Top 30 Employee Retention Strategies for the “New” Business World in 2023
Hiring the right talents can be difficult, but retaining them is an entirely new challenge. One of the first signs of employees on the verge of leaving a job is disengagement. Therefore, creating a highly engaged workplace where the employees feel valued is highly necessary. And the initial step to ensuring this is implementing competent employee retention strategies.
Let us understand employee retention properly and explore its strategies to help you retain your top performers.
- Basic understanding of Employee Retention strategies and their importance
- What are the 10 eye-opening Employee Retention statistics
- What is Herzberg’s Two-Factor Theory
- A clear understanding of an Employee’s Life Cycle
- What are the main drivers of Employee Retention?
- A detailed list of innovative Employee Retention strategies to improve employee retention
What is Employee Retention?
In simple words, employee retention is the effort taken by an organization to hold on to its most prized asset - the employees! Moreover, a low or high employee retention rate directly impacts the company's overall business.
It is also essential to know and manage your company's employee turnover rate if you want to stay in business for the long haul.
Consequently, to manage and avoid high turnover, retaining key employees becomes a crucial element.
It is also an excellent practice to implement a data-driven staff retention strategy rather than firing point-blank. I recommend keeping an eye on the employee retention rate periodically- half-yearly or quarterly.
Importance of Employee Retention Strategies
Employee Retention is crucial to an organization’s growth and success. The strategies of employee retention have their fair share of importance that adds weightage to the fruitful journey of an organization.
Let us take a glance at the importance in the section below.
Employee retention is the surest way to ensure cost reduction. Retaining employees significantly costs less than constantly recruiting and training new ones.
Losing out on experienced employees leads to a huge loss of institutional knowledge, skills, and relationships that exists within the organization, customers, and partners. Hence, retaining senior and experienced employees will make your organizations see significant returns as they undertake and master complex issues independently, benefiting the organization.
Retention is a vital means to maintain and enhance customer service and satisfaction. Experienced employees develop a smooth rapport with customers over time. Losing out on them might weaken the rapport with customer service, as the new employees might take time and be less adept at problem-solving.
Retention builds the morale of the employees. Witnessing limited turnover creates a sense of loyalty and teamwork among the employees. They feel their work is valued and get further motivated to work harder.
10 Eye-opening Employee Retention Statistics You Should Take Note of
Employee retention and employee engagement are interrelated to each other. Employees who receive the growth and exposure feel motivated. They feel motivated and satisfied with their work and thus remain with the company.
Here are some eye-opening employee retention statistics that will give you a reality check of the workforce.
Herzberg’s Two-Factor Theory
Frederick Herzberg's famous "Two-Factor theory" explains the relationship between employee retention and employee motivation.
According to him, two sets of factors influence motivation in the workplace. These factors either enhance employee satisfaction or hinder it.
First is the hygiene factor, which refers to factors enabling motivation at a workplace. Hygiene factors are the physiological needs that the employees expect to be fulfilled. The absence of these factors leads to employee dissatisfaction.
The second is motivators. Herzberg says employee motivation is dependent on the conditions of the job itself. These factors motivate the employees to perform better.
Some motivational factors are responsibility, job satisfaction, recognition, achievement, opportunities for growth, etc.
But do you know what makes an employee quit? And what makes them want to stay with the company?
Before we dive into this, let me give you a quick glimpse of the Employee life cycle and where the retention takes place.
Employee Life Cycle
The first stage is when the company tries to attract potential candidates for the job. They gather a pool of applications for the next step, i.e., the recruitment stage. The most suitable candidate is then selected through the recruitment process. Then they are put under the orientation and onboarding process.
After that, they enter the development stage, where they are trained and honed for their respective roles. Once they are fully qualified, keeping them motivated and intrigued with new challenges and roles becomes crucial. It will help them upskill in the development stage.
(Note: If you want to explore further, you can refer to this brilliant article on the Employee Life Cycle.)
But, there comes a time when the employee feels there is no room for further development in their current job. It is then the employee reaches the retention stage. This is where the employer tries to figure out how to retain employees with new ideas for staff retention policies.
But having said that, lack of development is not the only reason people decide to move on from their current jobs. Sometimes the reasons are apparent. It goes in complete contrast to what you think it is!
