There are seven stages to the employee lifecycle, and while many organizations focus on the first two, attracting and hiring new employees, it’s the following five that determine whether you’ll be able to develop and retain top talent once they’ve joined. Of course, many of the factors that influence a job candidate’s decision to accept a new position play a prominent role in their choice to remain with the company. So, what is the cost of employee turnover, how important is top talent when cost cutting is necessary, and what are the best ways to increase employee retention?
The Cost of Employee Turnover
Even amid a global pandemic that caused 114-million people to lose employment, the number of workers quitting their jobs steadily increased throughout 2020. The year before, nearly one in three employees left their jobs voluntarily. Worldwide, more than 50% of employees are actively seeking new opportunities.
As disheartening as these statistics may be, it should come as no surprise. As Forbes pointed out in 2014, employees who stay at companies longer than two years can expect to be paid 50% less over their lifetime. In other words, longer-term employees are ‘punished’ for their loyalty, with 1% to 3% raises each year, while those who jump ship every couple years are rewarded with pay increases of 10% to 50% with each transition.
This is why millennials, the fastest growing segment of the workforce, are particularly prone to job hopping. LinkedIn surveyed more than 10,500 recent job changers globally and found that 66% expected to leave their current job by the end of the year.
For employers, and particularly smaller businesses, each loss can be devastating. According to the Work Institute, employee turnover costs employers between $600 and $700 billion per year.
For individual companies, this often means between six and nine months of salary for each employee who departs — and, for executive positions, the cost can exceed 200% (or even 400%) of an employee’s salary.
Then, there are the additional ‘soft’ costs that aren’t as easily measured, such as:
- Weakened employee engagement and morale
- Decreased productivity, proficiency and efficiency
- Lost intellectual capital
- Strained customer relationships
- Training costs
- Cultural impact
- Reputational impact
The Importance of Top Talent, Especially During a Crisis
With increased costs and decreased revenue due to COVID-19, it may seem like an ideal time to allow your higher-paid employees to leave the organization; however, not only is it never a smart business strategy to lose top talent to your competitors, top talent can be particularly critical in times of crisis.
According to author, lecturer and Forbes Council member Courtney Pace, “In crisis, cut dead weight (underperformers), not your MVPs (top talent)… Top talent are the exact employees you want on your team in crisis.”
As associate vice president of talent, Ms. Pace oversees talent management, development and succession planning at FedEx Employees Credit Association. While she understands “top talent can be high-maintenance… your investment in them pales in comparison to their investment in your company.”
Not only do top-talent employees often “do the tasks of two or more full-time positions,” she explains, they “inspire others to rise to the occasion, work smarter and collaborate more effectively,” increasing their value “exponentially.”
How to Optimize Your Employee Retention, During and After COVID
Whether your staff is working in a single location, in offices around the country or world, from home full time, or partially remote and sometimes on site, the ways you encourage, educate, inspire and empower your employees will dictate the level of their engagement, the quality of their performance, and the length of their tenure with your organization.
Use the following seven strategies to guide you in your efforts at retaining talent in the near and long term.
1. Start retention at recruitment
No one forgets how they were hired, or how they were treated during the recruitment and application process. In fact, according to a study by the Society for Human Resource Management (SHRM), seven out of 10 workers are more likely to stay at their new company for three years or more if they experience a favorable application process. Keep that in mind when developing and implementing your strategies for attracting top talent; just because someone accepts a position doesn’t mean they’re planning on staying.
In addition, while you don’t want to unduly prolong your recruitment and hiring process when you do feel positively about a candidate, remember to “never ever compromise a hire.” The person you select should not only meet all the requirements for the role but share the company’s values, represent an appropriate cultural fit, and demonstrate a commitment to remain with the company for an extended period.
“Retention starts right from the beginning, from the application process to screening applicants to choosing who to interview,” says Dan Pickett, CEO of Infrastructure, a high-tech firm with a higher than 97% retention rate. “It starts with identifying what aspects of culture and strategy you want to emphasize, and then seeking those out in your candidates.”
Then, once you’ve filled the position, you need to create the best first impression with your new hire onboarding process.
As Harry West, Appirio’s vice president of services product management, writes in Entrepreneur, “Ensuring your employees have a positive, engaging onboarding experience is just as important as making sure your application process goes well.”
