It’s no secret that improving retention is often one of HR teams’ most important KPIs. For companies, high employee turnover is costly in more than one way.
Employee turnover is measured as the percentage of employees that leave an organization in a certain period. It can be voluntary, meaning that employees leave of their own free will — usually for another job opportunity. Involuntary turnover refers to the cases in which employees are asked to leave — for example, what we saw seeing happening in Twitter and other big tech companies in late 2022.
To prevent high turnover, companies must first understand why it’s happening. It’s good to be aware of specific industry trends and keep up with the competition when it comes to compensation and benefits. But, more often than not, there are reasons within the company that prompt people to start looking for other opportunities.
Why do employees quit, and what makes them stay? Find out these crucial stats to improve your retention this year.
In other words — you’re not alone! In the last couple of years, the world of work has been shaken by some big changes, like the pandemic and the Great Resignation. The new workplace trends as well as shifts in demand for certain professions made retention a critical priority for HR teams across industries.
It’s no wonder that improving retention is important: turnover is costly, in terms of time and money. Why?
When employees leave, some internal knowledge is bound to be lost. As a consequence, former employees’ colleagues spend more time finding the right information. Team dynamics get disrupted, and more often than not, team members have to take on additional work until a new person is hired, resulting in productivity losses.
Moreover, an HR team needs to spend resources to attract, recruit, onboard, and train new employees. It is no wonder that the average costs to replace an employee range from $1500 for hourly employees to 150% of a former employee’s salary.
Some employees indeed leave for better compensation. Reasons for quitting vary across industries and job roles, but according to a Flexjobs survey, the most common ones besides low salary include:
The meaning behind all this? Well, you can always guess why your employees quit — but it’s better to perform exit interviews and find out for sure. That way, you will know to detect a potential issue in the company and address it before you see more employees quitting.
Growing in their roles is important to employees, especially Gen Z and Millennials who now comprise the majority of the world workforce. Organizations are recognizing this trend, with 57% increasing their Learning and Development budgets since the pandemic outbreak, and 67% of HR Managers reporting increased L&D budgets in 2022.
However, there are many ways we learn in the workplace. HRs with tighter L&D budget constraints can still engage employees by facilitating internal training. Employees can volunteer to hold workshops to transfer their knowledge, thus gaining some public presenting experience and engaging their colleagues. Also, cross-collaborative projects offer good learning opportunities as well as improve team alignment.
Still, performance feedback is the most underrated yet highly effective way to learn. Coincidentally, 63% of employees want more frequent, “in the moment” feedback. Managers and their understanding of the importance of performance feedback, as well as their art of giving one, is crucial here.
Since employees want to — and frequently expect to — learn at their jobs, it’s useful to have a clear growth path that managers and employees can develop together. Not avoiding the subject of career advancement and learning that takes place to get there, can turn out to be an effective employee engagement and retention strategy.
Trust is detrimental to successful organizations. Improving trust between coworkers relies on effective communication, honoring commitments, showing empathy, and more. But here, we’re talking about trust toward leadership: how do you foster it?
According to a Harvard Business Review study, key factors that drive trust in leadership are good judgment, positive relationships, and consistency. Good judgment refers to leaders’ understanding of the technical aspects of work and effective problem resolution. Ultimately, decisions of leaders with this quality observedly contribute to organizations’ results.
Moreover, leaders that can create positive relationships with their coworkers will be more trusted. Inspiring cooperation, showing empathy for others, and successful conflict resolution are how employees evaluate their leaders’ ability to foster positive relationships.
Last but not least, leaders that show consistency in honoring their commitments and keeping promises are trusted more. But, for employees to realize their leaders possess these good qualities and trust them, leaders need to communicate effectively and maintain visibility in their decision-making.
Onboarding is a great example of how first impressions matter. Even though it represents a short period in the total employee journey, it’s the first experience that employee gets working in their new job.
The excitement that a good onboarding can bring is very powerful as it can improve new hire retention by 82%. Remote teams need a well-designed onboarding since they don’t have the opportunity to get immersed in the company culture as on-site workers do.
Here’s what you can do to create a positive onboarding experience:
Let’s face it: flexibility is the new black. 89% of surveyed HR professionals saw an increase in employee retention after implementing flexible work policies.
The recent shifts in remote work policies combined with the candidate-driven job market dictate this trend, and for now, it seems like it’s going to stay. After all, the call back to the offices was one of the main drivers of the Great Resignation in 2021.
While employees experience better work-life balance when working remotely, companies enjoy the freedom to hire talent from a much wider geographical area, thus ensuring the best candidates for the job.
Burnout has been a long-standing problem for US employees. Research shows that two-thirds of workers experience burnout during their careers.
More worryingly, the pandemic and its aftermath had an impact on overall burnout rates. According to the American Psychological Association, 79% of employees experienced work-related stress in 2021, or as the research says, “the stressors introduced with the pandemic are persistent and increase everyone’s risk of burnout”.
One of the biggest problems with burnout is that it gets detected too late by employers. Employees can feel exhausted, lack motivation, and experience health issues. But, employers can only perceive the obvious signs of burnout that employees display, like lack of productivity or decreased quality of work.
As burnout leads to increased absenteeism and long-term disengagement, organizations need to prioritize open conversations about mental health. Taking days off should be encouraged not only with words but by examples from leaders.
Moreover, you can try to detect burnout with psychological assessment surveys like Maslach Burnout Inventory (MBI) and its variants.
Lack of recognition for their work often drives employees to quit. Employees simply want to know that their work is valued.
When employee recognition programs are implemented in the right way, they can create numerous positive outcomes. Being appreciated motivates 78% of employees, and 84% of HR professionals agree that recognition positively affects engagement.
Recognition makes employees confident in their work and helps them understand the impact their work has on their colleagues, customers, or company success. The culture of appreciation can be encouraged by ingraining it into everyday work, for example with these recognition apps that can be integrated with Slack.
Extrinsic motivation for work only goes so far. Maslow’s hierarchy of needs points to the need for self-actualization if all other needs are satisfied. At work, that translates to purpose, and employees are hungry for it.
The purpose of their work is something that employees have to find for themselves because it’s very individual. You can help them find it by showing how their work impacts their colleagues, the company as a whole, and your customers. It is also related to the recognition of work. For example, a simple recognition program that encourages employees to thank each other can help individuals realize how their work impacts others.
Engagement is a complex metric, but its complexity proves that the holistic way of looking at the employee experience is detrimental to retention.
A lot of what we already mentioned is related to engagement — like trust, recognition, burnout, meaningful work, and adequate compensation. But another significant impact on engagement is the most obvious one: your manager.
Acccrding to Gallup, managers account for 70% of the variance in employee engagement. And it only makes sense, since direct managers are often the first ones you talk to about a pay raise or career advancement, and should be the first ones to recognize your work and detect stress.
For HR professionals, this emphasizes managerial training and making sure that managers acquire adequate leadership skills. Mentoring, learning, and growing in their role should be enabled for all employees, including those on managerial and higher levels.
As a final note, an encouragement: companies can prevent ¾ of employees planning to quit!
You can only prevent something if you know it’s going to happen. Surveys, bottom-up feedback, and exit interviews are your allies in this case. Surveys can help you detect popular sentiment in the company and address it before it becomes an issue. You can also learn a lot by analyzing bottom-up feedback that employees give to their managers, and exit interviews.
Chances are, you’ll find your employees longing for better learning opportunities, more work-life balance, or something else mentioned above. Optimizing the employee experience according to the challenges your employees raise is the key to preventing turnover and creating a healthy workplace.