Employee retention has always been a hot topic in the world of human resources. It's no secret that employee turnover can be costly for businesses - both in terms of money and lost productivity.
It's estimated that each lost employee equates to a cost of 1.5 to 2 times that employee's annual salary. Not to mention, it can take a business up to six months to replace them. Additionally, according to Gallup's State of the Global Workplace Report, only 33% of employees across the world are engaged in the workplace. Without engagement, retention becomes even more of a challenge.
Learning how engagement and retention affect each other could help organizations find long-term solutions for decreasing turnover and building improved company cultures.
Why Does Employee Retention Matter?
The bottom line is that poor employee retention is an expensive problem for organizations. Employee turnover causes lost profitability and productivity, more costly recruitment, the loss of quality candidates, time spent training, and so much more.
This can cause a domino effect as well. Companies end up having to allocate resources to those issues instead of providing raises, bonuses, etc. Additionally, high turnover affects engagement, company culture, and the employee experience.
But when companies get it right, they can experience:
Improved Employee Experience
The employee experience involves each stage of the employee life cycle, from recruitment to retirement. With retention strategies in place, organizations can focus on improving the employee experience in a meaningful way.
More Experienced Employees
With high turnover, the likelihood of having experienced employees who understand the organization and champion its mission is low. Conversely, employees who do stay with a company long term naturally gain a deeper knowledge of the company itself and its offerings. These employees are invaluable and contribute more to the bottom line.
Stronger Work Relationships
Employees who spend a lot of time together are more likely to collaborate better, support each other, and build strong relationships. Engagement increases when teams care about each other’s successes. This also helps to build a strong, resilient, and collaborative company culture.
Increased Profitability and Time
Organizations save time and money by not having to consistently onboard and offboard employees.
Moreover, when employees are invested in their work and company, they’re more likely to work harder for the company (and stay). This leads to higher profitability and increased employee engagement.
What Can Hurt Employee Engagement and Retention?
As we know, employees who are engaged are more likely to stay with their organization rather than search for a different job opportunity. But what causes employees to disengage in the first place?
Employees who feel out of the loop or like they aren’t being included in important conversations are likely to start feeling disengaged. Communication is key in any business, and it’s important to make sure all employees feel like they can easily connect with their colleagues and voice their opinions.
Lack of Connection to the Company Mission
Engaged employees feel like their work matters and that it contributes to a greater goal. If your employees don’t understand how their individual roles fit with the overall company values, you'll risk employee engagement. So, make sure you regularly remind your employees of the company values and why their work is so important to the company's mission.
No Recognition or Appreciation
Everyone needs to feel appreciated for the work they do, no matter how small it may be. When employees don’t receive recognition for their efforts, they’re likely to become disengaged employees. Recognizing employees for their hard work and dedication is key to creating a positive workplace environment.
No Career Development Opportunities
Many employees want to feel like they are growing in their roles and that there are opportunities for them to advance their skills. In fact, Pew research found that 63% of people who quit their jobs in 2022 did so due to a lack of career advancement opportunities.
If your employees don’t have access to training or professional development opportunities, it may be difficult for them to continue to feel engaged in their work.
Similar to career development, feedback is essential for employee engagement. If employees don’t receive regular feedback on their performance, they'll have no way of knowing what skills they should be striving to develop and which ones are their strengths. This can naturally lead to feelings of apathy and disengagement.
Instead, make sure you're providing your employees with regular, constructive feedback so that they can continue to grow and develop in their roles.
Lack of Flexibility
As we continue to shift to a world where remote work is the new norm, giving flexibility to your team members is key. With as much as 62% of workers believing that remote work positively affects their work engagement, it's important to, whenever possible, give your employees the freedom to work in a way that best suits them.
How to Make Employee Retention and Engagement Successful
Successful employee retention and engagement requires adequate groundwork. In order to determine if your organization is facing employee engagement and retention issues, research needs to be done.
