Employee Retention Strategies to Prevent High Turnover
Employees are the lifeblood of our economy—and retaining top talent is, in many cases, more important than ever.
The COVID-19 pandemic has tested businesses in unimaginable ways. Millions of employees are working from home. Companies are shifting gears to make personal protective equipment. Many small businesses and mega corporations have had to close temporarily or even permanently.
While the situation continues to evolve, one fact remains: Employees are the lifeblood of our economy—and retaining top talent is, in many cases, more important than ever.
In any economy, retention matters
U.S. businesses lose a trillion dollars every year due to voluntary turnover. Beyond the financial impact, high turnover can also damage employee morale, negatively affect your relationships with customers, and even shake the foundation of your business.
But if team members really want to leave, there’s nothing you can do, right? Not quite. In fact, 52% of employees voluntarily exiting say their organization could have done something to prevent them from leaving.
Fact: Gallup estimates that the cost to replace an employee can range from one half to two times the employee’s salary.
How does your turnover rate compare?
According to PayScale, the Fortune 500 company with the highest average employee tenure is the Eastman Kodak Company, which clocks in at 20 years! However, a few employers at the bottom of the list have an average employee tenure of one year or less—namely, Massachusetts Mutual Life Insurance Company, American Family Life Assurance Company of Columbus (AFLAC), and Amazon.com Inc. Why? Well, a mix of factors contribute to their high turnover including working conditions, pay scales, and industry competition.
So, what are the most effective employee retention strategies?
While there’s no one “right” way to improve employee retention, we’ve provided 20 suggestions that can boost your employee retention rate, engagement, and morale.
1. Hire right the first time—If you want to retain top talent, start by hiring the right employees. During the interview process, don’t just focus on potential new employees’ educational background and list of talents. Listen closely to how they answer questions and what their references have to say about them. Skills can be acquired through training, but qualities like a positive attitude or sense of loyalty are not easily taught.
2. Be up-front about the tough stuff—Does the job require 75% travel? Or repetitive data entry? Be sure you and your human resources team are upfront about the nitty-gritty job details—including those that potential employees may not love. That way, they will know exactly what they’re getting into before they accept the position.
3. Pay fairly—When it comes to retention, it almost goes without saying that money matters (a lot). Utilize salary benchmarking services or check out websites like glassdoor.com to get an idea of what is considered competitive compensation for each role. Also consider financial incentives like performance bonuses, promotions, pay raises, 401(k) matching contributions, and stock options.
4. Provide awesome benefits—Beyond pay, benefits like an excellent 401(k) plan, a strong health insurance plan, and generous time off can go a long way toward improving job satisfaction and boosting your employee retention. Want to upgrade your benefits? Consider footing a greater share of insurance costs, offer a 401(k) matching contribution, or provide more flexibility around time off (up to and including making it unlimited!).
Want to learn more? Read our article on competitive compensation.
Show them the money in black and white
Many top-performing companies provide total compensation statements to their employees. So, what’s a total compensation statement? Well, it tallies up things like salary, bonuses, paid leave, health benefits, 401(k) contributions, stock options, and other perks—enabling employees to understand the full value of working at your company.
5. Provide high-quality wellness programs—It makes sense that healthier workers are happier workers—and the research proves it. According to a survey from health services company Optum:
- 48% of employees who frequently participate in health and wellness programs are extremely likely to recommend their employer to others
- Employees who had access to more than seven wellness programs (like biometric screenings, wellness coaching, fitness challenges, and more) were one-and-a-half times more likely to continue working for their current employer and three times more likely to recommend their employer to others
6. Support employees’ financial wellness, too—Studies show that financial stress can have a damaging impact on business output, lead to higher employee turnover, and increase recruiting costs. Beyond paying fair wages, what can you do to help? Consider partnering with a 401(k) plan provider like Betterment who can help your employees plan for long- and short-term financial goals ranging from retirement to an emergency fund to a new house.
Betterment helps employees create a personalized plan to help them save for the retirement they envision. Plus, it enables employees to link their outside assets, making it easy for them to see the full picture of their finances and incorporates automated features to help employees stay on track toward their goals. For instance, our research shows that a Betterment customer who utilizes our automated features and follows our recommended investment advice could earn an estimated 38% over 30 years.
7. Provide opportunities to learn and grow—According to LinkedIn, 94% of employees say they would stay at a company longer if it invested in their learning and development. In addition to gaining new skill sets and experience, employees also benefit from knowing their company cares about their success.
Beyond sponsoring short professional development courses, consider paying all or part of your employees’ undergraduate or graduate education in exchange for continuing to work at the company for a specified period of time. This kind of tuition reimbursement program is win-win for you and your employees!
