With how expensive it can be to replace your most qualified staff, employee retention has never been more important. Lucky for you, we’re here what it is, why it’s so important for your business, and how to improve your own employee retention strategies.
Before we explain employee retention, first we need to look at employee turnover.
Employee turnover is the amount of people who leave a company within a certain time frame. For example if your business had 100 people at the start of the year, and 10 people left within that year, your annual employee turnover is 10%.
Employee retention meanwhile, is a business’s ability to to retain its staff and prevent employee turnover. These include systems and processes in place that help to create a positive and supportive work environment that stops your employees wanting to leave your business. Increasing employee retention has a direct impact on your business for a number of reasons:
High employee turnover can have huge negative impacts on your businesses finances. A study from Oxford Economics found that the cost of replacing an employee earning £25,000 a year or more was £30,614. Meanwhile, more recent research from The Society for Human Resource Management found that it can cost a company 6 to 9 months of an employee’s salary to replace them.
Giving an exact estimate can be difficult. Because there are many, difficult to track factors; from the actual recruitment costs to the loss of an experienced employee’s knowledge. But reducing the financial costs of employee turnover is just one of the benefits of having a high employee retention.
We asked Associate Director of Herd Digital, Alexis Wilkie, for why employee retention is so important for digital agencies:
“It normally takes an agency around 1-3 months to find a new employee. That person they find will then have a 3 month notice period. It will likely take them at least 3 months to get to the point where they’re performing at the previous employees level. This means it’s going to take 7-9 months before the team is back to normal working capacity.”
But keeping experienced employees on your team and saving money aren’t the only reasons why employee retention is important for your business…
The benefits of employee retention for your business are numerous. We could list them for days: But instead, here are the most important benefits of employee retention that can have the most significant impact on your business:
The first step to improving employee retention is knowing the causes of high employee turnover. Because once you know why it happens, you know how to prevent it, and recognise any gaps in your own employee retention strategies:
Whatever the reason for employees leaving your business, it doesn’t just happen overnight. Searching and interviewing for a new job takes time. And there are signs you can recognise that someone is looking to leave your business.
Recognising these signs can help you to preemptively prevent their leaving by discussing if they’re unhappy with their work, and what you can do to make them stay. These can be interventions such as promotions, pay increases, or the opportunities for additional training and development.
There are various different employee retention strategies and retention models, and what works best for your business may take some insight and trial and error. But here we’ve got eight of the most popular employee retention strategies for you to decide from.
The short of it: The employee’s most important needs are being met.
Perhaps the most well-known employee retention model. This focuses on the needs of every employee, in order of importance: Physiological needs, job security, belonging, self-esteem and self-actualisation.
What it means for your employee retention: Mapping out how the needs of your employees are met can identify gaps, and make sure that you’re meeting their needs at every level. For more information on Maslow’s Hierarchy of Needs, here’s a handy quick guide.
The short of it: Purpose in their work and job security.
Herzberg summarised as two-factors being crucial to employee retention: Hygiene (company environment, job safety, salary, and company policies) and Motivators (the job itself, enjoyment of the work and opportunities for progression).
What it means for your employee retention: You need to satisfy both categories to ensure long-term employee retention.
The short of it: It satisfies unique and personal needs.
The human motivation theory argues that every person has one of three basic needs: power, achievement, and affiliation. And that their behaviour is heavily impacted by their need.
What it means for your employee retention: To improve employee retention, you need to identify what is most important to each individual employee: And act on it. Here is some more information about how to implement this strategy for your business.
The short of it: Are the rewards worth the relationship (job)?
The social exchange theory argues that relationships are only worth keeping, when they feel an appropriate reward for this effort.
What it means for your employee retention: This means that your employees will only stick around and put in the work, if they feel like they are rewarded for maintaining their relationship and level of work.
The short of it: Is their effort recognised?
Barnard-Simon’s theory suggests that an employee will only stay at a company for as long as they feel their efforts are recognised. Job satisfaction relies on the employee’s compatibility with their role, and their relationships at work.
What it means for your employee retention: Employee retention relies on employee’s being satisfied with their contribution at work, and the compensation they receive from this: Whether financial, career progression, or just recognition.
The short of it: The better your employers feel treated, the longer they’ll stay.
The brainchild of John S. Adams, The Equity Theory, argues that high morale equals high productivity. Conversely, when employees aren’t happy and aren’t motivated, productivity naturally drops.
What it means for your employee retention: Employees who are happy in their job and feel they are treated with respect and are motivated are more loyal.
The short of it: The more you invest in employees, the higher employee retention.
This theory argues that companies have a natural incentive to offer training and support to better their employees skills and experience: their ‘human capital’. And that the greater this human capital is, the better your employee retention is.
What it means for your employee retention: The more your employees feel that you’re constantly investing in them with training and development, the better they will perform and the longer they will stay.
The short of it: Employees feeling recognised and that their work has a purpose.
The resource based employee retention theory states that employee retention can be heavily impacted by how useful to the business they feel. That their feelings of being valued by the business can heavily impact employee retention.
What it means for your employee retention: When your team feels they have a purpose with work and that their contributions are valued, they will stay for longer. But conversely, not recognising the hard work of your team can have detrimental effects.
While understanding employee retention models and strategies is well and good, we’ve put together some practical tips that you can implement in your business to improve employee retention.
Being clear with your employees about what they need to achieve to progress in their careers, helps give them achievable goals to aim for. Meanwhile, if your employees have no idea what it takes to progress, they might think that the only way for them to progress is to leave.
Salary is one of the most, if not the most, important thing to employees. Our best clients have yearly progression reviews or every six-months. These regular conversations with your employees about salary show recognition of your employees continuing value to the business.
Recognition of the hard work of your team is a common theme through the employee retention strategies on our list. Because it’s human nature to seek approval and reward for our work. Even if you’re excelling in other areas, if your employees don’t feel appreciated, they won’t put in the effort.
This one is nothing new. But it’s absolutely worth stating that if you can offer hybrid working opportunities to your team, you should be. Because it’s one of the most important things to the Digital Marketers out there (See below).
Digital marketing is notorious for the long hours, especially in an agency. So taking steps to ensure that your employees have manageable workloads and the support of their managers, can make any other agency look like a nightmare…
One of your greatest strengths is your company culture. Because the environment your employees work in can have a huge effect on employee retention. In fact, a strong company culture can reduce your employee turnover by up to as much as 35%!
Having an onboarding program that makes your team feel welcome is crucial to retaining new hires. It also helps your new hire hit the ground running and getting stuck in with their work, without feeling lost or overwhelmed.
While this may seem the opposite of your goals, exit interviews are still opportunities for improving future employee retention. Having an open and honest conversation with employees who are dead set on leaving, can help you find areas of weakness and prevent anyone from following out the door.
If your business is a larger company that has many employees coming and going, or a business which experiences high employee turnover (or higher than you like), then it can be incredibly productive to track your employee turnover and retention.
This starts with tracking annual turnover and retention rates, but it doesn’t end there. By tracking and analysing a wider set of data including employee satisfaction, employee performance, absences and holidays, you can find areas of weakness within your employee retention strategy. As well as indicators of when people are likely to leave.
Despite your best efforts, sometimes your employee retention efforts fail. Sometimes there aren’t opportunities for people to progress into. Or there isn’t enough money in the budget to pay them more. And sometimes it’s just completely out of your control.
When that happens, you need a recruitment partner who can help you find the right people for your business, who are interested in staying for the long-term. And if you’re a business looking or your next digital marketer, that’s where we come in.
If you’re looking to hire your next digital marketing professional, reach out to us here, and see what we can do for your business.
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