The Competition Is Fierce
Your employees are in high demand. Even the ones you think are content may have their eyes on a new position with a competitor – or an entirely new career. What retention strategies do you need to put into place to ensure your employees stay loyal and why is it worth your efforts?
The 2021 Microsoft Work Trend Index highlights why no company is safe from employee attrition, particularly post-Covid. Nearly half (40%) of the 30,000 workers across 31 countries surveyed said they are considering quitting their current jobs.
The trend began after the 2008 recession. The Bureau of Labor and Statistics reported that the number of quits has steadily risen over the past 12 years, doubling the more steady number of layoffs and discharges over the same period.
What’s behind the mass exodus? While higher compensation packages are always a carrot, today, the Microsoft study discovered 73% of employees are asking for remote work options and more in-person work or collaboration. It seems like a disconnect, but what workers are saying is that they want a say in how and where they work.
The pandemic revealed remote work is not only possible but quite viable for both workers and employers. Several studies show that counter to the assumption that remote work equals more significant inefficiencies, productivity increases and costs decrease. In many industries, it’s a win-win, and all indications are that remote work is here to stay. If you aren’t flexible about remote work, you’re playing at a huge disadvantage.
But is offering a higher salary and the option to work remotely (at least part of the time) all you need for a solid retention strategy? Likely not. In this current candidate market, you have to do more. Besides, flexible workplaces are now the norm, and trying to compete on salary is akin to playing Whack-a-Mole. There will always be a company out there that can offer more.
5 Proven Retention Strategies You Can Start Right Now
While having a positive and empowering work culture can do wonders, many companies we work with want to know what they can proactively do right now to bolster their employee retention. Employee turnover not only affects the morale of your remaining employees and slows corporate growth, but it is expensive.
According to Gallup, the cost of replacing a single employee can be anywhere from one-half to two times their annual salary. Companies can’t afford to have a weak or no retention strategy. It’s why we put together our list of proven strategies to not only attract top talent but keep them for the long haul.
1. Get Them Invested
When your employees have a vested interest in the company’s success, they’re more apt to stay and remain productive. Provide them long-term equity in the form of stock options or restricted stock so they have something to work towards over time. Consider ongoing stock options, such as yearly stock option bonuses for top performers.
Keep in mind that stock options help you retain capital. You can often forego cash bonuses in favor of stock options, and if your company ever sells or goes public, the opportunity for employees holding stock can be lucrative. Just be sure you have a tiered vesting period to incentivize employees based on their tenure.
2. Give Them Bonuses…with a Caveat
Money talks and a retention bonus is an effective strategy to keep employee attrition at a minimum. Establish a program where eligible employees will receive a set bonus amount, where the company will pay a portion of that bonus to them if they remain after a year. Another piece will be granted after their second anniversary.
You have the option of attaching strings to this offer. Many companies decide to add the stipulation that if the employee resigns without good reason before the end of the term, they must repay any portion of the bonus received up to that point. So, let’s say they quit after 18 months. They would be required to reimburse the company for the first half of the bonus they received six months earlier. The same goes if you terminate them due to poor performance or misconduct.
3. Promote from Within
SHRM found that employees who are given the opportunity to move around within a company are more likely to stay. If employees are not given opportunities to update their skills continually, they are more apt to leave. Plus, it is typically less costly for you to train up an existing employee than to recruit and hire an outside employee.
With each promotion should come increased responsibilities and pay. For some, they will want to expand their skills and do something new but relevant to their previous position. Others may want to stay where they are but rise in rank. And you may find a few who want to transition into a completely new position. Create multiple pathway options for each employee to visualize and get excited about their career opportunities within your organization.
4. Level-Up Compensation
Are your existing employees getting paid a fair salary? How do you know for sure? If you want to remain competitive, you have to know the going rate for each position and experience level. Do an analysis of your organization and conduct market research on current compensation salaries.
Recruiting firms are a perfect place to explore current market rates, as they have real-time visibility into multiple clients and roles. Then, after the analysis, level up employees by providing off-cycle raises to retain them.
5. Bring on The Perks
The perks of today look a bit different than they did in the tech boom decade, where happy hours and Nerf gun wars were the signs of a cool workplace. Today, perks are more meaningful and lasting.
(And a quick note: health insurance benefits are not considered perks. They are an integral part of a compensation package and highly desirable. In fact, you likely can’t compete without them.)
Top perks include:
Health & wellness stipend (monthly or yearly)
These perks go towards self-improvement, such as gym memberships, free access to wellness classes, maternity care, mental health apps, etc. Employees can use this stipend any way they desire, just as long as it goes towards qualified health and wellness programs.
Professional development stipend (monthly and yearly) and mentoring
Let your employees choose how they want to mature their skills and networks. This stipend can go towards programs that focus on their professional development, such as improving communication skills, investing strategies, and specific skills and management training. You can also leverage mentoring programs that support employee development and progression.
Besides stock options and bonuses tied to years of employment, you can offer perks based on tenure. Basically, after a certain number of years, employees get or are eligible for specific perks. You can get creative here or survey employees to find out what really matters to them. We’ve seen perks like:
After two years of employment, they can get a certain dollar amount towards the purchase of a home or continuing education, such as a Masters degree
After three years, they are eligible for an all-inclusive vacation package
After five years of employment, they are eligible for a two-week paid sabbatical
You can also offer philanthropy volunteering time off and donation matching, meaningful discounts on company products, and an invite to an annual company trip based on their performance.
You and Your Employees Want Options
The key takeaway here is that the best employee retention strategy is to provide plenty of options. Don’t assume what’s valuable to you will be beneficial to all of your employees. We encourage clients to survey existing employees to find out what incentives will entice them to stay. You may be surprised by what you find out.
If you go this route, you may want to provide them with parameters. For instance, ask them if they value stock options, bonuses, health and wellness stipends, etc., versus keeping the question open-ended. Many employees aren’t even sure what’s possible and others may come up with unrealistic ideas.
Let them know you value their contributions and want to create the best possible work environment to keep them happy and thriving. A Salesforce study found that when employees feel heard, they are nearly five times more likely to “feel empowered to perform to the best of their abilities.” They are also more likely to stay. Regular meetings with management; easy access to HR and company information; opportunities to voice their opinions, ideas and concerns; and transparent roles, responsibilities, and growth pathways are critical.
Some employee turnover is inevitable. You don’t have ultimate control, but you can create a workplace where your people feel empowered, valued and heard. It is all part of your overall retention strategy.
And you don’t have to implement every idea we mentioned at one time. Break off bite-sized pieces based on what you have the resources to support and add on when able. Eventually, you will have a strong and comprehensive retention strategy your competition will envy. Want help creating retention strategies? We can help by sharing effective strategies our clients are using to craft a custom program specific to your business.