Organizations need to understand why employees leave in the first place. Once you know the extent of your engagement and retention problem, your organization can execute ways to solve it.
- Research. Turnover analysis can be done through benchmarking (external and internal), pulse surveys, attending SHRM conferences and performing competitor analysis.
- Create an action plan. After conducting research, it’s time to make a plan that will improve your retention. The use of broad strategies (company culture, salaries, etc.) and targeted strategies (exit interviews, stay interviews, and focus groups) will help create a comprehensive action plan.
- Implementation. You’ve laid the groundwork, now it’s time to execute strategies that were identified by your organization.
- Evaluate results. After implementing your plan, you should be evaluating (quarterly, bi-annually, or annually) the results to assess the impact your strategies are having and adjust accordingly.
Tips to Improve Employee Retention and Engagement
While you won’t see dramatic improvement overnight, it’s important to be consistent. Building a healthy company culture takes time. In the meantime, be mindful of best practices that focus on the “human” aspect.
1. Appreciation and Recognition
According to Gallup's Transforming Workplaces Through Recognition report, more than 70% of workers with excellent recognition at work "rate their lives more positively overall and are more likely to be thriving in their everyday lives compared to those who aren't being fully recognized."
2. Freedom of Flexibility
Flexible work arrangements benefit both employers and employees. It allows workers to balance work and personal life, which can make them more productive. For employers, it means retaining their best employees for longer.
3. Work-Life Balance
If you create an environment where employees feel valued and respected, they're more likely to stay within your organization. Everyone wants to feel like they're seen as more than just an employee. Encouraging your team to have fulfilling lives outside of work will help achieve this.
4. Competitive Pay
Simply put - you're employees will be open to other opportunities if they're not paid well. If your employees feel they're underpaid, they're likely to be less engaged or even actively disengaged from work, as well.
5. Business and Personal Alignment
At the same time, employees want more than just money—they also need a sense of meaning at work. Ask your employees what they want their jobs to be about. Then, align it with the organization's interests.
Giving and receiving feedback can be awkward, so some managers avoid it altogether. But when done right, it can be incredibly rewarding to help employees grow and become more involved.
7. Training and Opportunity for Advancement
Top performers aim to continue expanding their knowledge bank and grow as individuals. These programs provide them with the chance to do just that. Employers benefit from this by getting more motivated and engaged workers in return.
8. Trust-Based Relationships and Autonomy
Trust should go both ways in the workplace. Employees should trust that their leaders have their best interests at heart, and leaders shouldn't feel the need to micromanage their workers.
Employee Engagement and Retention Strategies
Improving both employee engagement and employee retention will require consistent effort within the organization. There are multiple ways for companies to strategize how to improve retention and engagement.
Awesome Onboarding Experience
In a report from Gallup, only 12% of employees believe their company successfully onboarded new team members. That means 88% of new hires are not being set up for initial success. By creating a comprehensive onboarding program, you can provide new employees with the tools and knowledge necessary to transition comfortably.
Your onboarding team should comprise of employees from different departments including HR, relevant teams, direct stakeholders, and C-suite members (yes, even the CEO). By doing so, you are creating an environment that allows open communication to be foundational.
Additionally, you can identify goals and measure success during onboarding. Stick with the main Cs: compliance, clarification, culture, and connection. This way your new employees are prepared for everything!
Recruiting Quality Candidates
Candidates are expected to sell themselves during the recruitment process, but they are also looking to be sold the company. Now more than ever, employees value transparency, company culture, fringe benefits, and a superb work-life balance (especially millennials).
Don’t be surprised if candidates ask about the culture, and if you have ever been named a “Best Place to Work.”
It’s important to keep in mind that your best employee may have a unique educational experience. Maybe, it’s not traditional, or maybe they didn’t attend an Ivy League school. Be open to diverse paths and backgrounds among candidates. And look for those who align best with your company culture, mission, and goals.
Build Better Work Relationships
It starts from the top down. And it requires communication.
