Smart Strategies to Improve Employee Retention

In order to grow your business, you have to rely on competent people. That means you need to find ways to retain talent.

If it hasn’t happened already, at some point one of your employees will leave your business. You might receive a thorough explanation, but most of the time you’ll only get a vague excuse.

On the surface, you understand that people change jobs for lots of reasons – most are perfectly reasonable. But as a business leader, turnover is frustrating for three reasons.

  1. Now you have to spend time and money hiring and training someone new.
  2. Productivity will be suppressed during the transition.
  3. Plans you made around that employee have to be abandoned.

Take it from a human resource expert: “Failing to retain a key employee is costly to the bottom line, in addition to organizational issues such as training time and investment, lost knowledge, insecure coworkers and a costly candidate search aside.”

You can’t expect your employees to stick around forever, so you have to take retention seriously.

Free download: Checklist: Encourage Your Employees to Stick Around

Create opportunities for growth

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In most cases, your employees are looking to grow in their positions and expand their careers. They want more responsibility, more authority, and, of course, more money. They don’t expect these things for free (well, most don’t), but they want the opportunity. If they can’t move up, they’ll move on.

Unless you’re a large company with a well-defined organizational hierarchy, you won’t have a clear growth path. You can’t commit to salary growth charts. You can’t point to a manager and say “When he moves up, you can take his job.” This makes creating growth opportunities a challenge because even you don’t know the next step.

The growth problem is especially difficult if your staff is composed of millennials (people born between the early 80s and 2000). Millennials have a notorious reputation as job hoppers and it’s not without merit.

A survey by Deloitte explains the situation well: “During the next year, if given the choice, one in four Millennials would quit his or her current employer to join a new organization or to do something different. That figure increases to 44 percent when the time frame is expanded to two years.”

By 2020, 66% of millennials hope to have moved to a new position. Only 16% see themselves working for their current employer for a decade or more. This lack of loyalty is a challenge every employer should account for, because millennials are the largest segment of the workforce.
So what’s the solution?

1. Provide lots of career and professional development

The best employees want to growth their skillset and become better at their job. You raise the chance of keeping employees if they feel like you’re investing in them.

Send your team to training seminars, workshops, conferences, and meetups of similarly talented people. Give each team member a budget for training. Tell them to suggest a learning opportunity within the budget for your consideration. You get smarter employees and they get to control their growth. This can be a big perk for some people, like database administrators who can attend a conference on a cruise boat.

2. Set a trajectory for financial growth

Everyone wants to make more money. We tell our teams that we want their loyalty, but if you told them they wouldn’t earn a penny more than they do now, they’ll quickly find new work. People aren’t entirely motivated by salary. In fact, there’s a tenuous relationship between compensation and satisfaction, but no one likes a lack of growth.

You may not be able to say “Do X Y and Z and you’ll a raise,” but you should be able to set conditions for financial growth. Tell your employees what has to happen within the business for them to earn more money.

For instance, you might say something like “Once we pick up new accounts worth $200,000/year, I can give you a 5% raise.” This approach not only makes it clear that financial growth is obtainable, but it ties the employee’s performance to your goals. In this example, the employee is going to look for ways to bring in new business because it affects his income.

Develop the right culture

Image: TopRank Marketing / Flickr
Image: TopRank Marketing / Flickr

Your organization’s culture is an intangible quality that’s critically important to your team. Sadly, many organizations neglect to foster a culture that’s healthy and aligned with their business goals.

Your culture should emphasize the significance of each employee’s contribution. A team member should feel involved in the company’s progress. They should feel engaged, which has numerous benefits. They want to believe they are a part of something, not just an easily replaceable cog in a machine.

Making your employees feel valued is easier said than done. 68% of employees don’t feel like their contributions have significant purpose or impact on their companies.
Fortunately, company cultures are far easier to manufacture in smaller organizations. They can be influenced quicker and the results are realized sooner.

1. Hire the right people

The easiest way to foster a desired culture is to hire people that fit. They don’t need any special training, coaching, or readjusting. During your interview process, ask questions that gauge applicants in areas that relate to your values. For example, if your company values impeccable customer service, ask applicants how they would respond to certain customer scenarios.

2. Squash gossip right away

CEO Matt Ehrlichman says “[Gossip] is the antithesis of transparency and collaboration.” Even if it’s not cruel, gossip erodes the company culture. Over time, people build cliques. These groups reinforce their own comfort by putting down other people, which prevents relationships from forming based on goals and accomplishments

3. Discipline/coach consistently

Poor behavior has to be addressed, especially if it violates a written policy. “If behavior doesn’t improve with the individual in question then some may assume the behavior is considered an acceptable way to deliver results,” says Tim Kuppler, Director of Culture and Organization Development for Human Synergistics.

Furthermore, don’t punish competent people who violate minor policies. Be willing to judge the spirit of your rules, not the letter, especially in cases where the employee’s actions serve your goals. For example, let’s say an employee resolved a customer problem with a solution that ordinarily would have required your approval. If the employee made a judgement call because the customer was irate and you weren’t around, don’t write them up for violating a policy when they actually saved the account.

4. Create a transparent environment

Like I said earlier, people want to understand their own contribution to the business. Make your company goals and strategies available so everyone understands the plan. Empower them to work without being micromanaged. Give them access to your time.

Use this checklist to position your business to retain your talent.

Figure out why

Most importantly, determine why your employees leave. Do they feel under-compensated? Do they dislike their coworkers? Do they feel stagnant with nowhere to grow? Do they just hate the desk chairs?

You can’t craft a retention strategy until you figure out why people leave. You won’t be able to respond to many of their reasons. You can’t reduce their commute, pay them double, or switch industries. But some might give some feedback that helps you improve overall retention. The best way to gather this information is through exit interviews after the employee has committed to leaving.

Finally, put your retention strategies in place before people exit. Talking someone off a ledge is pointless in nearly all cases. Once they’ve decided to go, there’s little you can do to stop them. You have to be proactive.