So, instead of leaving your new hire with a recorded video or online class, provide them with a peer mentor, train your managers to provide ongoing support, and deliver enough resources as part of the onboarding curricula to ensure they can succeed in their new position.
Unlike a new hire orientation, which should take a day or two at most, onboarding can last up to 12 months; what’s important is not how long it takes for your employees to acclimate to their new role and the company culture, but how successful they can be as a result of your onboarding strategies and techniques.
Include a survey in the new hire paperwork, check in with the new hire to track progress, and request survey responses at the end of the onboarding process. This will allow you to measure, iterate and optimize over time.
2. Train your managers to support your retention efforts
From studying millions of managers and organizations worldwide, Gallup has found that “the role of the manager is a dominant factor in the employee experience — from onboarding and performance to development and retention.” In fact, only 15% of employees are engaged at work and one in two have left their job “to get away” from their manager at some point in their career.
While poor managers cost the US economy nearly $400 billion annually, the three in 10 who possess at least a basic talent for management contribute to a combined 48% higher profit for their companies.
Being an effective manager isn’t easy, and it’s the role of human resources leaders and C-suite executives to train mid-level management to create a culture conducive to team success.
Most importantly, this must include:
- Embracing and soliciting feedback
- Celebrating successes
- Intelligent delegating and collaboration
- Maintaining consistency in policies and vision
- Coaching and mentorship
- Inclusion and equity
3. Commit to diversity, inclusion and equity
According to Forbes Insights, “a diverse and inclusive workforce is crucial for companies that want to attract and retain top talent.” Indeed, 62% of employees between the ages of 18 and 34 — and more than half of all employees — believe their company needs to improve diversity, and 67% of job candidates are actively seeking out companies distinguished for their diverse workforce.
Of course, it’s not enough to hire a diverse workforce; if the (diversity of) people you hire don’t feel they are treated fairly and respectfully, are known and appreciated for their unique value, and belong to the group, they’ll quickly become disengaged, damaging employee morale and accelerating turnover.
Furthermore, as Dr. David Rock, a thought leader in the human-performance coaching field, explains, “You can’t eliminate bias simply by outlawing it.”
So, in addition to actively recruiting from a larger, more diverse talent base, you need to evangelize diversity and inclusion across your organization and facilitate radical inclusion and equity by:
- Focusing on intervention (and not only bias reduction)
- Inviting your employees to help the organization better identify points of conflict and possible resolutions
- Focusing on workplace (and not personal) issues
- Keeping the conversation going to maintain accountability
- Providing resources that educate and empower employees
- Staying flexible in content and delivery
To learn how to retain top talent by facilitating radical inclusion and equity in your workplace, download our free guide.
4. Never stop communicating
One of the most common causes of employee discontent is lack of communication, which often stems from top-down decision making with weak downstream channels. Human resources leaders and C-suite executives must make it a priority to consistently communicate objectives, instructions, decisions and opportunities — as well as provide constructive criticism and praise — to mid-level management, and train and encourage managers to do the same for their teams.
To facilitate ongoing and seamless communication:
- Actively strive to create a work environment that encourages open dialogue
- Create avenues for employees to provide suggestions to and ask questions of senior leadership
- Set goals for the month, quarter and year, and hold meetings to encourage and celebrate progress toward these goals
- Solicit formal feedback by distributing an anonymous survey or questionnaire that employees can complete on a monthly or quarterly basis
- At the beginning or end of meetings, inform staff that they can always email with suggestions — and that their input would be appreciated
- Split team and one-on-one check-ins into two segments for reviews and feedback, or restructure them as open-ended conversation aimed at shared success and learning experiences
5. Encourage flexibility
Ninety-seven percent of employees are looking to be a “flexible worker” in the long term, and more than three quarters of workers say they’d be “more loyal” to their employers if they offered flexible work options. In fact, more than a third of remote employees say they’d be willing to take a pay cut of up to 10% to continue working from home, and companies that allow employees to work from home experience 25% less turnover.
So, instead of allowing team leaders to dictate work schedules, create a work-from-home policy, and offer it to all your employees. Then, train your managers to be flexible in extenuating circumstances and accommodate their employees in need.
If the nature of the work performed by your organization does not allow for full-time remote work, create an employee incentive program with additional remote work days as a reward.