I have a friend who recently got married. She was a long-time employee in her company. So, they sponsored her whole honeymoon trip as a part of their "talent retention strategy." But she was already planning to quit after a few months because of her micromanaging boss.
So before you start medicating the illness, it makes sense to diagnose the problem, isn't it?
So What are the Main Drivers of Employee Retention?
Deciding to leave a job is difficult enough for almost everyone. It takes a lot of thinking and mapping out every possibility before taking this big step.
The reasons why employees quit their jobs can be both professional and personal. As for personal reasons, the employee can choose to disclose it or keep it confidential.
Here are some of the critical drivers of employee retention that make your employees stay:
- Healthy work environment
- Rewards and recognition
- Scope for growth and development
- A healthy relationship with the manager
- Competitive compensation
Here is a brilliant article about the 3 mistakes that force employees to leave. All three mistakes have to do with the management.
So once you can get a fair idea about the cause, only then you can buckle up with your best employee retention strategies!
You can also check these Top Employee Retention Factors that drive an employee to look for other opportunities.
Innovative Employee Retention Strategies to Improve Employee Retention
It is no secret that the covid-19 crisis brought about a jolt in the corporate world by undergoing a reset. The number of remote jobs has witnessed an increase since then, and company culture has taken a 180-degree turn. According to CNBC, 1 out of 4 Americans worked remotely in 2022.
The “work from home” queries in Google US, grew by +309% in March 2020 vs. 2019. Also, with the rise of the gig economy, retaining millennials and Gen-Z workers is difficult. According to a Forbes report, 49% of millennials would quit their jobs in the next 2 years.
Retaining your people post-pandemic might not be possible with your pre-pandemic measures. You need to constantly stay on your toes to keep ahead of the game, especially after Covid-19.
Thus, to help you in this war of talent, I have listed down some creative ways on how to retain employees.
Culture & Environment
1. Hiring for Cultural Fit
People can develop skills and expertise. But hiring someone keeping your cultural values in mind will result in more loyal and engaged employees. New hires can blend in with the team quicker. They feel comfortable and can contribute faster.
80% of employee turnover is due to bad hiring decisions. One should try to go beyond the textbook interview questions and think out of the box.
Ask questions that are related to your company values. Explain how the role correlates with the values. It will help them to get an idea about what is expected of them.
2. Diversity and Inclusion
The pandemic stirred up a hornet’s nest against the Asian community and people of color all around the world. Thus, you need to emphasize building a more diverse and inclusive workplace culture more than ever.
Guardian reported that 68% of American workers strongly agree that it is important for an employer that creates an inclusive workplace culture. A workplace that identifies and respects people from all backgrounds and sexual orientation will definitely retain and attract more talents.
Small changes like removing gender-coded signs or having a multi-faith prayer room for religious observance can be introduced. It is a solid way to improve your employee retention policy.
3. Clean and Hygienic Workplace
Last but not least, hygiene is the topmost important factor in any work environment, especially after the pandemic,
It may seem obvious, but a clean and tidy work environment facilitates employee well-being and safety. No matter what line of work you're in, you need to make your workspace clean and comfortable if you want your employees to be productive.
If your employees feel safe and secure in their work environment, they'll be more productive and efficient.
I hope the above employee retention strategies will help you in making your workplace a great place to be in.
Work Experience and Flexibility
4. Hybrid Workplaces
Flexible working arrangements have become one of the top things people look for in a new job. It became an expectation rather than a benefit.
Hybrid Workplaces have become a hot topic ever since the lockdown. It is the option to work in the office or work remotely according to one's convenience.
74% of the US workforce are willing to quit a job to work remotely. 31% would like to work remotely, but their company doesn't allow them to do so.
Yet, some employers are not entirely all-in with the idea of a virtual workforce. But the option to work remotely can be a win-win situation for both employees and employers.
Employees save time and money in commuting. They have improved work-life balance and fewer distractions. Moreover, it's a much safer option to work from home. On the other hand, employers can save infrastructure costs, overhead costs, avoid office politics and reduce absenteeism.
The best part is that there is no geographical constraint in hiring people. So, you get access to a bigger pool of talent.
