford, in any sense of the word, to live with low employee retention rates.

How improving employee retention benefits your organization

The economic benefits of increasing employee retention are easy to understand.

More challenging, however, is actually improving your employee retention. To do this, the overall employee experience has to be improved, but there’s no single variable you can tweak to keep people on board. It requires a more holistic approach (and this is good news).

Comprehensive improvements to your employee experience will bring comprehensive benefits to your business. 

  • Lower costs

If replacing an employee costs 90 to 200 percent of an employee’s annual salary, retaining just a few more team members can free up enough payroll budget to hire new team members. 

  • Better productivity

It’s no secret that more experienced employees get more done than less experienced employees. The additional benefit of a more experienced workforce is that new employees become productive faster. When current team members have more knowledge, they can get new hires up to speed sooner.

  • Higher team morale

High turnover rates take a toll on team morale. Dealing with a constant churn of new faces reduces team cohesion and creates sluggish work processes.

Working with the same team for a long time makes it easy for people to connect, engage, and collaborate.

  • Deeper knowledge pool

No matter how well your organization documents processes, there’s always knowledge that never gets written down. When you keep the same team on board for a long time, these little bits of unwritten wisdom accumulate and deliver big improvements to operating efficiency.

  • Improved customer experience

Enthusiasm alone isn’t enough in customer-facing roles. Experience is also required to quickly and effectively help customers. Keeping your experienced employees around longer helps eliminate negative customer experience.

  • Stronger business revenue and profitability

The cumulative impact of all these benefits is a more efficient workforce that generates more revenue at a lower cost, and that’s what makes a company profitable.

Why your employee attrition rate is more useful than employee retention rate

People intuitively look to employee retention rate as the metric for measuring employee retention. After all, retaining employees is the goal, and “employee retention” gets thrown around a lot in strategy and planning discussions.

However, the best metric for measuring retention is actually employee attrition rate, which is the percentage of employees who leave your organization over a given period of time.

Using this metric instead of employee retention rate makes sense when you dig into things a bit.

When a company works to improve employee retention, the problem they’re trying to solve is employees leaving, which is employee attrition. Measuring employee attrition shows how big the problem is and gives more insight into what’s causing attrition.

Looking at the employees who have separated from your company gives you far more information about demographics, job positions, seniority, and other useful information about the employees who leave. This is the data that points you in the right direction in terms of correcting issues that cause high employee attrition rates.

This is important and more efficient for retaining employees because every company and industry has unique employee retention problems to solve.

For example, in 2021 the construction industry had an annual voluntary separation rate of 56.9 percent. The finance and insurance industry had just 26.3 percent turnover.

Why the difference? The construction industry employs a lot of seasonal and temporary employees, and people often work in construction trades while they study and acquire skills for another career. Conversely, finance and insurance tends to be a long-term career path.

Identifying retention challenges such as high seasonal employment or career development would be far more difficult using the employee retention rate, which is why organizations such as the Bureau of Labor Statistics focus on the separation rate.

This is the general formula for calculating employee attrition rate:

Employee attritions in a given time period / ([beginning time period headcount + ending period headcount] /2) * 100

The most common periods for measuring employee attrition rate are yearly (every 12 months), quarterly, and monthly. We at Praisidio recommend calculating your employee attrition rate on a quarterly basis.

Checking your employee attrition rate too frequently makes your evaluations vulnerable to outliers. A single month might have an unusually high number of separations that do not reflect a long-term trend.

Conversely, waiting a whole year to evaluate your employee attrition allows problems to persist for a long time before you’re even aware of them.

Whereas a quarter is long enough to identify trends without waiting until too much damage is done, and it matches up with many other aspects of business planning.

Lastly, when you calculate your employee attrition rate, it’s important to look at cohorts—focus on discovering exactly who is leaving. A simple, company-wide attrition rate isn’t useful.

You want to know if people from a particular demographic or in a certain job position are prone to attrition. That way you can use your internal data to evaluate compensation for those employees, identify common factors such as a manager or management team, and understand which part of the employee experience is causing attrition.

How to improve employee retention (by reducing attrition)

As we’ve touched on already, improving employee retention requires a comprehensive approach. Your employee retention strategy must be a company-wide initiative, and everyone from top to bottom must be involved.

The task before you is to make your company a better place to work. That means going beyond compensation and benefits, and turning the dials on everything from company culture to how your company conducts meetings.

While this may seem daunting, it’s manageable with the right employee retention strategies.

Employee retention strategies for a successful employee retention program

At Praisidio, we’ve identified five key areas within which to focus your retention activities. These are based on analysis of large corporate clients we’ve helped with retention.

  • Work
  • Connection
  • Growth
  • Compensation
  • Recognition

Within each area, there are a number of retention strategies you can apply to improve employee experience, productivity, and length of employment. 

