If you check your LinkedIn feed or newsletter subscriptions on any given day, you have a 50/50 shot of seeing a post about layoffs, the Great Resignation, social media trends like "acting your wage" and "quiet quitting," or some other kind of employee attrition.
We get it—employees expect a lot. But businesses need them regardless, which calls for leaders to reconsider what actually makes their companies worth working for.
Some businesses seem to have the "employee retention" thing down, and this article answers the question: "What on earth are they doing differently?"
Employee Retention Programs: Why Should I Care?
Costs. That's why.
If you're constantly replacing employees, you're burning a massive hole in your company's pocket. Employee turnover costs businesses anywhere from tens of thousands to twice their annual salary.
Consider the total costs of losing your existing employees:
- Hiring someone new. Ads, job board placements, interviews, and candidate screening require multiple steps and resources, plus time.
- The onboarding process. Training, paperwork, and IT setup for new hires take time away from everyday management tasks.
- Lost productivity. It could take as long as one year to replace your previous employee's productivity.
- Lower employee engagement. Current employees see a low employee retention rate and become disengaged themselves.
- Errors and problem solving efficacy. New employees aren't well-versed in the company's processes and are therefore less adept at solving job-related issues. This causes errors that lead to revenue loss and a poor customer experience (e.g., customer service blunders or sales opportunities lost), most of which are problems HR can't see.
- Training costs. Training is an ongoing process that helps employees develop. Every time a company hires a new employee, they start over from the beginning.
- Cultural damage. A high turnover rate creates an atmosphere of insecurity and chaos that impede your company's overall growth. Each time another employee leaves, others will ask themselves, "Why?"
And the total costs of employee turnover are only increasing. Total turnover costs to employers now exceed $700 billion and have more than doubled since 2009, according to Work Institute's 2022 Retention Report.
8 Effective Employee Retention Strategies for Highly Engaged Employees
The best employee retention strategies give your employees the things they're actually looking for. It takes more than breakroom ping pong tables and free food to keep your people motivated and engaged.
About half of the workforce is "open to leaving their organization" at any given time, and they aren't quitting to collect unemployment. They're leaving for a better employee experience.
In 2022, Gallup asked 13,085 current U.S. employees their opinions on the most important factors when accepting a new job offer. Unsurprisingly, the study revealed pay- and well-being-related factors ranked highest.
In order, the top six factors for employees in the Gallup study were:
- A substantial increase in pay or benefits
- Better work-life balance and improved well-being
- The ability to work on what they're best at
- Stability and job security
- COVID-19 vaccination policies that align with their beliefs (on both sides of the issue)
- An inclusive workforce for all types of people
Employees decide on a new role based primarily on how well it promotes their financial, physical, and mental health. And even though 50% are willing to leave their company at any time, what they really want is stability and job security.
This underscores a tremendous opportunity for employers: Their employees want to be loyal, they just need to meet them halfway.
Here are ten ways to boost employee retention.
1. Talk to your employees about their values.
Compt articles are great resources for those who want to improve employee retention. But the research we put into them is in no way prescriptive.
Talking to your current employees will create a culture of employee engagement from the beginning — by asking what's important to them, you'll create a team-driven environment that ensures employees feel heard and valued.
Before making any changes to retain employees, start with the basics. Talk to them about what matters to them and how they want to be supported.
Ask them questions like:
- What's important to you in your job?
- What kind of benefits do you need to feel valued and motivated?
- What benefits would help you feel healthier and more productive at work?
- How can we help you stay engaged and reach your goals?
- What employee perks would you like to see besides the standard benefits?
Let your team know you're prioritizing employee retention and want their input. The best way to get a candid answer is to ask each employee anonymously. Invite them to share their thoughts and feelings in a survey or anonymous Slack channel without fear of judgment or retaliation.
2. Look closely at your internal processes.
Employee job satisfaction and sentiment toward the company's current processes can tell you a lot about what you're doing right (and what you're doing wrong). After gathering information about what your employees are looking for, conduct an employee benefits survey to find out what they would change about their current work environment.
Make sure to ask about the following:
- Compensation and wages
- Flexible work hours or remote working options
- Mental health and well-being
- Training opportunities for job growth and development
- Existing perks and what could be improved
- Company values and culture
From there, you can develop an employee retention strategy that meets the needs of your employees.
3. Offer competitive salaries (or hourly wages).
Competitive pay is by far the most essential factor when it comes to employee retention. If you aren't offering competitive wages, you can kiss your employee loyalty goodbye.
According to Willis Towers Watson's 2022 Global Benefits and Attitudes Survey, 56% of workers say pay is a top consideration when evaluating a new employer and 41% would leave for just a 5% bump.
There are three essential considerations when determining "competitive" pay:
- Benchmarking. Use salary surveys and online tools to research your industry's pay averages and stay current with or above these numbers.
- Impact. Carefully consider the bottom-line impact of each role (i.e., how much revenue it drives for the company). As they take on more responsibilities, their pay should increase as well.
- Local cost of living. Your salary should also reflect the local cost of living — nobody will take a job if their pay is lower than what they need to survive. MIT's living wage calculator is helpful for getting a baseline understanding of what your employees need to live.