5. Reduced Workdays
Yes, you heard it right! Stanford University conducted a study on a bunch of American employees. They found if a person exceeds 50 hours of work in a week, their productivity sharply decline.
Typically, people who work extra long hours or leave the office last are seen to be more dedicated and productive. Let's look at two scenarios.
Employee 1 does not take any breaks (except for lunch). They finish their tasks and decides to leave after 6 hours of work.
Employee 2 takes 10 minutes of cigarette breaks now and then, and engages in "coffee machine" chats. Then they finish their tasks and decide to leave after 8 hours.
Both the employees have fulfilled their daily obligations but at different times.
Alex Soojung-Kim Pang vouches for the same in his book “Rest: Why You Get More Done When You Work Less.”. He mentions that the state of being “busy” does not necessarily mean effectiveness. It is instead an obstacle to success.
6. Maintaining Work-Life Balance
11% of workers have refused a new job due to a lack of good work-life balance opportunities. Especially for new parents, having considerable family time is a priority.
To take pressure off employees, share the workload, allow work from home, and practice flextime.
When you’re gone, would you rather have your gravestone say, ‘He never missed a meeting’? Or one that said, ‘He was a great father'.
7. Rewarding Efforts, and Not Just Results
It is easier to measure results than the effort taken to get that result.
We all have been in situations where we worked really hard to get that sales deal or reach those numbers. In contrast, a colleague gets it at the snap of a finger. Not because we are less competent but because things don't always go according to our plans.
Companies must empathize with the ground reality and recognize their efforts.
A great example of this is how a US-based company, Next Jump. They have decided to reward employees based on how much they have helped their coworkers.
So, it's time to recognize and reward hard work rather than just appreciating results!
A workation, also known as a workcation, is an employee-friendly trend that makes your company stand out in the talent acquisition game. It happens when you combine "work" and "vacation."
Latest report shows 75 million U.S. employees (56% of the U.S. workforce) work in a job that allows remote work because of COVID-19.
Workation helps you define your culture and gain a competitive edge. If you want your business to be attractive to employees, communicate that you care for them and, in return, will make them love their jobs. A unique working environment can be a unique differentiator when improving your staff retention strategy.
Recognition and Engagement
9. Rewarding & Recognizing Employees
Sometimes, your employees expect more than a thank you or a pat on the back. When they fulfill their goals, rewarding them to congratulate their efforts is important. Some ways to reward your employees and employee recognition are corporate gifts, point-based reward systems, performance awards, etc.
You can also check our innovative rewards and recognition platform right here!
10. Creating a Culture of Peer-to-Peer Recognition
You know your staff retention strategies are working when your employees trust and believe in each other. When they value each other, they will help each other and work as a team. This will lessen internal conflicts, and create a culture of peer-to-peer recognition.
11. Appreciating your Employees
Every employee wants acknowledgment and recognition for their work . Appreciating your employees for their efforts and achievements goes a long way in making them feel valued. Employees who feel a sense of belonging tend to be more loyal.
Some meaningful ways are through handwritten thank you notes, peer-to-peer recognition programs, etc.
These factors motivate and encourage an employee to contribute and excel.
Recommended Read: 33 Amazing Employee Appreciation Ideas
12. Celebrate Employee Tenure with Service Yearbook
A service yearbook is an excellent way to recognize and reward your long-term employees for their years of service. It is a great addition to your company culture, aiding in creating meaningful employee experiences. Employee experience results in more employee engagement which ultimately affects talent retention.
Employees feel valued and appreciated for recognizing the time and hard work that they have put into your organization.
The service yearbook from Vantage Circle gives a unique way of celebrating work anniversaries in a personalized yearbook format.
13. Employee Health Insurance
Health is wealth, indeed! Especially after the Covid-19 outbreak, health is the top priority for everyone. Both our physical and mental health had been tested amidst the global lockdown.
You can give your employees more than just sick leaves and free health checkups. Recently, LinkedIn gave its employees a mental week off to cope with burnout.
Apart from that, make sure there are strict safety protocols for a hygienic workplace. You can have a comprehensive health plan for your employees' overall wellness. Your health plan can include meal tracking, fitness tracking activities, etc.
Providing health insurance is another excellent way to take care of their wellness.
