Making sense of employee retention and it’s importance for your business! | ActionHRM blog

Welcome to ActionHRM Blog

Making sense of employee retention and it’s importance for your business!

Retention remains a top priority in HR strategy

Many HR teams are focusing, it’s recently been reported, on how best to retain their top talent as it has been revealed that the way to increase productivity now lies with pinpointing your best employees and helping them increase their output. HR teams are looking at how implementing retention plans and providing great performance reviews that can nurture the workforce and keep them for the long term – driving down recruitment costs and, it’s hoped, pushing up productivity levels. Therefore the ability to properly monitor and record the development of your talent has become a priority for many businesses – enabling them to maintain an ongoing record as to the individuals’ progress, as well as any discussions and plans that are put into place. Action HRM is perfectly positioned to help with talent performance management as part of an integrated HR platform. Enabling businesses to manage all aspects of performance related HR including 360 reviews, setting and tracking objectives as well as succession planning.

True cost of turnover

Recruiting new employees is a costly business; a recent report suggests that the cost in actual dollars can range from a few to several thousand. However many experts now point out that the real cost of employee turnover is far higher than simply the dollars and cents spent on recruitment. The impact that constant turnover has on other aspects of the working environment can be just as detrimental to business success. The effect can be seen in all aspects of the organisation ranging from a drop in the morale of remaining employees, lower customer satisfaction levels and a fall in the perception of the organisation to others – all incalculable in hard dollars but undoubtedly leading to lost business opportunities. One of the greatest areas of concern should be the effect on co-workers and their ability to maintain productivity levels if stress levels rise along with the loss of productivity of the individual who is leaving in the last weeks of their employment. Add these up and the true cost of attrition becomes more apparent.

Arguably, in any organisations’ strategic plan retention should be a top priority – there is little point in having a well thought out sales and marketing strategy or manufacturing and production strategy if you don’t have the right talent for it to be realised. So what are the strategies to help encourage employees to stay and nurture those that are believed to be key members in the team? There are a growing number of strategies that HR and organisational experts think should be employed; they can be divided into the financial and non-financial considerations. One vital point though is that retention strategies should not be broadcast but tailored for the motivations of individual groups of employees segmented by their job type or their management level.

 

Offering more than just money

An obvious differentiator for an employee between one business and another is the rate of pay they are willing to offer their workforce. This is one way in which a business can gain competitive advantage against its peers as well as using strong pay rates as a good retention strategy. Remaining one of the key factors that employees will cite as their reason for leaving is their remuneration and benefits package (along with job development opportunities). Compensation and benefits packages have become a deciding factor to many management levels in their overall package – dollars alone simply aren’t enough. Along with a standard salary and possibly performance related pay many expect a range of other high quality benefits that are membership not performance led. In a climate where the economy is starting to recover, many of the top talent realise their worth in the business arena and expect to be rewarded for it. Whether the form of that compensation comes from share options, health care schemes or an enhanced pension plans. In an economy where it seems nothing is for certain many employers see these additional benefits as a way to further engage their staff and retain them for the future. Of course, as with most financial products, pensions and shares hold their own risks but they can nevertheless be a very attractive benefit to employees.

Non financial incentives

Along with creating a competitive advantage with the compensations and benefits package a business can offer are a number of other factors that may lead employees to stay for longer. Many of these centers around the engagement arena. For example development programs, whether technical or managerial are high on the wish list for many top employees. Leadership mentoring schemes are also desirable for many.

The role of performance reviews

Performance reviews are a further way to engage with and nurture your employees but can been seen as a bit of a waste of time if they are not thoughtfully planned and executed well by management. Firstly the role of the review is not to discuss any financial implications of the employee – these reviews only work if they are a truly honest and reflective discussion of the person’s position within the business. Ensuring the discussion is a two way street is vital to achieving a productive review and talking about how the role could develop in the future and plans that company may have for expansion or diversification should be included. Setting specific, timely and measurable targets will make sure that the next review has a firm basis from which to start. Used well these reviews should be seen as an exciting meeting for employees and a great engagement and retention tool for management and HR.

Retaining the right people

Whilst many HR teams quickly identify those they believe to be their key candidates for retention strategies there can be the mistake of retaining only those that are seen as the high fliers or who are senior executives of the company. In fact there are many other employees that should be considered as just as important to the future of the business. An employee’s institutional knowledge and industry experience could far outweigh what they appear to have achieved on paper. A smart HR team will be able to identify these key players within the organizational structure and shortlist them as well as the potentially more obvious candidates.

Continual process

In order for a businesses retention strategy to be successful it must ensure that it is tailored for its employees, and it should normally include a mix of financial and non financial elements as discussed. However senior management should not become complacent as this is not a stand alone exercise that once completed can be set aside. Retention strategies, in forward thinking organisations, should be continually evolving, offering talent an ongoing dialogue not only to their progress within their role but also within the company – as it stands today and as it might be in the future.