In 2019, the national turnover rate was 36%, a nine percent increase from 2018. And that’s a number that should get employers worried.
Sure, part of these numbers can be explained by natural turnover, as people change workspaces or even careers. But a significant portion of them boil down to one thing:
Poor employee retention practices.
In thousands of companies across the country.
The importance of employee retention is hard to overstate, especially when you consider that employee turnover costs alone ended up costing companies a staggering $600 billion in 2018.
But the good news there’s a better way. Instead of scratching your head trying to figure out why it’s so hard to retain employees or attract top talent, let me share some simple yet extremely powerful strategies for creating a working environment your employees will love.
But first, let’s look at what kind of impact can employee retention have on your business.
Why is Employee Retention so Important?
The old-school thinking about employee retention went something like this:
Sure, training and growing employees takes time, but there will always be a line of people for a good position, and you can just plug in a new person as necessary and continue as usual.
Today, many companies are learning the hard way why that’s not at all how it works.
Employees are more than their titles and qualifications. Even if you take two people with relatively similar resumes, you’ll find that the one who’s been working at your company already has an advantage: they understand the unique challenges and opportunities of your business.
Over time, most employees will start developing unique insights about your business and what might be improved. If that person decides to leave, all those ideas go to waste without you ever even hearing about them.
And then there’s the no-less-important fact of office cohesion.
People form bonds and closely-knit work relationships that can have a significant impact on their performance. Employees who like working together will usually be much more willing to go the extra mile when achieving goals.
Then, there’s the financial aspect of turnover. I already mentioned how turnover costs U.S. companies as much as $600 billion per year, and it might cost a company around 20% of the annual salary just to fill a position when someone leaves.
But all of this is not even the worst part.
The worst outcome of low employee retention is the reputation that you acquire as an employer. Today, it’s easier than ever to check a prospective employer’s reputation online, and the best talent will always have the luxury of turning down offers they don’t fully trust.
So, over time, a high turnover rate will mean that you’re not only using some of your best people, but you can’t attract top talent to replace them. And that’s a recipe for disaster, both in the short and the long term.
Luckily, there are things you can do. So let’s look at some of the best actionable employee retention strategies below.
Essential Employee Retention Strategies
Employee retention doesn’t have to be complicated, especially if you understand some of the best practices used by the most forward-thinking and coveted companies in the country.
Let’s explore some of the employee retention factors below.
Set Clear Goals (the Right Way)
Goals are something that most companies are very well familiar with. They help align the company in the right direction, help avoid wasting time, and set a standard for everyone to follow.
But the way you set these goals, and even the way you discuss and share these goals, can make all the difference in how your employees respond (and perform).
For one thing, if you want employees to get motivated about the goals you set, then make those goals feel less like commands from above and more like a collaborative plan of action.
Also, make sure that you provide all the context and details necessary to understand why the goal is what it is and what it might do for the company. Instead of saying, “do this,” try to explain why this type of goal makes sense and what achieving it would mean.
Finally, make sure that the goals you set not only contribute to the company’s success but also allow the person to move forward. Professional growth is an essential part of employee retention, as people want to grow in their careers and feel like they are moving forward and becoming better at their jobs.
When done correctly, goal setting doesn’t have to be an anxiety-inducing process for the employees. Instead, it can be an exciting time to explore the possibilities and push the limits of what the company can achieve.
In my course, Managing Happiness, you can learn a lot about setting the gith goals for yourself and those you work with.
By joining a mastermind of like-minded people who want to improve their performance, you can crystalize your goals and become a better leader for others.
Provide Autonomy
Autonomy is an often-overlooked part of a happy and efficient workplace environment. But unfortunately, many managers struggle with providing their team enough freedom to handle tasks on their own.
In his book, Drive: The Surprising Truth About What Motivates Us, Daniel H. Pink talks about how autonomy plays a vital role in how employees approach tasks, find solutions, and overcome obstacles.
By relaxing the constraints that employees have to work with, you will probably find that they become much more creative and handle tasks better.
And at the same time, your employees will be much more motivated and happier, unlocking their inner creativity and getting real joy from overcoming challenges at work.
The same autonomy can be used when allowing people to work when they want. That means instead of strict working hours, you could implement a more relaxed policy that’s based on trust and accountability for one’s work.
It may seem risky at first, but the rewards for giving employees more freedom and autonomy stretch far beyond improved retention. They have the potential to reshape the entire company’s future.
Find the Right Challenges
As I discussed in the previous section, encouraging employee autonomy can be a powerful strategy. Some companies even encourage staff to spend 20% of their time working on absolutely anything that interests them.
But while that’s definitely impactful, as a company, you also need to have focused challenges if you don’t want your team to lose interest.
Striving towards something meaningful and tangible is something that’s built in the way that we humans function. But as an employer, finding the balance between giving direction and becoming restrictive requires a lot of balancing.
Make the challenges too simple, and your employees will get bored. However, put too much on someone’s shoulders, and they will quickly become overwhelmed and lose confidence.
So, what’s the right approach to keep employees productive and motivated?
Well, a good place to start is by communicating with each member individually about their strengths and areas of interest.
You can then build on those strengths when you set objectives, encouraging employees to get out of their comfort zone and try something new or more complex. This way, employees will feel that they are growing and that they can tackle more complicated tasks each time they start working.
For this to work, it’s essential to treat failures as learning opportunities instead of something to be reprimanded. If employees know they can fail, they’ll be much more willing to experiment, leading to outstanding outcomes and promoting work satisfaction.
You could also combine these challenges with mentorships within the company to share insights and experiences and facilitate growth internally.
Nurture a Creative Environment
Most companies want their employees to be creative. But few actually manage to nurture a creative environment that gets people excited.
One of the best ways to nurture creativity in the workplace is to put employees in a position to be innovators.
By establishing innovation teams and giving them an area to work on, you might be shocked at the amazing results that can be achieved.
For instance, if you put together a team and encourage them to find new ways to provide exceptional customer experience, you could not only fast track the application of industry best practices but might become a pioneer in the field yourself.
Instead of people being stuck in narrow roles related to their position in the company, you can get your teams to take on much broader assignments, master new skills, and develop ideas to propel the company’s growth.
The best part is that this type of environment is incredibly fun to work in. You will find that rumors about the way you organize your workplace will spread quickly, and the most motivated and high-performing people in other companies might start looking for ways to move to the work environment you have created.
If you want to get the most out of what this approach has to offer, you could even reward those that manage to come up with the best ideas or solutions for your company.
However, if you want the rewards to be effective, it’s better to provide them after the achievement and not use it as motivation. It’s better to encourage intrinsic motivation that stems from curiosity and not from wanting to get the reward.
Next Steps
At this point, you probably have a much better idea of how to improve your employee retention using simple but actionable strategies. But even more importantly, these same strategies can have a transformative effect on your entire company.
And as you have probably noticed, money was not part of the strategies I chose to focus on. Sure, it plays an important role, but if you pay a fair salary on-par with what they’re worth, additional financial incentives diminish in their influence compared to working in an exciting and creative environment.
What do you think are the most crucial employee retention factors? And what have you found to be the biggest motivator in the workplace? Share below in the comments!
