Rethinking Retention: 6 Strategies to Increase Employee Engagement

The employee-employer relationship can be a delicate balancing act. You and your employees have expectations about the dynamics of your relationship. But information gaps can often cause assumptions that lead one side (often the employer) to believe everyone is happy. Because employees don’t always effectively communicate their dissatisfaction, employers may be left blindsided by unexpected resignation letters.

The best way to address this problem is to assess why your employees leave and implement strategies for employee engagement and retention. Taking a methodical and holistic approach can help reduce turnover rates, improve the organizational health of your business, and save the time and expense necessary to fill open positions.

Why Do Employees Leave?

It’s a question that hounds any employer when receiving a two-week notice (seemingly) out of the blue, whether it’s from a stellar longtime employee or a recent hire. From a financial perspective alone, retention is an imperative. According to a Gallup study, voluntary turnover can cost businesses double that employee’s salary or more. Collectively, businesses lose $1 trillion annually due to employees quitting.

Extensive research done around voluntary employee turnover helps clarify the most common reasons employees quit. According to a 2017 meta-analysis, numerous factors can indicate a high chance an employee may leave.

Personal fit and purpose – Many employees leave if they do not feel they “fit in” with the prevailing personalities, values and culture present within the company. They may feel their work doesn’t provide meaning or does not contribute to the overall organization or society.

Job market conditions – Although external job market conditions are outside any organization’s control, they can heavily influence an employee’s decision to quit. When demand for labor is high and supply is low, employees are more likely to look for opportunities elsewhere.

Turnover contagion – When one or more employees quit, it can go viral. Other employees may be prompted to leave as well, indicating a possible underlying (and widespread) dissatisfaction within the organization.

Pay – There’s no getting around it; employees who do not feel they are properly compensated are more likely to quit.

Leader behavior – Many studies, including the meta-analysis above, corroborate the idea that “people don’t quit jobs, they quit bosses.” Leadership impact reflects on the organization as a whole, both positively and negatively.

Work environment – A negative work environment can cause employees to grow frustrated and leave the company. “Environment” can include everything from a company’s physical working conditions to its culture.

Organizational support – Employees who don’t feel properly supported by their company when they’re struggling are more likely to leave. The above referenced Gallup study found that over 50% of employees said their managers or organization never discussed job satisfaction with them in the three months leading up to their quitting.

It’s important to note that voluntary employee turnover is incredibly complicated. Employees often don’t quit for just one reason. For most, the drive to leave their employers comes when multiple issues compound over a period of time—making the idea of staying unbearable.

6 Ways to Improve Employee Retention and Engagement

There are both short-term and long-term approaches to employee retention and engagement. Additionally, it’s critical to begin tracking job satisfaction data and align that data to voluntary employee turnover. Understanding what makes your employees happy or unhappy and how these factors impact the decision to quit or stay can empower your company to make more effective organizational decisions.

1. Get Informed to Develop a Retention Strategy

You don’t know what you don’t know, but if you put forth the effort you can find out. The best way to get the answer on what is wrong is to simply ask. Data collection is key when developing a plan of action to develop a retention strategy. There are three key methods of discovery when it comes to retention:

  1. Engagement Surveys: A crucial tool that can give employees an anonymous venue for open feedback. It can measure the satisfaction the employees have with their company and provide information on what is influencing it.
  2. Stay Interviews: An in-person interview in which the manager asks the employee structured questions about why they stay and what could potentially cause them to leave. Although the questions are structured, the interview is to be casual and conversational.
  3. Exit Interviews: An in-person interview, typically with HR, that discusses why an employee is leaving and any takeaways they can offer about their employee experience at the organization.

2. Pay higher salaries

While compensation is not the only reason employees choose a position, it plays an important role in retention and engagement. Surprisingly, however, salary issues can have more to do with a lack of communication than mere unwillingness to pay.

Many employees don’t actually know whether they are compensated fairly. In fact, 64% of employees paid at market rate (and 35% paid above market rates) believe they’re paid below the market for their skills. Those who are actually paid below market rates tend to know their compensation is not up to standard, with 83% believing their pay is too low.

Overall, compensation weighs heavily on whether employees decide to leave, especially if other factors make them feel dissatisfied. Unfortunately, many employers are unwilling to increase existing employees’ salaries.

A Gartner study found that companies are often willing to pay 15% more for new hires than their existing employees. Some employers actively discourage employees from talking about pay despite the fact that pay secrecy rules are still illegal. However, employees will eventually talk salaries—and when they find out new hires are paid more, discontentment can fester.