To learn how to manage a happy, healthy and successful team at home, download our free guide.
6. Incorporate learning and development into everything you do
It nearly goes without saying that the best way to prevent an employee from finding a better opportunity elsewhere is to offer them that opportunity within. Indeed, hiring from within not only provides a clear path to greater compensation and responsibility for the individual, it improves overall morale and retention by demonstrating to employees that they are valued and crucial to the success of the organization.
Of course, to ensure you’re hiring the best candidates from within, you need to create a work environment that facilitates skills development and professional growth.
As LinkedIn explains in its guide, How Learning Programs Attract and Retain Top Talent, “your organization needs to be a place where people advance their career. It needs to be a place where people are given opportunities to learn new skills and take on new challenges.”
The LinkedIn survey of more than 10,500 recent job changers found that lack of advancement opportunity was the number-one driver of job change. Likewise, 83% of respondents to a survey by SHRM said career advancement was “important” or “very important,” and 78% said a clear career path would compel them to stay longer at their current organization.
To reduce your employee turnover, include stipends and/or paid time off for learning and development in your benefits package, create and implement a peer mentorship program, and integrate learning in every project and task, encouraging employees to learn by doing and always ask questions.
“Investing in your employees’ education can help retain talent and intellectual property at a time when there’s stiff competition for both,” says Kevin Griffin, an IT advisor at Falco Enterprises and former CIO of GE Capital. “The need for new skill sets and evolving roles are in demand at a rapidly growing rate, so putting someone on a career path that doesn’t have any room to develop is not only a career-limiting move for the employee, but a business-limiting move for the company.”
7. Offer the Best Perks, Incentives and Benefits
In a gratitude survey of 2,000 Americans by the John Templeton Foundation, 81% percent said they’d be willing to work harder for an appreciative boss, and 70% said they’d feel better about themselves and their efforts if their boss thanked them more regularly. Happy workers are 13% more productive, so be sure your managers thank their employees publicly for their hard work (and not only for results), develop an incentive program, and reward successes with employee spotlights and creative gifts and perks.
In addition, and perhaps most importantly, provide the benefits your employees want and need. Along with work flexibility and learning and development opportunities, these should include:
1. Mental and behavioral health care
Even before the pandemic, the vast majority of workers believed their employers should have a mental health policy, according to a survey commissioned by Zapier. With COVID-19 and subsequent quarantine efforts creating short- and long-term psychosocial and behavioral health implications, the need has increased dramatically. In November 2020, the National Center for Health Statistics found that 36.3% of adults admitted having anxiety disorder symptoms, up from only 8.2% the year before, and a recent report from Mental Health America indicates that high rates of anxiety, as well as depression, are expected to continue through 2021 and beyond.
2. Paid Sick Leave and PTO
For years, the trend in HR had been to combine sick and vacation days into one PTO bank, but this led to an increase in employees reporting to work sick rather than using one of their days, which increased the spread of illness in the workplace. Now, with worker safety considerations at an all-time high, many employers are:
- Reverting back to distinguishing between sick days and PTO, encouraging employees to stay home when they feel ill (in line with CDC recommendations)
- Offering unlimited PTO, which not only improves employee recruitment and retention but benefits the business by preventing carryover and payouts
- Allowing employees to donate their excess PTO to fellow employees who may need additional time off, improving team morale
3. Telehealth and Virtual Care
As Business Group on Health explains in its 2021 report, “virtual care is here to stay.” When you offer virtual care to your employees, they have 24/7 access to everything they need to stay informed about their health and can make virtual appointments with a variety of doctors and other providers at times that best suit their busy lives.
4. Digital Health
In addition to what has traditionally qualified as telemedicine or virtual care, employers are now offering stipends to employees to invest in other forms of digital self-care. This can include apps for meditation, sleep tracking, meal planning, physical fitness, and even maternity.
The annual fee for most mobile apps is relatively low, and some even offer bulk discounts to businesses, allowing HR departments to deliver significant ROI by demonstrating care for their employees at little financial cost.
