Every year, companies spend billions of dollars recruiting new employees when a smaller investment in keeping their current staff is more cost effective. Many factors affect your retention rates, so it’s up to you to become proactive in addressing the primary reasons why good employees leave your company. In general, there are six areas that need special attention.
Better Hiring Practices
High retention rates start with hiring the right people. Job applicants with short tenures at previous companies are unlikely to stay with your company for the long term. It’s acceptable to take a chance on one or two job-hoppers a year, but you don’t want to staff your company with people who are serial job hunters.
Taking the extra time to find the perfect person to fill a vacancy is better for the long-term morale of your company than rushing to fill a position with someone who is unqualified or prone to leave after only a couple of months.
Increase Pay or Bonuses
The average cost of hiring a new employee depends on the industry, but even for low-wage workers, the cost is over $1000 per person. This cost includes recruitment, lost productivity, training, and time lost during the hiring process. Re-examining your raise structure may reveal that increasing raises by a few percentage points over the current structure will cost you less per year than hiring new employees.
If changing the pay scale is not an option, look to bonuses as a way of increasing pay and encouraging improved performance. Employees thrive when they are recognized for their hard work and they receive additional compensation for exceeding expectations.
Career Advancement and Development
Multiple studies have shown the strong correlation between career advancement and retention rates. Employees like to feel that they are moving forward in their jobs and they aren’t stuck in a dead end position.
Training and development programs not only improve morale and retention rates, but also groom an entire pool of qualified applicants for greater positions of responsibility within your company. They are already well versed in operations and company policy so, when promoted, it doesn’t take as long to get up to speed as an outside hire. A clear path of advancement is a win-win for both sides.
Flexible Scheduling
As counter-intuitive as it may seem, money may no longer be the primary motivation for career changes. Millennial employees have tremendous demands on their lives outside of work and they want to find a career that allows flexibility in their work schedules to allow them some semblance of work-life balance.
Over 40 percent of young workers will move to another company, even at a lower wage, if they can secure more flexible hours. There are several solutions to this problem, such as allowing workers to telecommute to the office one or two days a week or instituting a system where workers can earn flex hours to use for time off when they need it.
Relaxed Work Environment
Amazon offers one of the best compensation packages in the world, provides a flexible work schedule for employees, and hires only the brightest applicants, but it still suffers from atrocious retention rates. The problem with Amazon’s retention rates stems from its cutthroat workplace culture that sees employees turn into corporate spies and pushes people to their physical, mental, and emotional limits.
Competition in the workplace is not a bad thing, but when competition is the sole focus of your work environment, good employees will burn out. A relaxed workplace encourages collaboration and self-expression, both of which fuel creativity and productivity. Allow your staff to take a break from work for an hour or two each month for birthday parties, schedule after-hours social gatherings, or return to casual Fridays, and you will see morale and retention rates improve.
Insurance Options
The Affordable Care Act forced many companies to offer health insurance, but there are still gaps in employer coverage. Minimum insurance plans only cover catastrophic injuries or include high deductibles that make the insurance virtually impossible to use for most employees.
One of the most critical gaps in coverage is dental insurance. In the United States more than 164 million hours of work are lost each year to dental issues, many of which are caused by a lack of treatment early on. An expansion of your insurance coverage will make you stand out from your competitors and help you attract and retain the best employees.
Momentum Insurance Plans is a locally-owned dental insurance company that helps Wisconsin employers and employees with their dental insurance needs. Please contact us for more information about how a good dental plan helps with employee retention.
High retention rates don’t happen by accident. They are the result of targeted efforts by management to find and cultivate great employees. If you want better results in your retention rates, you need a top down evaluation of all of your company’s employment policies.