Relationship building can feel tricky! But it is vital to the success of any company’s employee engagement and retention strategy. Get to know your employees and encourage managers to have a relationship with their employees as well. This can be done with team-building exercises, 1:1 meetings, and team meetings.
Just remember, work relationships need to be more than just work. Show a genuine interest in who your employees are, their personal lives, and hobbies. This helps not only establish a healthy line of communication but reinforces bonds.
Implementing a social recognition program can also help to strengthen the relationships between employees, colleagues, and leaders. This type of program encourages everyone to interact with each other regardless of status, tenure, or position. Whether it’s a work anniversary, or a shoutout for a job well done, you can empower employees to experience moments that are bonding.
It feels great to be recognized for your achievements.
By implementing employee recognition software and other strategies, you can greatly improve engagement and retention. People will stay where they feel valued. Recognized employees will feel empowered to help build a positive company culture, reach, and obtain company goals, and grow professionally.
Employee wellness programs are a great way to help employees adopt a healthier lifestyle - from physically to socially to mentally. Healthier employees, in turn, are more likely to be more engaged in their work. But that's not all - companies benefit in other ways too.
These benefits include:
- Reduction in Healthcare Costs: 72% of employers saw a reduction in healthcare costs.
- Return on Investment: The average return on investment (ROI) for employee wellness programs is six-to-one.
- Reduced Absenteeism: Wellness programs can reduce absenteeism by 14-19%.
- Improve Culture: 77% of employees say that workplace wellness programs positively impact company culture.
- Increased Retention: 85% of employees say they intend to stay at their jobs.
Empower Your Employees
We know disengaged employees are more likely to leave. But empowered employees are more likely to be engaged. Build a team of empowered employees by trusting employees. This means trusting employees to use their judgment for projects and tasks and give them the opportunity to do more when they ask for it.
Also, ask employees for their input on projects and genuinely consider it. Even if their ideas can't be accommodated, making employees feel heard and valued can help them feel empowered to speak up again in the future.
Professional Development Opportunities
Employees will not stay where they feel stagnant.
Neglecting employee development can have significant effects on a company’s ROI. Supporting your employees’ career aspirations, professional development, and continued education can improve morale, and boost engagement and retention.
Not every company needs to have a formal professional development program, but it does make it easier to execute ideas! However, mentor programs and other educational programs inspire employees to be more creative, engaged, and motivated.
Organizations can support their employees’ growth by implementing reimbursement for continuing education and certification programs, including conferences, industry-related memberships, and events.
PRO TIP: Take it a step further. Implement internal knowledge shares. Allow your employees to share their expertise and teach others new skills (this is a cost-effective idea).
Company Culture Matters
Positive company culture has an enormous impact on attracting and retaining employees. Many people think that the fringe benefits and perks are what make a culture awesome. However, company culture is much more complex than sleep pods, snacks, and a ping-pong table.
Your company culture should represent the core values of the organization. Workplace environments can become very toxic quickly. But with core values being its foundation, your company culture can grow and flourish.
Employees should feel as if they can ask questions, seek support from managers, build relationships with coworkers and grow professionally. When building a company culture, ensure its success by encouraging open communication, offering professional development, and great compensation packages.
Some ideas to build a fun and thriving company culture include:
- Team building exercises
- Collaborative environments
- Wellness initiatives
- Professional development opportunities
- Company events
- Rewards + Recognition
- Employer-provided benefits
- Open communication
Improve Employee Engagement and Retention With Terryberry
Terryberry provides the solutions you need to better recognize employees and build the work culture that keeps employees engaged:
- Service Awards and Performance Awards: Recognize and reward employees based on years of service awards, anniversaries, or performance.
- Social Recognition: Empower your employees and managers to recognize their peers and celebrate successes with an easy-to-use social recognition application.
- Feedback and Communication: Unlock improved feedback and communications with employee and customer feedback solutions.
Ready to learn more? Schedule a demo with our team to get a hands-on walkthrough of how Terryberry can transform the culture of your workplace.