Last year, we gave you 7 ways you can update your recruiting process to attract top talent. Now that you’ve selected the best people for your organization – how do you keep them? Having a strong employer brand, loyal employees and a positive industry reputation is dependent on your company’s ability to retain your top performers. If you’ve invested time and money in finding the best people for your workforce, you want to continue to invest in things that will make sure they stay. Keep on reading to understand why an investment in employee retention efforts are essential to the success of your business and what we recommend for employee engagement initiatives.
What is Employee Retention and Why Is It Important?
Employee retention is the methods by which your business and its stakeholders work to keep employees engaged to the extent they want to continue working for your company. If you’ve invested time and money in building an effective recruiting strategy and expended effort to bring top industry players into key leadership positions, the same amount of time, money and effort should be invested in keeping those same people in the organization. If you’ve spent your energy onboarding an employee over the span of their first three months, the last thing you want to do is feel it’s wasted time and money because there is high turnover. Failure to implement measures and strategies to retain your competent employees can deeply impact your company’s bottom line. According to Gallup, the conservative estimated cost of replacing an employee can range from half to two times their salary.
On the flip side, the benefits of keeping an employee engaged and part of the organization can be a boon for the business. Your employees can focus on executing job duties consistently, rather than being pulled away from their day to day responsibilities every few weeks to onboard and train new team members. Long term employees have developed tribal and organizational knowledge and can memorialize all of it for effective knowledge transfer and succession planning for new employees or internally promoted colleagues. By taking active measures to engage and retain employees, you are demonstrating long-term commitment to and investment in their success with the hope they will return the favor by remaining loyal and choosing to grow with your organization. Employees who have been treated well and to whom you’ve demonstrated loyalty will reciprocate that loyalty; and there is incredible value in keeping the people around who have bought into your company’s vision, mission and culture.
Employee Retention Strategies
There are a variety of ways businesses can go about retaining their top performers. Any employee-facing process should be developed strategically with goals and outcomes in mind. Like any employee-facing process, you want to establish goals and outcomes for your retention plan. Develop a process by which you will communicate the retention program to your workforce, execute it, and assess its progress to the pre-established goals.
Also, your retention goals should be realistic and specific to your business. Although I believe every suggestion below is possible for all businesses, it doesn’t mean they should all be implemented at the same time. Your business may want to offer competitive salaries, but isn’t in the financial position to do so right now. But, you know it is something you want to do, in conjunction with other retention programs. So, you choose to execute on something that doesn’t cost as much money now, with a goal to provide salary increases and variable pay in the next two or three years. A comprehensive retention strategy takes time and should be approached methodically – one step at a time, based on your specific workforce (ask yourself – what do your employees need and want from you as their employer?), with long-term sustainability in mind.
When at work, people want to know where they stand. As difficult as receiving feedback can be for some people, receiving no feedback is even worse. Imagine reporting to work day after day and having no idea if you’re doing what you’re supposed to be doing or if you’re doing it well. Most people don’t accept a job so they can remain stagnant in their position. They accept a job because they believe they can leverage their skills and experience to move the business forward. Providing regular feedback to your people, whether informally or formally, connects them to the business because they are able to see how their efforts are contributing to the success of the business.
Performance management, when done well, is a highly effective retention tool. A key part of successful company performance development is the goal-setting that occurs between the manager and the employee. These formal conversations should occur at least bi-yearly, if not quarterly. Through these feedback discussions, the employee becomes more invested in their growth and development in the company and sees the investment reciprocated by the manager. By leaving the performance development meeting with concrete goals, the employee has the opportunity to challenge themselves, improve their performance and potentially improve their position in the company. When an employee sees a future for themselves at work, they will work hard to see that future come to fruition, especially when they have someone in leadership supporting them as they attempt to achieve that future. As cliche as the expression “people don’t quit jobs, they quit managers” is, it’s true. If a bad manager can have an adverse impact on turnover, imagine the benefits of having strong, positive managers who believe in even-handed and consistent feedback. When your organization encourages and promotes effective managers who help grow their teams, a management position becomes attractive to everyone within the organization. You are able to hire, retain and grow your top performers internally as a result of your performance development process. Invest in your people and they will invest in you.