14. Providing Financial Wellness Programs
Owing to the Covid-19 situation got many of us worrying about our financial situation. With unexpected medical bills, family members getting laid-off, or having salary cuts, employees need support more than just a job.
8 in 10 employers believe that financial wellness programs deliver more loyal and satisfied employees. This subsequently results in improved employee retention.
A financial wellness program is subjective in nature. It should be tailor-made to suit the personal finances and goals of each of your employees. Some employee financial wellness benefits to include are:
- Retirement plans
- Student loan repayments
- Flexible paydays
- Personalized financial advice programs
Recommended Read: Financial Wellness Benefits: Why you should care?
Compensation and Benefits
15. Providing Monetary Benefits
One of the major reasons that make employees quit is the lack of compensation. To avoid this, you can give fair and just appraisals to every deserving candidate. A salary hike is another way to retain top performers. Your workforce would be demotivated if they do not receive the proper benefits.
Thus, leaders should build a competitive benefit package such as:
- Salary hikes
- Health benefits
Recommended Read: A Quick And Simple Guide To Compensation Planning
16. Creative Ways of Compensation
According to a survey conducted by Glassdoor, 35% of employees said that they would quit a job for better compensation.
Of course, a family lunch coupon, a care package, etc, sounds nice. But you must think beyond these short-lived delights. It shows that you are invested in your employees’ growth as much as your company’s growth.
There is also a notable increase in US employers choosing to pay in Bitcoins. Twitter CFO Ned Segal said that they are considering Bitcoins as a mode of payment to both their employees and vendors.
Considering the highly volatile cryptocurrency market, I agree it is a bit controversial.
If you are a small to medium-sized organization, consider giving virtual rewards to your employees. Some are online gift cards, Spotify or Netflix subscriptions, and more!
Other than the above, keep yourself in the shoes of your employees. Think about how you would like to be compensated!
Here are some excellent compensation ideas, in case you need some help!
17. ESOPs (Employee Stock Ownership Program)
ESOPs (Employee Stock Ownership Program) is an excellent way to compensate your employees as a bonus or incentive. Making the employees become your company's stakeholders helps them stay invested in its performance.
From an employer's perspective, it is an excellent way to maintain liquidity. But it may not be the best option if your company is struggling. Instead of motivation, employees can feel quite the opposite with the ownership.
Some other versions of employee stock ownership include Phantom Stock Plan, stock appreciation rights, and direct purchase plans.
18. Sabbatical Programs
Sabbatical programs are a great way to retain top talents. It shows that you appreciate your long-term employees' hard work and service. The company's leave policy states that sabbatical leaves can last six weeks or more.
Employees can benefit a lot from a sabbatical leave. They get a chance to develop new skills and work on their passion project. Some are just happy to spend quality time with their loved ones.
You can also organize a mental week off for your remote employees, if not for a month.
It is found that employees come back much motivated and refreshed after a good long break.
19. Profit-sharing Plan
A profit-sharing plan is a type of plan used by employers to distribute a portion of a business's profits to employees.
When employees are given a piece of the pie, they're more motivated to go the extra mile.
A profit-sharing plan is a great way for organizations to share profits with employees meaningfully. It can help retain valuable talent, incentivizing people to work harder and better over the long term.
Communication & Feedback
20. Encouraging Open Communication
You can foster an environment where employees are unafraid to voice their opinions. In other words, they need a workplace where they can freely express their ideas and express their concerns.
An “open-door policy” is one of the most effective communication strategies to establish a culture of transparency and trust. It shows that you're always available to listen to their views.
21. Practicing a Feedback Culture
Regular feedback and suggestions can help you stay connected with your employees. Covid-19 had different levels of impact for everyone. Some struggled to keep their work and personal life separate. And some went through workplace loneliness, anxiety, and stress.
During these difficult times, you must empathize with your workers and keep a check on them. This helps you to get the pulse of your workforce.
Communicate as often as possible. Ask them what are the virtual work challenges they are facing. Let them know what’s on your mind so they feel they are not alone in this.
This will increase their loyalty and trust in your leadership style and company.
There’s feedback on the work. There’s feedback on the individual’s performance. And there’s feedback on how the individual’s doing in their career.
