Now, more than ever, employers should be doing everything they can to retain their best people. The quit rate is rising rapidly. According to staffing company Robert Half, nearly 1 in 3 employees (32%) said they plan to look for a new role in the next several months.
With so many jobs going unfilled, and employers offering signing bonuses in the hundreds to attract even unskilled workers, employee retention has to become a priority for every organization.
The reason is simple: It’s far better and less costly to retain workers than to hire new ones. Ignoring all the other consequences, the cost alone to fill a staff position averages about $4,100. And that was before Covid, before millions of people left the workforce entirely. What the cost is now hasn’t been calculated, but with wages rising and bonuses becoming expected, it’s certainly higher.
If the recruiting costs were the only consideration, employee retention would still be a priority. Using just the average, pre-Covid cost of hiring, a company with 1,000 workers and annual turnover of 20% would be spending $820,000 a year just to fill vacancies.
But add in the cost of training, the loss in productivity and the impact on workers who have to pick-up the slack and it’s clear the economic consequences are high. By most estimates, the full cost of replacing a productive employee is between 1.5 and 2 times their annual salary. Replacing a uniquely skilled worker or an executive is higher still.
Since last year, the government has sweetened the pot even more. Employers can actually make money retaining workers. Since being signed into law in March, the American Rescue Plan Act makes businesses eligible to offset up to $7,000 of payroll tax per employee per quarter.
Not every business is eligible. It applies to businesses that partially or fully closed down or had a 20% quarterly decline in revenue. Yet for qualifying organizations, every worker retained this year can be worth as much as $28,000 in tax savings.
Ideas to retain Your Employees
Convinced about the value of employee retention, but wondering what you can do to hang on to your best workers? Gallup tells us that 51% of employees who quit say that in the previous three months not once did their manager or other company leader ask about their job satisfaction or their career ambitions.
Would that have made a difference? There are no guarantees, though 52% of all voluntarily departing employees told Gallup researchers their manager or organization could have done something to prevent them from leaving. Talking to them was one.
A leading if not the leading cause of worker dissatisfaction is a lack of recognition. This is such a simple problem to solve, yet survey after survey shows too few workers receive praise. Too many managers take the position, whether they admit it or not, that paychecks should be enough recognition.
They’re not. They’re table stakes in employee retention. Workers paid unfairly or below market will start looking for a new job as soon as they discover the inequity. So paying workers what they’re worth and a little more – and a little more than that for the top tier people – will eliminate comp as a reason to jump ship.
Money alone, even for money motivated sales people, isn’t enough. Supplement fair pay with honest and regular praise. Recognition goes a long way to reducing turnover and improving employee retention.
One of the many surveys linking recognition to retention, SurveyMonkey found 82% of workers are happier when they’re recognized. SurveyMonkey wrote: “63% of people who are ‘always’ or ‘usually’ recognized at work consider themselves ‘very unlikely’ to seek a new job in the next 3-6 months, whereas only 11% those who are ‘never’ or ‘rarely’ recognized feel the same way.”
Another survey, this one from the Society for Human Resource Management, four 68% of HR professionals agreeing employee recognition has a positive impact on retention.
Recognition can be as simple as a manager saying “thank you” to a worker for finishing a report ahead of time. Or as formal as an employee recognition day. Regular recognition, however, is the key to improving employee retention.
Certainly there are other key ideas to employee retention. Larger companies have HR professionals dedicated to monitoring and analyzing turnover and developing entire programs to reduce it.
But improving employee retention begins with valuing the workers you have. Pay them fairly, recognize them regularly and publicly and talk with each of them about their job and their future and turnover will go down as employee retention goes up.
Contribution by John Zappe
