How to improve employee retention

You can’t keep someone by your side if they don’t feel a sense of belonging. This principle applies just as much in the workplace as in our personal lives. When employees feel disrespected, burned out, or dissatisfied, their commitment to the job diminishes – and it’s only a matter of time before they seek better opportunities elsewhere. 

Unsatisfied employees not only threaten business success but also pose a significant risk to employee morale, leading to even more turnover. 

So, what can you do as a leader? The key to employee retention lies in prioritizing a positive employee experience and company culture where employees feel engaged and valued.   

What is employee retention?

Employee retention refers to an organization’s ability to retain its employees over time. It is crucial for long-term sustainability, market competitiveness, and overall business growth. 

Companies with effective retention strategies not only benefit from experienced and innovative team members but also from their ability to attract top talents. 

In contrast, high turnover rates lead to rising costs for the company. When an employee leaves, the company incurs new hiring and onboarding expenses but also puts remaining employees under more pressure and additional responsibilities. 

This situation can lead to greater dissatisfaction over time, hurting employee morale, the company’s reputation, and profitability. 

With the job market becoming increasingly competitive,  developing an effective employee retention strategy should be a strategic goal. This involves creating a positive employee experience, reducing turnover, and ensuring employees feel happy and engaged in their roles. 

Why employee retention matters

Companies with high employee turnover face significant challenges in growing and expanding their businesses. Beyond the tangible costs associated with recruitment, hiring, and onboarding, they also lose valuable knowledge, undermining their competitive edge in today’s market. The impact of understaffing can be severe – imagine having a promising project but needing more personnel to execute it. So, the difficulties in retaining employees directly affect the bottom line. 

Gallup’s research shows that engaged teams contribute to 23% greater profitability, resulting in an 81% difference in absenteeism and a 14% difference in productivity. 

Not only that, happy and engaged employees are your best promoters.  However,  if they are unhappy, they will share their frustration and bad attitudes, making it tough for the company to attract new talent and fix its reputation. Companies struggling with retention can be seen as unstable, eroding brand loyalty. 

After all, no one wants to work in an unstable environment and toxic workplace culture. When employees start leaving, it’s only a matter of time before profitability declines. 

So, the benefits of talent retention are clear:

• Cost savings: Reduces expenses related to hiring and training a new hire.
• Improved morale: Builds a stable workforce and improves employee satisfaction.
• Knowledge retention: Preserves valuable knowledge and innovation within the organization.
• Stronger company culture: Builds a cohesive and positive workplace environment. 
• Talent attraction: Makes the company more appealing to potential hires. 
• Greater productivity: Satisfied employees are more efficient and productive. 

Employee attrition and employee retention

A company’s inability to retain employees over time can lead to employee attrition, which is a gradual decrease in the number of employees without replacing them for extended periods – or even indefinitely. Some effective methods include pulse checks, one-on-one meetings, exit interviews, and stay conversations to understand why employees leave. 

Some of the most common reasons employees quit are:

• Inadequate compensation: Feeling underpaid can drive employees to seek better financial opportunities.
• Lack of career growth: A lack of employee development opportunities can lead employees to pursue advancement elsewhere.   
• Poor management: Ineffective leadership can lead to frustration and cause employee departure. 
• Work-life balance: Struggling to balance personal and professional commitments can lead to employee burnout. As a result, employees have started looking for flexible work arrangements. 
• Limited employee benefits: Unattractive employee benefits can weaken a company’s competitiveness and make other companies more appealing. 
• Lack of employee recognition: Feeling unappreciated for their contribution can diminish employee loyalty and motivation. 

5 tips on how to improve employee retention

If you’ve read all this carefully, you have probably recognized that employee retention is closely tied to the overall employee experience. This means you can’t force your employees to stay with your company if they are not satisfied, but by building a positive employee experience and implementing proactive initiatives, you can bolster retention and make them wish to stay with you.

For instance, offering flexible work arrangements, prioritizing employee wellness, providing opportunities for employee development, and conducting regular pulse checks and feedback sessions can improve internal communication and make employees feel valued and heard.