-Shell M Phelps
22. Developing Orientation Programs
Good managers always keep their employees informed. They clearly explain the policies and expectations of the employee from the beginning. Furthermore, orientation programs help employees to understand how to contribute and excel.
Remember to also include a cultural induction as well. This will help the new hires understand your core values and culture.
23. Conducting Exit interviews
Sometimes letting go of an employee is inevitable. Hence, conducting exit interviews just before an employee is about to leave is very crucial.
It is, however, equally important to back up such an interview with a list of effective exit interview questions.
An exit interview is asking a departing employee about his/her experience at the company. This process can help throw light into things like toxic management practices, departmental conflicts, etc.
Growth & Development
24. Shaping their Growth and Development
One of the most crucial employee retention strategies is helping employees achieve their short-term and long-term goals. It shows that you are invested in their future just as they are. Most millennials and Gen-Z workers will choose a lower-paying job if they see development opportunities.
Therefore, designing in-house corporate training programs for employees can advance their professional development. Other methods include encouraging them to attend conferences, industry events, etc., which can increase employee retention strategies.
25. Altering Work Responsibilities
Doing the same work becomes boring and tedious.
In that case, don't make employees stick to their laid down responsibilities. Involve them in various tasks and allow them to work with other departments. This will help generate better ideas and improve coworker relationships. It will also make them more skilled and advanced in their professional development.
You can also try to encourage creativity and give them an opportunity for their personal growth too!
For instance, Google’s 80/20 program allows its employees to work on any side projects of their interest.
26. Staggered Work Shifts
Staggered work shifts can aid in a more socially distanced workplace. The idea of a company having staggered working hours is that the employees do not arrive or leave the office at the same time.
Staggered work shifts existed before the pandemic but they became more popular later. Besides maintaining social distancing, it can also help avoid peak office rush hour and heavy traffic.
27. Engaging in CSR Programs
Reports show that millennials and Gen-Z workers are more inclined towards social responsibility. They believe in giving back to the community. Especially in times like this, people value empathy.
Contributing to society and helping those in need are feel-good factors. It inspires loyalty and engagement in your people. A CSR initiative where the workers can contribute their participation is an excellent employee retention idea. It will go a long way in creating effective employee engagement.
Since physical team activities are impossible, virtual CSR activities are a much more workable option. You can organize activities such as virtual charity bingo. There are also some activities that you can do individually or remotely, such as planting trees, cooking for a cause, donating to pandemic-hit communities, etc.
It fosters a sense of fulfillment and team bonding.
Management & Leadership
28. Bonding with Employees
It’s no secret that employees don’t leave jobs but their managers. A good manager works continuously to nurture their relationship with the team members. Above all, bonding with employees outside work is as important as inside the office.
Team lunches, group treks, and excursions are some methods to celebrate employees. Celebrating even their achievements- a new house, marriage- will deepen your bond.
29. Initiating a Mentor/Buddy Culture
Most people don’t like to be micro-managed. Most people don’t like to be managed at all!
Clint Pulver is the founder and president of the Center for Employee Retention. He believes in leadership that helps, encourages, and supports their employees. In his book "I love it here", he tells us how mentorship over old-school management techniques is better. And, how it can totally transform an average employee into a high performer.
Assigning a mentor or a buddy to a new employee is also a great onboarding idea. The newcomer can learn about their work and the existing techniques from his mentor. Moreover, a new employee can offer a fresh take on things. As a result, this will help generate creative and innovative ideas.
30. Virtual Team-Building Activities
Working in a virtual environment can be difficult for some employees. You might think that working from home or other remote locations would appeal to all workers. But, the ability to work virtually, like in an office setting, is not for everyone.
As a result, most remote employees feel isolated from their co-workers. They can't fully immerse themselves in the company's culture. Thus, virtual team building becomes necessary, and it often plays an important role in talent retention.
These activities are carried out by management to improve group processes and interactions and increase employee engagement and morale. It also develops better working relationships between employees.
By now, you must be clear that retaining top talent requires a strategic focus on employee needs. Organizations can boost retention by fostering engaging workplace cultures, providing growth opportunities, recognizing contributions, embracing flexibility, and building trust. Making employees feel valued and invested ensures strengthening organizational agility and success.
Therefore, it is your turn to make your call and implement these strategies for your desired outcome.