Employee retention is a powerful determinant and indicator of a company's overall health. High turnover is not only hard on employee morale, but also harmful to growth and profitability.
There is a real and significant cost associated with losing knowledgeable employees and onboarding new ones – hiring a replacement can cost up to two times as much as an existing employee's salary. In other words, struggling to hire and hold on to promising employees can really hold your company back.
There are several reasons your company may be dealing with poor retention. Here are some of the most common we encounter in the field.
1. Your salaries aren't competitive.
Unemployment is currently the lowest it's been in 50 years, and this trend is putting upward pressure on wages. Employers are already stepping up their recruitment efforts to fill lingering vacancies and lure top talent away from competitors with appealing offers. As a result, some companies may need to re-examine what they're paying their employees to make sure they're staying competitive in this market.
2. Your mission isn't clear.
If your business doesn't have a mission statement, it's time to establish one. We recommend creating this mission in collaboration with your staff to encourage unity. This is the credo you and your employees will work and live by during business hours. It's the core set of values and intentions your staff will circle back to when the going gets tough. Your mission should remind your staff of their purpose and motivate them to reach their next milestone. This will help them stay enthusiastic and engaged after their first week, month, and year with the company.
3. There seems to be no room for growth.
Some employees may start out strong, but after a few months, their productivity may begin to wane. Often, this is due to a loss of motivation after the initial excitement of onboarding. Be sure to give your employees opportunities to grow and clearly defined goals to reach. Provide hands-on training and constructive feedback as well as praise and recognition. What your employees want most is to move forward on their chosen career path, and as their employer, it's important to help them sustain that ambition and momentum.
4. You've made some bad hires in the past.
Every hire has the potential to impact your company's short and long-term success, so it's important to make those decisions thoughtfully. A thorough and comprehensive interview process will help you hire more confidently. Make sure that the person you are interviewing is not only qualified, but also passionate about your line of work and committed to long-term growth. Just because an applicant looks strong on paper does not mean they are the right fit for your company culture.
5. You're not encouraging cohesion.
Happy employees work harder than unhappy ones. Encouraging your employees to bond with their coworkers and enjoy what they do drastically increases the likelihood that they will stay with your company. There are numerous ways to support your team's happiness and work-life balance, such as offering flexible hours, volunteering with local charities, doing team-building exercises, and setting aside time to celebrate milestones and achievements.
6. You're forgetting to ask why.
Sometimes, employees decide to leave for reasons that have nothing to do with the company itself. Life happens, and your employees could be dealing with a variety of problems outside the workplace. Don't pry, but don't forget to respectfully ask why and offer help if the issue can be mitigated or resolved. In some cases, there may be nothing you can do as an employer. But facilitating open communication can sometimes make the difference between losing a great employee, and retaining them with reasonable accommodation.