With the COVID-19 pandemic causing so much upheaval, it’s more important than ever to make sure your team is happy and productive.
If you’re like most business owners, you’re always looking for ways to improve staff retention and reduce turnover. It can be costly and time-consuming to constantly hire and train new employees, not to mention the talent shortage currently facing Australia. With our unemployment rate is at an all-time low at 4.2% there are some real challenges ahead for businesses.
Now more than ever, it’s important to focus on retention strategies that will keep your staff happy, engaged and most importantly employed by you.
The cost of employee turnover
In times of the Great Resignation and a talent shortage in Australia, the cost of employee turnover is high. The cost of replacing an employee can be significant and can include advertising costs, interviewing and selection costs, training costs, and lost productivity. In times of talent shortages, it can be even more difficult to find qualified employees, which can lead to even higher replacement costs.
According to a study by the Society for Human Resource Management, the cost of employee turnover can be significant. The study found that the average cost of turnover for a company is one-third of an employee’s annual salary. This cost includes recruiting and training new employees, as well as the lost productivity of the departed employee.
Another study, conducted by CareerBuilder, found that the cost of replacing a salaried employee can be as high as 213% of their annual salary. This study also found that the average cost of replacing an hourly employee is 116% of their annual salary.
Reducing turnover starts with understanding why employees leave in the first place. Once you know the reasons behind voluntary departures, you can start to put retention strategies in place that will address those issues.
There are a number of reasons why employees may leave their jobs, but some common ones include:
- Poor management
- Lack of career advancement opportunities
- Unclear job expectations
- Poor work/life balance
- Lack of flexibility
- Poor benefits
- Toxic work environment
If you can address these common issues, you’ll be well on your way to reducing turnover in your organisation.
The benefits of retaining employees
There are a number of benefits to retaining employees, including:
Reduced costs
As we mentioned above, turnover can be costly for businesses. By retaining employees, you can save on the cost of recruiting and training new hires.
Increased productivity
Happy and engaged employees are productive employees. When your staff is content in their roles, they’re more likely to be productive, do good work and contribute to your bottom line.
Improved morale
A high turnover rate can lead to low morale among your remaining staff. This can have a negative impact on productivity, quality and service.
By improving staff morale, you can improve your bottom line and create a positive, engaged and productive work environment for your team.
So how do you go about improving staff retention? Let’s take a look at five strategies you can use.
Strategies to improve staff retention
Be Adaptable
COVID-19 has had a significant impact on Australian workplaces and changed the way we work forever!
In 2022, businesses will need to be even more adaptable with their staff retention strategies. With the rise of remote work and flexible work arrangements, employees are no longer as tethered to their jobs. They can now work from anywhere, at any time, which gives them a lot of choices when it comes to their careers.
To retain employees, businesses will need to offer a range of flexible work arrangements, including remote work, part-time work, and job sharing. They’ll also need to create a workplace culture that supports work/life balance. This could mean giving employees the freedom to work when it suits them.
Employers will also need to focus on career development opportunities for their employees. In a world where people can move around more easily, businesses need to offer opportunities for advancement to keep their employees engaged.
In the words of Richard Branson: “Train people well enough so they can leave, treat them well enough so they don’t want to”.
Offering flexible working arrangements and benefits
In a post-pandemic environment, offering flexible working arrangements and benefits can be one of the most effective ways to improve staff retention. When employees have the ability to work flexibly, they’re more likely to be content in their roles. This can lead to increased productivity and engagement.
Benefits are also an important factor when it comes to staff retention. Employees want to feel trusted and valued by their employer, and benefits are one way to show them that you care. For example, if an employee needs to pick up school-age children and log off at 3 pm but may log back on after the kids have gone to bed. The emphasis is on getting the work done not the normal 9-5 mandatory hours or traditional workplaces.
Creating a positive work environment
Another key retention strategy is to create a positive work environment. This includes things like having a clear and concise job description, setting expectations, providing feedback, and offering opportunities for growth and development.
According to research from the University of Warwick, happy employees are 12% more productive than unhappy employees. In addition, research from the Gallup Organization has found that companies with a highly engaged workforce have a turnover rate that is half of those with a low engagement rate.
Improving communication
Communication is key in any organisation, but it’s especially important when it comes to retaining employees. Make sure you’re keeping your staff updated on company changes, goals, and objectives. You should also encourage open communication so that employees feel comfortable coming to you with concerns or suggestions. Booking in time to have ‘stay interviews” to truly understand the motivating factors for your employees and what you can do to meet their needs. The days of a “one size fits all” approach is gone.
Providing training and development opportunities
As mentioned above, investing in your employees’ development is a great way to show them that you’re committed to their growth and career progression. Additionally, we need to train our managers to think differently post-pandemic, and training and development not only helps our employees but our leaders to adapt to this new world of working.
A study by Development Dimensions International (DDI) found that 73% of employees who received developmental opportunities were more likely to stay with their organisation. In addition, the study found that those who received developmental opportunities were more likely to be engaged in their work and perform at a higher level.
Giving employees a voice
Finally, it’s important to give employees a voice in the organisation. This includes things like conducting regular engagement surveys, holding team meetings, and having an open-door policy.
But remember it is important to follow through. By implementing some of these retention strategies or explaining the reasons why it is not viable (make sure you have a good reason) you can improve staff retention and reduce turnover in your organisation.
How to measure the success of your retention strategies
It’s important to track the success of your retention strategies so you can gauge their effectiveness. There are a number of ways you can measure retention, including:
Stay interviews
Stay interviews are conducted with employees to understand what they value in a job and how the company can meet their needs. Results then inform HR strategy development and employee communications.
Attrition rates
Tracking attrition rates is another way to measure retention. Attrition is defined as the rate at which employees leave an organisation. By tracking attrition rates, you can see whether your retention strategies are working or not.
Other HR metrics
There are a number of HR metrics you can use to measure staff retention, including turnover rate, voluntary turnover rate, and replacement rate.
By tracking these metrics, you can get a clear picture of your organisation’s retention rate and identify areas where improvement is needed.
No matter what method you use to measure retention, it’s important to track the success of your strategies so you can make adjustments as needed. By improving staff retention, you can improve your bottom line and create a positive work environment for your team. So what are you waiting for? Implement some of these strategies today and see the difference it makes in your organisation!
The future of employee retention
The future of employee retention is uncertain, but there are a few trends to watch out for. Some of the key trends include:
The rise of millennials in the workforce
Millennials are now the largest generation in the workforce, and they’re putting a new emphasis on work-life balance. They’re also looking for opportunities for growth and development.
The increasing use of technology
Technology is changing the way we work, and it’s having a major impact on employee retention. One of the key changes is that employees will have more options than ever when it comes to finding employment.
The global economy
As the global economy continues to grow post-pandemic, along with technological advances, companies are hiring employees from all over the world. This presents its own set of challenges when it comes to retention, but it’s important to be aware of the trend.
What do you think is the future of employee retention? Share your thoughts with us on social media!
ChandlerWoods is a leading HR consultant and HR agency in Sydney. We specialise in helping businesses improve staff retention and reduce turnover. Contact us today for a free HR health check and consultation!