As an employer, you put a lot of thought and effort into hiring the best employees. But can you say the same about keeping them?
Employee retention is critical to a healthy, well-functioning business. That’s because employee turnover costs you — in terms of money, productivity and morale. (Calculator: The cost of losing a key employee )
So how do you hang on to the good employees? Sure, there are some things that as employers you can’t control. But you have a larger influence than you may think.
While every company has a different culture — and every company has a different definition of culture — there is one element that is consistent in any successful business environment: A feeling of belonging.
As an employer, you can do several things to foster this feeling and build the company’s culture.
- Clearly defined vision : Your vision for the company — where you want to go and what you want to do — should be known, and shared, by everyone on the team. This gives them a sense of purpose.
- Strong leadership : It’s been said employees don’t leave companies, they leave managers. Managers assign tasks. Leaders provide guidance, coaching, and when needed, they roll up their sleeves to help get the job done.
- Thoughtfulness : Get to know your team personally. You can’t get involved in their private lives, of course, but you should know their likes, dislikes, goals and passions. This knowledge is vital when giving recognition. Thoughtfulness also means caring for their well-being. This can be demonstrated through the tools, programs and benefits you make available to them.
When people work hard, they want to know where that effort is taking them. And for many employees, professional growth is just as important as salary. Especially for younger workers.
A 2021 study by LinkedIn Learning found that 61 percent of workers aged 25 to 40 said learning and professional development is the key to career success. Of those, 38 percent said learning helped them find new opportunities with their current employer. Which is critical, as the same study found that those who are offered mobility within their organization stay almost 2x longer than employees without.1
Many large companies have professionals on staff to help employees plot their career and identify opportunities. But for other companies, formal development programs can be a challenge.
Successful companies often follow a simple 70-20-10 rule when it comes to their employee’s professional development:
- 70 percent — Challenging assignments, stretch goals and on-the-job experience
- 20 percent — Coaching, feedback and networking
- 10 percent — Formal training and development classes
Employee training and assimilation into the culture begin the day you make the hire. Take a good look at your onboarding program and identify areas of opportunity and improvement.
While culture and professional growth are important, don’t overlook the role of fair compensation. With today’s technology, anyone can discover within minutes whether they’re being paid competitively or not.
But competitive pay is only the beginning. Flexible work schedules, work-from-home arrangements and paid time off when necessary are all part of today’s compensation package.
That’s why many companies now provide their employees with a Total Compensation Statement. It shows their base salary, of course. But it also includes the contributions the company makes towards their profit sharing, health insurance, retirement plans, etc. Annual statements like these can go a long way towards showing your employees their true compensation package.
Other forms of compensation, such as bonuses used to pay life insurance premiums for employees’ benefits, employer-paid disability income insurance, or non-qualified deferred compensation programs can help keep your most valuable employees in place. And they can provide the company with potential tax deductions. Oftentimes, offering meaningful benefits to your employees can cost the company less than a salary increase, while still having the same positive effect.
Resources for employers
There are various resources available for employers to delve deeper into the culture, professional development, and compensation initiatives critical for engaging and retaining employees. These range from consultants and human resource services companies to industry groups and multicultural professional associations. (Related: MassMutual's Business Center)
In fact, some employers find sponsoring employee memberships to such organizations is an expedient way to tap into the resources those organizations routinely provide to members.
The Society of Human Resource Management routinely provides resources for employers on retention as well.
Governments at various levels also provide resources for employers looking to retain employees. The Small Business Administration’s resource section has an online course dedicated to the subject.
In the end, happy, satisfied employees are more productive, more innovative and present a better face to your customers. They become the backbone of a stronger company, allowing you to focus on improving your business model instead of constantly looking for new employees to fill seats.
More from MassMutual...
What owners should know about Qualified Sick Pay Plans
This article was originally published in March, 2016. It has been updated.