Constant employee turnover often contributes to a company’s inability to meet objectives. Recruiting, hiring, and training new employees costs and demands more resources compared to retaining existing quality employees. A company-specific retention strategy helps to reduce turnover rates and foster loyalty among employees.
According to the Work Institutes 2020 Retention Report, voluntary turnover in the U.S. reached over 42 million in 2019, increasing by 2 million compared to 2018 rates. This equates to 27 out of 100 employees leaving their job voluntarily in 2019.
Reasons to invest in increasing your employee retention:
- Potential employees desire positions with high rates of retention
- Boosts morale in the company
- Maintains indispensable talent and prevents productivity stales caused by employee turnover
- Retaining employees saves money compared to replacing them
Benefit programs, opportunities for growth, and company culture are useful tools to both attract, and more importantly, retain quality employees. Based on the size and needs of the company, different retention strategies will be more effective. Companies must listen to the opinions of the employees to best develop an individualized retention strategy. Regardless of the number of retention strategies utilized, they are only effective if the employees appreciate and take advantage of them.
1. Offer competitive benefits and incentives tailored to your workforce
Going the extra mile to provide employees optional benefits attracts new talent while retaining valued team members. Offering health insurance can set small businesses apart by being a very desirable benefit. With a growing number of customizable health insurance options, small businesses can compete with large companies for talented employees.
Health reimbursement arrangements (HRA) offer a way for employers to offer provide health benefits while avoiding the large expense of providing a one-size-fits-all group plan. HRAs allow employers to reimburse employees for medical costs and/or insurance premiums. Employees choose the plan that best fits their needs while the company supports them at a tax-advantaged rate (the contributions are deductible for the employer and tax-free to the employee). The two most common types of HRAs for small business include:
- The qualified small employer HRA (QSEHRA) applies to companies with under 50 full-time employees. Reimbursement amounts are capped under the QSEHRA at $5,300 ($441.67 monthly) for individuals and $10,700 ($891.67 monthly) to families as of 2021.
- The individual coverage HRA (ICHRA) removes the company size and reimbursement caps. ICHRA allows for more flexibility for employers and can be offered alongside more traditional group insurance to separate employment classes
- Retirement plans
- Telecommuting opportunities
- Gift Certificates
- Offering lunch
- Companywide shout out
- Acknowledging contributions and extra work
Other motivating benefits that can be offered to increase employee retention include:
Not all retention strategies have to be as large as offering health insurance. Low-cost incentives function to show your employees that you care about the extra mile they put in their work. When used relatively sparingly and genuinely, the following incentives can keep employees motivated and fulfilled:
2. Create opportunities for growth within the company
Training opportunities, educational courses, and tuition reimbursement programs prevent stagnation and a sense of unfulfillment among employees. Promoting from within also boosts morale, and employees begin to see the potential for professional growth without leaving the company. If a senior position opens, employers should start the search by looking at their employee base. This offers an opportunity for growth for a star employee, boosts morale among the entire team, and ensures a smooth transition into the new role because the new senior employee is already a vital part of the team.
3. Invest in a company culture that reflects the values of your employees
Trust and transparency from the management team are essential to high employee retention. Open communication allows employees to understand the value that their contribution brings to the company that leads to an overall positive work environment. Team success stories boost morale and create a sense of achievement; discussing challenges allows employees to present unique solutions while getting the team member invested in the success of the company.
A positive and transparent work environment is becoming even more important as companies continue to adapt to COVID-19 restrictions. Working from home makes it easier for people to disconnect from the company and isolate themselves. Encouraging working relationships among team members through the utilization of communication software, company-sponsored events, and other communal options helps foster a sense of community in the company that leads to greater employee satisfaction.
Promoting a healthy company culture requires being receptive to criticism. Understanding the reason behind high turnover rates proves key to improving them. Open communication can help prevent or fix employee grievances before a loss of talent results from them.
Additionally, exit interviews offer an opportunity to understand the pain points when it comes to your company retention rate. Having analytics regarding why employees left will help direct you to where the most vital changes are needed.