Your employees want to feel valued where they work. That’s why company culture is incredibly important to employee retention. To be clear, company culture is more than freshly stocked kombucha in the fridge, Friday team happy hours and a dog-friendly office policy. In fact, those perks lost all value when the majority of workplaces were forced to go remote as a result of COVID. Company culture is the intersection of values, goals, attitudes, behaviors, experiences and practices that define a company and influence the employee experience. Studies show that working adults value company culture over salary as it relates to job satisfaction. People want to work for a values-based company where the core values are interwoven into the everyday business practices of the organization.
The first step in developing a strong company culture is clearly defining the core values you want to guide the business. To develop a strong, positive culture, you use the core values to influence the employee experience. What you value as a business and how you want your employees to feel about coming to work every day has a direct impact on policy development and process creation. Values need to be lived and reflected in every aspect of your business. For example, if you value resourcefulness and independent decision-making among your people, you are likely to feel comfortable offering flexible schedules and remote work. Perks are a reflection of your company’s values, but mean nothing if they aren’t aligned with expected behaviors. In this case, if you insist on micromanaging your remote workers or take away flexible scheduling because someone didn’t immediately answer Slack at the start of the work day, there’s a clear disconnect between your values and your employees’ experience. The incongruence between what your company says they believe and what they actually do is indicative of a poor company culture and can result in a dissatisfied workforce with frequent employee departures.
Culture can be hard to evaluate, especially if you are attempting to gauge its connection to employee retention. Simply put, within the context of company culture, ask yourself if your employees enjoy coming to work every day because they feel respected, valued and connected to the company and the work they are doing. If you can confidently answer in the affirmative, leverage your company culture to retain employees. Use employee testimonials about the culture in recruiting and employer branding materials. Have employees evaluate how they embody the core values as part of the performance development process. If you have an annual recognition event, acknowledge employees who further culture-building initiatives through their commitment to exemplifying the core values.
There’s absolutely nothing wrong with perks like cold brew on tap, Margarita Mondays and half day summer Fridays – but they aren’t the indicators of company culture, they are an extension. Keep your employees by valuing their contributions to the business, engaging them in their day to day to work, and creating positive professional development opportunities – then you focus on the foosball tables and team outings.
Competitive Salaries/Incentive Programs
Although job hunters are willing to sacrifice a larger salary to work for a culture-driven company, culture alone won’t keep them engaged and employed within your organization forever. Your initial salary offering to a new hire may not be the highest on the market, but developing a comprehensive compensation structure can serve as a tool for employee retention. Linked with performance development, outlining how an employee can earn more as they meet performance metrics and accomplish business goals is an effective approach to keeping your top performers. If they perform well, they get paid well. Paired with a strong company culture, having a clearly outlined pay strategy tells employees you are a business where people want to work and are rewarded for their efforts towards the growth of the business. A competitive salary program may be an annual base pay increase based on achievement of performance goals or a variable pay strategy, including bonuses and/or commissions if someone moves the needle connected with KPIs and performance metrics. Red Clover is skilled with developing a compensation strategy for businesses of all sizes and our expertise and insight is available through our compensation eBook, available here.
There are also incentive programs that a company can implement that aren’t related to salary that can be effective approaches to retaining your key employees. Some organizations increase their vacation time offering the longer an individual remains with the company. One of our consulting clients, as an extension of their company culture-building initiatives, offered reward trips to individuals who were recognized during their annual awards ceremony. Having a learning and development curriculum to scale your internal workforce demonstrates an investment in their aspirations and allows you to build rather than buy your talent. If your workforce knows you’ve made an investment in their professional growth, they will be more engaged and committed to long-term employment, especially if given consistent opportunities for learning to improve in skills and business acumen without having to do so outside of the business or at their own expense.
Flexibility and Transparency
Even before the COVID-19 pandemic, employees wanted remote work options and flexible schedules, even if their bosses insisted their roles couldn’t possibly be effective if remote. Now, people who were always told they couldn’t be successful working from home have demonstrated they can be. People want to work for businesses that provide flexibility. When you provide your people flexibility, you’re demonstrating you trust them and their success becomes tied to deliverables rather than on presence. Imagine the positive influence on culture if your employees feel comfortable running to the grocery store or taking their kids to the doctor without feeling like they’ll be reprimanded for stepping away from their computer while working from home. As long as the employee is meeting KPIs, providing them the freedom and the flexibility to work during the time that is most conducive to their productivity is a benefit that will influence their decision to remain with your organization.