Some of the most highly rated wellness apps include:
- Sleep Cycle
- Nike Training Club
5. In-Home Care Delivery
“While the pandemic certainly accelerated the transition away from facilities to home care, the transition has been underway for some time,” Paul Kusserow, CEO and President of Amedisys, told Home Health Care News. “Care in the home is the most economical for all payers. It’s where patients want to receive their care — and it has proven, quality outcomes.”
Especially if your staff is still working remotely, even part time, you will definitely want to consider providing access to this type of care, whether for medical, behavioral or palliative care, or even social services.
6. Family Wellness and Care for Caregivers
A simple concept designed to address an immediate and long-term need, family wellness means extending wellness benefits to employees’ families. At a time when travel outside the home is limited, adults are working from home and children are homeschooling, offering financial assistance and other benefits to the entire family for much-needed stress relief will not only demonstrate your commitment and appreciation to your workers, it may directly impact your workers’ physical and emotional health, as well as their productivity.
As part of your family wellness program, you could offer access to family health coaching, fitness classes, meditation, yoga or massage; kid-friendly online events, and family challenges with prizes; or summer camp stipends.
Care for Caregivers
Since the pandemic began, parents have spent an additional 27 hours per week — or nearly the equivalent of a second job — on household chores, childcare and education, and about 50% feel that their work performance has suffered as a result, according to a survey by BCG.
While on-site preschools and nurseries were once the best employee benefit most workers could receive, forward-thinking companies are investing in alternatives that will allow their employees to regain focus without worrying about their children.
Possible benefits could include more flexibility for your employee, such as allowing them to work early mornings or nights if they are homeschooling their child; extending your paid family caregiver leave policy; providing in-home childcare; creating a childcare referral service with stipends for childcare expenses; and offering a caregiving assistance program that provides online education and support to caregivers.
Post-pandemic, these benefits could apply also to remote workers or employees who work from home part time.
7. Personalized Wellness and Tailored Benefits
Employee benefits allow you to not only attract better recruits but retain your best workers, improve morale and engagement, and build trust and commitment. With startups and other forward-thinking businesses offering more benefits — and more creative benefits — to attract potential employees, the competition has never been greater for HR departments to think creatively about what would improve the lives and productivity and effectiveness of their employees.
Examples should be targeted at your workforce, and could include:
- Student loan repayment programs
- Continuing education and college tuition reimbursement
- Pet insurance
- Summer camps and higher education investments (like 529 plans) for dependents
- Health coaching, on-demand fitness classes or gym memberships
- Meditation, yoga, acupuncture and massage
- Self-care subscription services
- Meal plans and snacks
- Happy hours
- Half-days and mental health days
- Volunteering opportunities
- Commuting travel stipends or car service
- Vacation travel vouchers
- Local one-day or weekend retreats
- Additional holidays like Election Day and Juneteenth
During COVID, simple, cost-effective solutions may include laundry and dry-cleaning services, household management resources, errand running or concierge services, meal plans like DoorDash, and memberships to online and virtual wellness resources.
8. Financial Wellness and Emergency Savings Accounts
It’s well known that the majority of workers live paycheck to paycheck, and approximately 40% of US households would struggle to cover a $400 emergency expense. Needless to say, this produces great financial stress, and according to SHRM, financial stress causes a 34% increase in work absenteeism and tardiness.
Unfortunately, since the outbreak of COVID-19, more employees are financially stressed than ever, whether it’s due to increased medical costs, unforeseen expenses, stock market volatility, a partner losing a job, cuts to pay, raises or bonuses, or simply the fear of becoming unemployed.
To provide financial assistance, you could create payroll-deduction emergency savings accounts or offer student loan debt contributions or tuition fee reimbursements. To reduce financial stress and assist with long-term financial health, you could offer complimentary meetings with financial advisors, host workshops on topics like reducing debt or budget planning, develop a partnership with a company that specializes in employee financial planning, or provide a stipend for digital financial tools that provide on-demand financial advise or customized training and e-learning to improve financial literacy.
Are Your Employees Asking for New Benefits?
The MBL Difference
If you’re looking for guidance on attracting and retaining top talent, there’s no better solution than MBL. At MBL, we are a true partner. We think of our work as building relationships, not as a business transaction. It’s our mission to learn as much about your company and its needs as possible, so we can act as your guiding force. We will share our vast network of carriers, technology and wellness providers, and more, so you can keep your employees happy, attract new talent, and boost your bottom line.