A comprehensive employee retention strategy is likely to employ many of the strategies listed below. A core element to effectively applying these strategies is understanding exactly which employees are at risk of departure. If you don’t know, then you risk applying blanket strategies that lack efficiency. We’ll look at how to find at-risk employees shortly, first let’s dive into individual strategies. 

Work

Burnout is a major risk for employees in large companies. These strategies aim to help employees mitigate the risks of overload and the risks that follow, like disengagement and quiet quitting. 

Run wellbeing programs

Most companies understand that Employee Assistance Programs (EAP) and wellness initiatives are important, and these programs dovetail nicely with most other strategies mentioned here.

Where most wellbeing programs fall short is that they tend to be something that’s implemented rather than iterated. Set-and-forget is an ineffective approach.

The important part is that your managers, supervisors, and HR teams collect feedback on your wellbeing programs and take action on that feedback. You need to gather data that tells you whether or not your wellness programs are working and make changes if your employees feel these programs are falling short.

Give a short survey or even an in-person interview to everyone who participates in your wellness initiatives, and put that feedback to work.  

Implement flexible working arrangements

Work-from-home and hybrid work arrangements exploded during the pandemic, and employees really like them. 87 percent of employees choose to work remotely if it’s offered by their employer, and 21 percent of job seekers cite finding a job that offers remote work as their primary reason for seeking new employment.

If you have employees who can work remotely or on a hybrid schedule, consider offering those arrangements. Likewise, if you implemented remote working arrangements during the pandemic, try to leave them in place.

Foster employee creativity and freedom

This strategy can be boiled down to avoiding micromanagement. Your employees joined your company because they had an interest in the work. Let them do it.

As much as possible, empower employees to develop projects and empower teams to put their creativity to work tackling those projects. While you’ll still need to manage processes and deadlines, giving your teams the freedom to decide how projects are completed will help them feel satisfied and engaged.  

Honor employee work-life balance

Burnout is a major cause of voluntary attrition. This could be because employees are overloaded, or it could be because of something more easily overlooked—poorly managed work hours.

Ill-considered time management and schedules can prevent employees from working on the tasks that matter most to their role. People need long periods of uninterrupted work hours to complete complex tasks or solve difficult problems.

The solution is to carve out protected hours during the workday so that employees are guaranteed times with no meetings or interruptions from supervisors and managers. These hours are known as “Maker Time.”

Manage meeting loads

Meetings are a necessary part of every business, and they can be valuable. However, meetings can also be disruptive, and poorly planned meetings are often unproductive.

In short, too many meetings is bad for productivity. Make sure every meeting has a clear purpose and agenda.

Also, only invite people to the meeting if they need to be there. Avoid the mass meeting invite at all costs. If it’s difficult to identify exactly who needs to be at a meeting, the meeting likely doesn’t have a clear purpose or agenda.

Lastly, respect your Maker Time when you schedule meetings. Batch all your meetings together in the morning or afternoon, so everyone has four or five hours during the day to concentrate on their work.

Connection

Meaningful connections to managers, peers, and collaborators are prerequisites for preventing isolation and disempowerment. These strategies aim to foster a respectful environment in which everyone belongs and feels empowered.

Create a company culture of belonging at work

The key here is to bring people together socially. Companies work best when teams feel connected on more than a professional level.

Run team-building activities, block out a few minutes of social time during meetings, and always take time to acknowledge everyone’s efforts and successes. Avoid being all business, all the time.

Give people time to get to know each other, and make sure everyone feels acknowledged and engaged.

Build trust and respect from the top down

Trust and respect must be built. Full stop. The baseline of operation for your company should be that senior leadership and above serve as models for the level of trust and respect that your company embodies.

People at the top are often allowed to get away with poor behavior. This can set a pattern of behavior that ripples through all levels of a company and sets low expectations for all.

Nobody wants to admit there’s an issue with respect in their company. If there is, though, fixing it starts at the top.

Build a well-connected company

A truly connected company is one where everyone understands the company’s direction, long-term goals, and milestones.

Employees want to understand how their company is performing and providing access to key metrics helps ensure everyone is aware of and aligned on what matters most.

Your workforce will feel more connected to each other and the company if they have a shared sense of purpose, and there’s no way for them to feel that sense of purpose if they’re not sure what the company is working toward or how much progress they’ve made toward that goal.

Give regular updates from leadership on progress toward long and short-term goals and make sure all of your teams understand what they’ve contributed to that progress.

Diversity, equity, inclusion

People—especially the young—feel more engaged when their values closely align with company values. Use diversity, equity, and inclusion initiatives to highlight biases within your company, build a truly representative workforce, and create company values that your employees identify with. 

Growth

The value to employees of learning and development and career progression cannot be underestimated. These strategies underscore the importance of maintaining focus on these areas.  

Provide and support career development opportunities

Stagnation is a huge risk factor in employee retention. People want to advance and grow in their careers. If employees can’t see a path to advance within your company, they’re going to start looking to other companies.