Remember: Giving an existing employee an X% raise is considerably less costly than replacing a departing employee.
4. Give employees flexibility in their schedules and work environment.
Besides financial compensation, flexibility and autonomy are the most important factors for employee retention. Employees feel valued when they're able to do what they're best at on their own terms.
Depending on the company, role, job functions, and number of employees you have, this could mean:
- Remote and hybrid options (e.g., work from home, work from anywhere, X days in the office)
- Flexible schedules or the ability to work their own hours
- Unlimited paid time off (PTO)
- Job sharing with other team members
- Remote work stipends, equipment, and/or software
Remote work will yield the highest employee retention rate. New findings from Zapier show just how far people will go to become remote employees.
In addition to the 61% who would quit their jobs to pursue remote flexibility and the 32% who already have, 91% agree that remote work has contributed to overall employee satisfaction.
If you can't offer remote work, the next best thing is to offer a hybrid model. Employees quit in favor of flexibility because it helps them save money, feel more motivated, and spend more time with their families.
5. Make work-life balance a part of your company culture.
Almost all employee retention strategies involve encouraging a healthy work-life balance because it improves the overall quality of work.
Employee burnout is a serious problem — Deloitte research shows that 77% of professionals have experienced burnout at their current jobs with more than half citing multiple instances.
Aside from promoting flexibility in workplace culture, an employee retention strategy should prioritize work-life balance by:
- Giving enough PTO and encouraging employees to take it
- Supporting your team's mental health
- Respecting your employees' time outside the office (e.g., no emails or calls after hours)
- Making sure your employees; workloads are reasonable and expectations are clear
- Fostering work relationships outside of the office
- Incorporating wellness initiatives into your company culture
- Continually managing your organization's ability to provide transparency and flexibility to all your employees
Aside from remote work, one of the easiest and fastest ways to drive employee retention through work-life balance is to set up a health and wellness stipend as part of their benefits package. They can use this stipend for anything related to health and wellness:
- Meditation apps
- Fitness apps
- Gym memberships
- Workout clothes and gear
- Virtual health classes and consultations
- Mental health counseling and therapy
A healthier workplace culture is not only good for employee morale but also for the bottom line — health and wellness perks lead to fewer sick days, more productivity, and improved job satisfaction.
6. Focus your company's culture on diversity, equity, and inclusion (DEI).
Hiring diverse employees is a deciding factor for 80% of workers. DEI-focused companies empower their workforce to speak up and contribute rather than feel like they need to look for a new job.
Focus on increasing diversity and creating an inclusive workplace by:
- Developing and implementing anti-discrimination policies in the workplace
- Eliminating potential biases during the hiring process
- Offering mentorship programs to help all employees succeed
- Establishing DEI initiatives like affinity groups, task forces, and diversity training
When hiring for diversity, a lot of companies fall into the trap of only hiring for race or gender. If you want to create a culture centered around diversity, hiring team members with different worldviews, life experiences, and skillsets is equally important to prevent groupthink.
7. Enable personal and professional development.
Thanks to technology, e-learning opportunities are more accessible than ever. Online courses offer convenient ways to keep up with industry trends and develop new skills — many of them are even free.
Offering e-learning opportunities as part of your employee retention program will show that you value their growth, and give them the ability to advance their career without leaving the company.
You can create a culture of continuous learning in numerous ways:
- One-on-one coaching sessions
- Mentorship programs
- Reimbursement for courses, books, and/or conferences
- Leadership bootcamps
- Professional development stipends
- Companywide learning objectives and action plans
Whether your employees leave your company or stay forever, investing in their growth means they'll always associate your company with the skills they gained and positive experiences they had. Plus, it makes them more productive and engaged.
8. Offer additional perks and stipends.
Perks and stipends are by far the easiest way to give your employees more of what they need on their own terms. Especially if you have a diverse workforce with varied needs, offering stipends for general categories (e.g., health and wellness, mental health, professional development, etc.) makes it easy for them to choose what's most important to them.
Here are a few examples of employee retention strategies with stipends:
- Webflow supports the work-life balance of 100% of its remote workforce by offering 95 health and wellness-related perks.
- Carrot achieves 97% employee engagement by offering stipends for new hire tech (e.g., home office tools), $50 spot bonuses for holidays, and productivity stipends for midday coffee, dog walkers, and other needs.
- Column offers employees an all-inclusive stipend to use for anything that makes them feel "healthy and whole."
Rather than telling employees what they can and can't use their stipends for, giving employees the freedom to choose how they use their stipend helps them reach their goals and feel respected.
Automate Your Employee Retention Strategy With Compt
Employee retention is a complicated equation. Once you figure out the right way to motivate employees, compensate them fairly, and give them the perfect amount of flexibility and autonomy, you're stuck with an HR headache.
Compt makes it easy to manage your benefits, stipends, reimbursements, and other perks in one place. With Compt, you can create a personalized employee rewards package, manage employee engagement, and track your expenses — all in one platform.
Click here to see how businesses increase employee engagement and employee retention with Compt.