As with performance development, employees thrive when organization leadership is transparent with them about where they stand. We aren’t suggesting that the leadership team lay bare every aspect of the organization, but intentional communication about business issues that directly impact the workforce is a way that senior management can support transparency through every level of the business. A company that clearly communicates policies, business challenges, and changes within the company demonstrates the premium they put on directness and honesty. It can also prove to be a reciprocal relationship; if managers are upfront with employees; employees will feel that can be upfront in return. An environment where feedback is appreciated and encouraged for individual and company advancement is one conducive to long-term commitment by its people.
Companies can put a premium on transparency throughout their organization by clearly and succinctly communicating any changes throughout the workforce with a comprehensive communication plan. Leadership develops the who, what, where, why and how of the employee communication, approaching it with mindfulness to its impact on the organization. Even if the message itself is one employees may have difficulty hearing, if you deliver it with the employee experience in mind, it mitigates the risk of losing employees. Respectful communication, treating employees like mature adults, and being appropriately honest with your people is another way you retain your workers.
As a business owner, you worry less about high turnover and frequent employee departure if you have a recruiting process that is structured to bring in the right people from the get go. Your goal is to hire individuals who have the core competencies expected of the role, will add to the pre-existing culture, and can execute job responsibilities within the context of the core values. Although these are relatively abstract concepts that seem hard to quantify, we find behavioral interviewing is a tried and true method to finding the right people for the right seat.
Behavioral interviewing is based on the theory that the best way to predict future results is by past behavior. You derive your interview questions from core competencies you’ve identified for the position and provide the interviewee the opportunity to speak to their professional experience in relation to the competencies. For example, if you’re hiring for a customer service role, customer focus is a necessary skill for that role. A behavioral interview question you may ask is “Tell me about a time you exceeded a customer’s expectations.” The question is framed in a way that invites the candidate to speak to a specific past experience and tell the story as it relates to that experience. How they’ve acted with customers in the past is a strong indicator of how they will work with your customers if offered the job. We recommend avoiding hypothetical questions (“How would you deal with a difficult customer?”) as someone is more likely to answer that question based on what they think the interviewer wants to hear and can adequately answer the question without speaking to a specific example of customer service. So, you don’t actually learn if they possess the core competency you’re looking for.
You can also tailor behavioral interviewing questions to help identify if the person across the table will be a culture add and if they will have buy-in to the core values. If one of your company core values is “Reliability”, you use questions that invite the candidate to speak of past instances where they’ve exhibited reliability at work. Sometimes, you may even be able to understand if they are the right fit through the course of the normal interview without having to outright ask values-based questions. If one of your company core values is “Teamwork”, and throughout the interview, the candidate speaks about how they are constantly cleaning up others’ messes and throws her previous colleagues under the bus, it’s likely that person isn’t the right fit for your organization. And if you have legitimate concerns during the interview, but are desperate to fill the position, you may make the mistake of offering a job to someone who may not be long for the company. If they don’t fit during the interview, they probably won’t be a long-term player in your organization.
At the end of the day, the key to retaining top performers is developing an experience that benefits the employee and the company. It’s futile to try to force someone to fit in if in their interview there are more reservations than endorsements. Employee retention is a two way street – they want to stay and you want to keep them. The employee/employer relationship is reciprocal, and cultivating an effective relationship between the two is key for retaining your top performers.
How Red Clover Can Help
Red Clover consultants have extensive business leadership experience. Through our numerous service offerings, we can help your business identify your core values, develop company culture initiatives, and build effective recruiting processes as means to improving employee retention. The success of any change in your business is dependent on your peoples’ ability to embrace it, and we roll up our sleeves to work with your organization and its people to implement and accept the change.
If you’re interested in learning more about our approach to employee retention through the entirety of the employee lifecycle, reach out to us here!