1. Be transparent

One of the things most employees truly appreciate is honesty. 42% of employee turnover is preventable because it’s tied to open communication and transparency.

Build a transparent company culture where everyone will have an opportunity to speak openly about the things that bother them or the challenges they face on a daily basis. 

Create open boss-employee communication channels and provide your employees with an insight into how the business works and what values it brings to both your clients and employees. Encouraging your employees to suggest new ideas and giving them a chance to have input. In this way, they will have a feeling that they contribute to the working environment and that their opinions are being appreciated.

In a workplace culture where they feel valued, employees will feel more invested in their work and the organization as a whole. 

Take Buffer as an example. This company openly shares information about its salaries, revenues, and equity distribution, which builds trust among customers and employees. This transparency contributes to Buffer’s remarkably low turnover rate and enviable churn level. 

Employee experience software like HeartCount can help you maintain transparency. With regular HeartCount pulse checks, you will always know how your employees feel and what challenges they face. 

2. Provide regular feedback

Another effective way how to prevent employees from resigning is to provide regular feedback. 

Studies have shown that companies prioritizing employee feedback cultivate a stronger and more positive company culture. 

A consistent feedback process gives employees a clear understanding of their strengths and weaknesses, as well as how other colleagues and managers perceive them. 

Finally, it helps them gain insight into their behaviour and uncover blind spots, which will enable them to develop, improve, and take control of their career path. 

How regular feedback can be transformative shows the case of NLB Komercijalna Bank. They wanted to build a unique, joint culture based on open communication and feedback. With over 2,000 employees, organizing one-to-one meetings with each of them and collecting regular feedback was impossible. 

So, they decided to rely on HeartCount, particularly its weekly Pulse Check surveys and other initiatives, as part of its HR transformation strategy. These efforts resulted in an employee participation rate of 57%, a response rate of 40%, a well-being score of 4.14, and a reduction in employee dissatisfaction from 6% to 2.5% in less than a year.

With HeartCount, you can create custom surveys in addition to regular pulse checks to address issues tailored to your company’s needs.

3. Provide opportunities for professional growth 

You’ve probably heard the saying, “If you’re the smartest person in the room, you are in the wrong room.” This is important to consider in your work environment.

Over 86% of employees say they would switch jobs for better growth opportunities. Consistent professional development makes employees more likely to stay. 

Provide opportunities for employees to challenge themselves and grow through peer learning, courses, or other development initiatives.  If you want your employees to feel valued, motivate them to share their knowledge with other colleagues. 

From workshops and mentorship programs to giving lectures and authoring a publication, there are many ways your employees can share knowledge and keep them engaged.

4. Monitor employee happiness

If you are wondering how to prevent employees from quitting, there’s no better way than asking them how they feel. Happy employees enjoy their work, feel optimistic about their tasks, and generally experience joy and fulfilment at work. This emotional aspect can fluctuate depending on daily experiences or interactions.

One effective approach is to conduct an employee happiness survey to understand employees’ feelings, challenges, and satisfaction with their work. 

Tools like HeartCount provide regular insight into your employees’ happiness levels and allow you to act on the results on time and do whatever is in your power to retain your employees.

5. Create a culture of recognition and praise

There’s nothing more encouraging than hearing your manager praising you for what you have done. Encourage your employees to nominate one another for some special recognitions, including hard work, creativity, innovation, and other things. 

On top of this, share these success stories and nominations with the rest of the company. This will motivate them to follow the same steps, which will improve their productivity and efficiency and become more satisfied with their job. In other words, by giving them occasional words of praise, they are more likely to stay with the organization.

Let’s take Google as an example. As a company recognized for its care for employees, Google has a retention rate of 90% and was ranked 6th in the Fortune 100 Best Companies to Work. They use peer-to-peer recognition and let employees honour each other with public praise and small rewards. 

With the HeartCount employee recognition feature, your employees can send and receive kudos that are visible to everyone in the company.

Conclusion

The success of your employee retention strategy depends on how well it aligns with your employees’ needs. That’s why prioritizing effective communication and building a feedback culture is essential.

Tools like HeartCount can help you by collecting employee feedback and providing regular insights into the key factors influencing retention. Want to see how? Check out our product tour!