Fueled by the global COVID-19 pandemic, 41% of workers around the world are considering leaving their jobs, and 55% of American workers intend to look for a new job. In fact, 2.7% of the U.S. workforce quit their jobs in April 2021—the highest number of resignations ever recorded. Although previous generations stayed with their employer for decades, in the modern era, employee attrition is clearly increasing.
With employee tenures dwindling, it’s important to measure and monitor employee retention to gauge the impact of your employee satisfaction and retention initiatives. Employee retention is a percentage of how many employees stay versus how many leave the company (whether through resigning, firing, or layoffs) in a given year. Ideally, organizations want this percentage to be as close to 100% as possible.
If you’re operating in a high-turnover environment, it means employees are leaving faster than you can hire their replacements. This is an expensive and inefficient way to operate, especially considering the fact that it takes a new employee up to 8 months to become fully productive.
Why Do Employees Leave?
An alarming one-third of your employees plan to quit their jobs in the coming months. What’s the reason behind this mass exodus?
In some cases, it may be about pay, but studies show that only 12% of employees leave their jobs for this reason. In fact, 71% of workers would take a pay cut in exchange for a better job.
In reality, employees cite these reasons for leaving their jobs:
- Disengagement: Only 35% of employees are engaged at work. This pervasive sense of boredom not only harms productivity but significantly reduces retention.
- Burnout: Are you driving your team too hard? 20 – 50% of employees quit their jobs to escape burnout.
- Poor management: 40% of employees quit their jobs because of poor management. An impressive 92% of employees would stay if their managers had more empathy, which shows that there is a disconnect between management and employees.
- Lack of opportunities: 70% of employees want to leave their current job because there are no opportunities for advancement or training.
The Value of Employee Retention
Few organizations invest in employee retention, but attrition has a real effect on your bottom line:
- It costs 50 – 60% of an employee’s annual salary to hire their replacement.
- One in four new employees will quit in their first year at your company, which means you could be investing in new employees who will leave in a few months.
- A highly engaged workforce can boost sales by 20% and profitability by 21%.
- Disengagement costs businesses $550 billion every year worldwide.
Employee retention is a must if your organization needs to boost productivity, decrease costs, and provide better customer service.
How to Improve Employee Retention
47% of HR professionals say that employee turnover and engagement are their top concerns. While it’s impossible to prevent attrition entirely, organizations that take employee retention seriously tend to operate more efficiently. Implement these 4 changes to improve employee retention in your organization.
Create an Engagement Strategy
70% of the variations in employee engagement are due to management. Your strategy needs buy-in from every level of management, as well as your employees, to succeed. An oil and energy company witnessed the power of a retention strategy firsthand. Facing a retention and recruitment crisis, the company utilized the Humanyze Platform to identify areas for improvement. Armed with this data, the company reworked its culture and physical space to improve retention.
In 2019, 80% of employees surveyed said they would be more loyal to their current employer if they had flexible jobs. With more employees experiencing remote work during the COVID-19 pandemic, that number is likely to increase as employees want to maintain some of that flexibility. When possible, provide your employees with flexible work options. This might mean switching to a hybrid workplace, offering remote options (which can reduce turnover by 25% alone), or relaxing your dress code.
Coach and Train Your Team
Employees want to feel capable at work. It’s no wonder that learning cultures improve employee retention by 30 – 50%: when your team feels knowledgeable, they produce better work.
Look at your new employee onboarding process. Just 12% of employees say their company does a good job of onboarding new team members, so this is clearly an opportunity for improvement.
Teach your managers how to coach employees in regular one-on-ones. 23% of workers say their manager gives them valuable feedback, so training your managers in the art of coaching can improve employee outcomes.
Incorporate Employee Feedback and Data
90% of workers would stay at their company if the organization acted on their feedback. In addition to collecting quarterly feedback from your employees, your organization should also act on workplace analytics. For example, a major U.S. bank increased employee retention by 28% when it used employee data to create a more positive culture.
Employee retention is going to become an even more pressing issue for employers. While pay and benefits are a good start, employees largely resign because of cultural issues. That’s why it’s so important for organizations to implement these 4 changes to increase retention as much as possible. When in doubt, collaborate with your team to create a unique strategy tailored to your organization’s employees.