Unfortunately, most companies have poor advancement pathways. In fact, many career coaches recommend that employees switch companies every two to four years for optimal career advancement.

Yearly raises and loyalty programs aren’t enough, though.

Make sure managers and supervisors are working with employees to map out pathways to take on new roles and responsibilities within the company. Additionally, offer training programs that give employees the skills they will need for their next position in the company.

If you don’t have a dedicated learning and development team, ensure that managers regularly check in with their team members about what kind of learning would benefit their current and future positions. Remember that learning and development isn’t a one-size fits all proposition, and try to offer opportunities that match the needs of the individual.

Lastly, if you can, give advancing employees raises (when they move into higher positions) that match what they would be able to negotiate for if they moved to another company.

Compensation

Key to offering fair and competitive compensation is knowing the compa-ratio for your employees, from both an external and internal perspective.

Offer competitive compensation and benefits

Most company leaders understand that they need to offer competitive salaries to retain employees. However, tracking salaries relative to other employees is often overlooked. This matters because it’s demotivating if some employees earn significantly more than others while doing similar work.

Track your compa ratio—a must-know metric for comparing your company salaries to the rest of the industry and comparing salaries within your company—to keep tabs on how your compensation packages stack up and make adjustments as necessary.

Recognition

Performance management and peer recognition are relatively straightforward strategies, but they require consistent implementation to be effective.

Recognise achievements with a minimum tempo

This is one of those employee retention strategies that every company endeavors to implement but often forgets. It takes intentional effort to consistently give meaningful recognition and praise to everyone who deserves it.

One of the simplest ways to start correcting a deficiency in employee recognition is to require supervisors and managers to publicly recognize at least one team member during every meeting.

It’s a simple strategy that can quickly bear fruit. Even if the recognition is for something small, it’s public recognition, which humans innately value.

There are plenty of other opportunities to give recognition, like a dedicated Slack channel or monthly awards, but the benefit of this approach is that it’s easy to implement and builds the habit of recognizing jobs well done.

Take advantage of performance reviews

Performance reviews are often treated as a formality, but they’re incredible opportunities to develop your workforce and build relationships between employees and supervisors.

Take your performance reviews seriously and avoid the cursory review where employees get a few performance marks and a thumbs up. Take the opportunity to ask how the company can help employees.

Offer guidance and mentoring. Also, educate employees on learning and development programs, and find out how the company can help them achieve their professional goals.

A performance review should be valuable enough that employees actually want to do them. If your employees feel that performance reviews are a cumbersome obligation, rewrite your performance review process with a focus on helping your team members improve.

How do businesses identify ‘at-risk’ employees?

If an employee is considering looking for a new job or leaving for a different company, it’s possible to change their mind. The trick is spotting at-risk employees in time. Preferably before they even know they want to leave.

There are two ways to judge if an employee is likely to quit. The traditional approach attempts to spot at-risk employees actively looking for a new job, while the approach we use and recommend is to look ahead and predict upcoming behaviors. Let’s look at both. 

The more traditional approach is to look for physical signs. These are known as lagging indicators because they present after the employee has already decided they want to leave. Examples include: 

  • Changes in attitude. If someone is dissatisfied, they’ll usually act dissatisfied.
  • Tardiness. If an employee who is usually on time starts showing up late, that’s a bad sign.
  • Decreased work output. People often check out before they actually quit.
  • LinkedIn activity. LinkedIn is designed to help people find work, and people who are considering leaving their jobs often put up the “Open to Opportunities” tag on LinkedIn in preparation for their job search.
  • Missing work for interviews. This is an obvious red flag. Though, not everyone will say they have an interview when they request time off.

The major issue with relying on these indicators is that they don’t leave managers and HR enough time to intervene before an employee leaves. A secondary issue is that managers need to ceaselessly watch their team members for signs of an upcoming departure.

The smarter way to spot at-risk employees is with Praisidio retention software which identifies at-risk employees before they’ve decided to leave. Praisidio does this by applying AI and algorithms to large-scale, manager-accessible data you already have. 

This allows you to intervene up to 6 months earlier than traditional approaches.

Praisidio automatically gathers and analyses indicators and then clusters them into the five strategy areas (we identified above), per employee. This makes it quick and easy to identify employees at risk of departure and see where intervention is required. 

A Praisidio dashboard, showing risks broken down by strategy area.

To make intervention simple and effective, Praisidio gives you the best retention strategies per employee, ready for you to implement with the click of a button.

In some cases, Praisidio has saved companies more than $10M in employee turnover costs. 

If you’d like to see how Praisidio can help your company proactively tackle employee retention, and potentially save you millions, book a demo with the team.

Prevention is always better than cure. Book a demo with one of our retention experts to see how Praisidio can help you solve turnover 6 months before it happens.