8. Be flexible with schedules—As we’ve seen during the COVID-19 pandemic, telecommuting is sometimes necessary—and many employees like it! In fact, according to Global Workplace Analytics, 80% of employees want to work from home at least some of the time.1 So if an employee asks for a flexible or non-traditional schedule—for example, working from home three days—give it serious consideration. Learn more about the benefits of remote work.
9. Make their commute a little easier—In addition to allowing employees to work from home if it’s feasible, consider ways to improve their commute.
- Let them skip rush hour—If employees have a killer commute, allow them to work 10-6 or 7-3 instead of the typical 9-5.
- Offer transportation—Whether it’s a company-sponsored shuttle or an organized car-pooling system, brainstorm ways to make their commute less stressful.
- Provide commuter benefits—With this benefit, your employees can set aside pre-tax money to pay for public transportation and paid parking. Want to sweeten the deal? Kick in some money, too!
10. Encourage a healthy work-life balance—It’s easy to talk about “work-life balance” but it’s another thing to really encourage it. Tell your employees to take their vacation days, don’t text them at midnight on a weekday, and acknowledge that they have a vibrant life away from the office that deserves their attention, too.
11. Formalize a mentorship program—Beyond the onboarding process and initial training, employees often need (or want) ongoing mentorship. The mentor isn’t necessarily the person’s direct manager. In fact, it’s often a senior leader in a different department who can offer a unique perspective on leadership and growth within the company. Concrete guidance and a sympathetic ear could be just what your employees need to stay the course.
12. Show employees their career path—Most employees don’t see themselves toiling away in the same job for the entirety of their career. Be sure they can see the path forward to promotions and pay bumps. By clearly defining the skills they need to acquire and the goals they need to attain, you can help employees stay focused and excited about their career development and future at your company.
13. Give feedback (and ask for it)—Annual performance reviews can help employees understand where they are year over year, but regular check-ins are extremely useful, too. Also, think about asking your employees what you could be doing better. Although sometimes it can be hard to accept negative feedback, it’s critically important to building relationships and developing as a leader.
14. Make sure the coffee is hot (and your company culture is on point)—A hot, fresh cup of coffee, free snacks, an open-door policy, a “hi” from the CEO in the hallway—sometimes it’s the simple things that make employees feel like their employer cares. Creating a positive company culture and employee experience takes work. Ask yourself: What makes our company unique? What are our values? What is our leadership structure? What distinguishes our work environment?
15. Enhance your engagement—Especially during the COVID-19 crisis—when you can’t just chat by the coffeemaker or greet employees in the hallway— engagement is important. A recent Harvard Business Review article recommends nominating one trusted staffer to be responsible for regularly checking in on employees’ wellbeing over the next three to six months. This way, any concerns, fears, and other issues are caught before they escalate (or result in employees looking for an exit).
16. Encourage workplace BFFs—Yup, that’s right—having a co-worker as a best friend can dramatically increase employee engagement. Research shows that women who strongly agree they have a work best friend are more than twice as likely to be engaged. And for both women and men, having a best friend at work leads to better performance. So how do you foster friendships among colleagues? Encourage collaboration, foster team building, and consider hosting happy hours or other social events.
17. Say “thank you”—Giving your employees recognition and showing your sincere appreciation can go a long way toward improving your retention rates. There are many ways to say “thanks, you’re doing a great job”:
- Publicly recognize employees in group meetings
- Host a pizza or donut party
- Give them a shout-out on Facebook, Twitter, or Instagram
- Send a hand-written thank you note
- Recognize birthdays and employment anniversaries
19. Focus on diversity and inclusion—Many companies are working to make their workplaces more inclusive—and research shows that it pays off. In fact, a recent survey found that 63% of executives say their diversity and inclusion (D&I) programs help with employee retention.
20. Leave on good terms—Sometimes you do all you can to help retain your top employees, and they still want to leave. That’s okay. But the last thing you want is for great employees to leave your company with a bad taste in their mouth. Not only will they likely never come back, but they may even share their negative opinion with other people in their professional network. Want to develop a positive exit experience? Gallup recommends:
- Taking the time to make employees feel heard
- Thanking employees for their contributions to the company
- Turning past workers into brand ambassadors by staying in touch with company news or referral opportunities
Betterment can help you retain great employees
Now that you know 20 ways to help retain employees, you may be wondering: “How can Betterment help?” Well, as a leading 401(k) provider, we can help you design a plan that your current employees appreciate (and that bolsters your recruitment efforts). A Betterment 401(k) plan is:
- Extremely cost-effective—Our fees are a fraction of the cost of most providers. That’s good news because after reading our list of employee retention strategies, you may have a few other investments you want to make.
- Easy for you to manage—Our intuitive platform works to reduce your administrative burden. Your customized dashboard will keep you informed of what you need to do and when you need to do it—making 401(k) plan administration simple.
- Designed to make your employees feel valued—This isn’t a one-size-fits-all retirement planning experience. Betterment offers employees a personalized plan to help them strive for their own unique goals.