Is your employee turnover rate where it should (or could) be? How do you know if your turnover rate is too high? Even if it’s higher than ever, at least you’re not alone – employee data shows that the quit rate has remained basically steady since hitting a record of 3% in November 2021. Not to mention that the average cost of replacing a worker amounts to–wait for it–7.5 months’ worth of the employee’s salary. On the flip side of that, engaged employees can boost productivity by 17%. It’s pretty clear that there’s a war for talent going on–and right now, the workers are winning.
The “War for Talent”
This is actually a phrase that goes back to 1997, when the unemployment rate was on its way down. There’s an approximate ten year cycle that starts with high unemployment (which is a ‘buyer’s market’) and ends with low unemployment (a ‘seller’s market’).
Based on recent trends such as the Great Resignation, it would seem that the employment pendulum has swung back in favor of employees. We’ve actually been in a seller’s market since about 2010, which was briefly interrupted by the pandemic.
In such a market, businesses sometimes go to great lengths to attract and retain the best. Enter free bikes, more days off, call-free Fridays, and higher salaries.
But then there are companies that don’t have the resources, or perhaps the attitude, to be so extravagant. Some businesses believe that they just need to wait until the unemployment cycle is completed. But this ignores the fact that most resignations are preventable.
State of the Workplace
It’s a cold fact that workers’ main complaint isn’t money: it is lack of opportunity. For many years now, ‘career issues’ have been the number one reason for leaving a job, while pay is somewhere down the list. In 2021, for example, 18% of people left work to find better opportunities for growth, achievement, and security. In contrast, only 7% quit due to compensation and benefit issues.
Employers must also contend with a relatively new retention challenge, which is greater importance placed on health and family. Last year, it was the second greatest factor (12%) for quitting. On the other hand, organizations should already be accustomed to another critical issue, which is quality of management, accounting for almost 8% of voluntary turnover (for more details, see this report).
Winning the War Means Fighting for Employees
With an understanding of the reasons behind poor retention rates, let’s look at how organizations can ‘win the war’ and do so without breaking the bank.
1. L&D for All
The single greatest complaint that departing employees have is that they don’t get sufficient chances to develop professionally. Allowing workers at all levels to access upskilling courses is vital for solving this problem.
It requires a comprehensive effort on the part of the organization, but it’s worth it. HR departments can use data to map employee skills and understand who needs what upskilling courses. This might be part of a career pathing program, which also helps to resolve skill gaps, prepare for succession, and other advantages.
2. Internal Promotions
Building skills isn’t all that beneficial if they are never put to use. But with most companies focusing on external hires, it is common for employees to be frustrated by a lack of upward mobility. To deal with this situation, organizations need to adopt a growth mindset focusing on internal talent mobility while giving current workers priority over outside recruitment.
3. Higher Compensation
Salaries are set to go up across the board. For instance, in the US, a 3.9% increase in wage costs is predicted for this year.
However, salary is not the only component of compensation. Employers also need to offer benefits, rewards, profit-sharing, and other forms of remuneration.
To counter the perception that a job interferes with an employee’s health and family life, organizations should maintain the work from home programs that became the norm during Covid-19. Both companies and employees tried hard to acclimatize to the situation; it was thought that it would be the ‘new normal’. More importantly, people became used to it, with 91% now hoping that they can maintain at least some of their remote working hours.
But many businesses seem to have the opposite intention. According to this survey, 77% of managers would penalize employees for demanding a continuation of WFH policies. That’s problematic.
5. Management Reform
Speaking of managers, organizations need to address the huge effect that they have on retention. Poor management quadruples an employee’s chance of leaving. Among the approaches that bosses can use to increase retention are:
- Acting as a coach. Attitude counts for a lot. A good manager will suggest instead of demand, guide instead of order, and explain instead of criticize.
- Getting acquainted. Understanding the individual strengths and weaknesses of team members is essential in obtaining great performance. By matching an employee with a task that takes advantage of their strengths, a manager can see a significant increase in profit.
- Providing recognition. ‘Credit where credit’s due’ is a mantra that should be adopted by all managers. Employees who are commended for efforts get more exposure to promotional opportunities. On the other hand, when a worker’s achievement is not recognized, people might believe that the manager has taken credit, which seriously harms trust levels.
Employee Retention Strategy by GrowthSpace
GrowthSpace technology is boosting employee retention at thousands of companies around the globe, by delivering the upskilling programs their employees seek. The GrowthSpace platform specializes in matching L&D requirements to renowned experts so that your employees get precisely the skills they need from trainers, mentors, and coaches who are the best in the biz.