If your business consistently pays below market rates, consider prioritizing salary increases. Even if you can’t pull employees up to market rates or higher, any improvement can be a positive gesture. You might also need to be more up front about what you are capable of paying. A lack of financial transparency can make employees feel as if they’re being cheated, even if that’s not your intention.

3. Boost your benefits package

Employees’ concept of benefits is changing. Workers want more than just a retirement plan, health insurance and sick leave. They want innovative benefits that were often unthinkable in previous generations. Flexible scheduling, remote work, student loan debt payment assistance, extended paternal (not just maternal) leave, professional and career development, child care, life balance benefits… all of these and more are becoming commonplace as the workforce evolves.

These benefits aren’t always prohibitively expensive to offer. Allowing employees to work remotely, for example, comes at little cost for businesses whose work is already cloud driven. Life balance benefits are a cost that is solely on the employee, but employees appreciate the free time it provides during off hours. And you can ease the financial hit of other benefits, such as extended paternal leave and flexible scheduling, by outsourcing some tasks to part-time freelance workers.

Your business should be strategic in the benefits you offer on top of the standard and expected compensation package. It may be prudent to poll your existing staff to see what they want most and stay ahead of these trends for your industry.

4. Hire effective leaders and develop managers that need realignment

Businesses that ignore the negative impact of their management team may cause their own issues. Numerous studies consistently support the reality that bad managers can lead people to quit. Even if a bad manager isn’t the only reason, they can be the linchpin for employees already considering a job change.

To resolve the issues, companies should either hire talented leaders with a history of supporting and motivating staff or realign and retrain the current management to be better leaders. The latter is the more cost-effective option considering the expense of hiring new managers.

Promoting internally first also provides more advantages, like built-in knowledge of your company and a quicker hiring and training process. There’s also good reason to believe that employee loyalty can be impacted when companies show a preference for hiring managers externally. Hiring internally promotes employee development and improves departmental morale, which in turn can improve employee retention.

5. Overhaul the recruiting process

Your recruiting process lays critical groundwork for whether employees ultimately choose to stay or leave. If you hire people who don’t fit the company culture or the role , they’re likely to leave—and often relatively quickly. A large short-term turnover rate is a key indicator of a recruitment problem.

As highlighted in the meta-analysis mentioned earlier, culture fit is an exceptionally common indicator in employee voluntary turnover. Unfortunately, many businesses disagree on how to properly hire for culture fit or struggle to understand what it even means.

While it’s good to have a unified and harmonious workforce, culture fit efforts can have an unintended result. Many businesses with subjective hiring practices tend to exhibit a large amount of bias in the hiring process. When that happens, the company can lack diversity and employees can start to look as if they are cut from the same cookie cutter.. That can lead hires who may not fit the prevailing culture to feel out of place, which may cause them to quit.

Employers can still hire for culture fit and minimize the influence of personal biases. According to researchers from the Kellogg School of Management at Northwestern University, you should:

  • Clearly define your organization’s culture (or desired culture).
  • Align that culture to your organization’s goals.
  • Starting the hiring process by filtering solely on skills.
  • Identify and assess candidate personalities during personal interviews.

Finally, you should also limit how much culture fit influences your organization’s hiring decisions. The end result will be a more diverse staff with better skills alignment.

6. Offer ongoing support for employees

Employees who don’t feel supported will become disengaged and will potentially leave. Both professional and personal struggles can leave employees feeling like they’re simply treading water—waiting to be fired or for a better opportunity to come along so they can quit. Approaching employees holistically and seeing them for who they are in and out of work is the first step.

For new employees, consider offering one-on-one mentoring for the first year. This can help them navigate those early difficulties with getting situated and help them feel less overwhelmed.

Additionally, give new employees support for “firsts,” such as the first time they encounter a problem or make a mistake. And celebrate with them on the positive firsts, such as the first time they get a win or have a major breakthrough with a client.

Ongoing support can also come in the form of professional or career engagement opportunities. Paying for professional development or CPE can make employees feel like you value their career advancement. It also helps your organization as employees develop new skills or hone existing ones that you can leverage.

Consider Managed HR to Navigate Employee Retention

A fair amount of employee retention falls squarely on the shoulders of your human resources personnel. But some businesses are too small to have an internal HR department, don’t have the capacity to make these changes proactively, or want to avoid bias throughout the recruitment and engagement process.

If your organization fits that description, consider hiring a managed HR service. A third party perspective is impartial and refreshing. While there is a cost associated, it can often result in long-term savings once new initiatives are in place.

All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a James Moore professional. James Moore will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.