In a statistic cited on Access perks, companies lose $11 Billion annually due to employee turnover. That’s a concerning statistic.
There’s no doubt: employee retention is crucial for the success of any business. I’m sure I don’t need to tell you this. Retaining your employees not only leads to cost savings but contributes to productivity, profitability, better staff morale and on job satisfaction. It’s no surprise then that 78% of business leaders rank employee retention as essential. Yet, the rate at which employees leave their jobs is on the rise. As a result it becomes progressively more important for companies to craft retention strategies that work to retain these employees.
And if you aren’t crafting such strategies perhaps it’s time you considered it? While implementing retention strategies is important, it’s imperative that you truly understand why people are leaving (and no it’s not just about the money!). You need to get to the root of the problem. You need to understand what makes employees tick. You need to understand why they leave. You need to accept that what you thought was true about employee retention, simply isn’t. You need to dispel certain myths. Here are 6 of the biggest.
Myth 1: Higher Pay Improves Employee Retention
Busted: Employees Leave for a Host of Reasons
Research by Bamboo HR about why people leave their jobs found that money only ranked third. In fact, opportunities for advancement and work/life balance trumped money. Ask yourself this: What are the reasons why employees leave? Framed another way: What would make them stay?
Get Creative; Take a Holistic Approach
- Flexible work schedule or ability to work remotely
- Free gym membership
- Free food or catered lunches
- Casual dress code
- Mentoring or developmental programs
Now’ I’m sure you can offer some of these perks, if not all of them. The important thing is to take a holistic approach to your employee retention efforts. Consider perk 1. The working remotely trend is on the rise, with Odesk predicting that by 2020, 1 in 3 people in America will be working remotely.
Now consider this:
- As of 2015 millennials comprised the largest portion of the workforce.
- 68% of millennials would be more willing to work for a company that offered remote working as part of their package.
It’s not just about the money.
Myth 2: There’s No Relationship Between Retention and Recruitment
Busted: Retention Starts With Recruitment
Employee retention and recruitment are interconnected. Hiring the right people improves employee retention and better retention is often a sign that you’re a good company to work for so you keep attracting top talent. However, if you hire the wrong people to begin with, chances are, that on average, you will have higher employee turnover. But you should not hire employees based solely on skill. Yes, skill-set is important, but it’s only a part of it. Hiring should be based on other factors like personality and fit. There are several creative interview techniques to use for this purpose.
Get Creative: Use Interview Techniques
- Set up a group interview, where you and several colleagues interview the employee to see how they interact in group settings, what their knowledge set is, and how they communicate.
- Let different managers interview the potential employee in a series of interviews. Creating a few interviews with different people in your business is ideal to see if what you and your colleagues experienced was similar and if you missed anything.
- Better yet, create a series of interviews that include role playing. When I was in London, a few years back, I attended two interviews. In the first interview they assessed my personality. In the second interview they assessed my current skill-set. I was in a roleplay where I was playing out an interaction with a “client”.
Myth 3: Investing In Employees will Increase Turnover; so I don’t do it
Busted: Not Investing In your Employees Causes Them To Leave
There’s this perception that if you invest in your employees, whether it be training, development or other education programs, you’ll be bolstering their skills and improving the odds of them leaving. Well, let me ask you this? What message are you sending by not investing in your employees? I’ll tell you. One that says, “I don’t really value you that much. You’re here to do a job. And that’s it.”
The reality is that employees leave for greener pastures all the time. What you want to do is ensure that you retain the right employees for as long as possible and decrease the odds of them leaving in the first place.
Get Creative; Invest In Training
Here are some training ideas to get the creative juices flowing:
- Enlist them in technical skills training programs to stay up to date with any software and hardware enhancements.
- Send them to trade shows to see what the competitive landscape looks like.
- Hire a motivational speaker. Aside from motivating, it’s a nice break from work.
- Monthly meetings where employees share ideas and what projects they’ve been working on.
Myth 4: Employees Want Limited Responsibility
Busted: Some Actively Seek out Work
If you think that the majority of employees only want to do the tasks assigned to them, then you’d wrong. Very, very wrong! Firstly, some actively seek out more responsibility. It’s in their nature.
Let me give you an example. I worked for a company. While my role was to grow company revenue, I went over and above that, seeking out work in support, project management, and finances (to name a few areas). Now some people won’t be as vocal about wanting more work and some won’t take initiative. Sometimes they just need a push. So, give them more responsibility and opportunities to add value.
Get Creative; Assign More Responsibility
- Start off by giving employees something small to do e.g. like updating a spreadsheet. When they’re done they’re bound to return looking for more work.
- Assign larger things to do, like creating presentations and drafting proposals.
- Let them attend meetings with you and present to clients.
- Over time they’ll have so much responsibility they’ll have forgotten what life was like without it.
Myth 5: Small Businesses Can’t Compete With Big Business
Busted: Small Businesses By Their Very Nature Have A Competitive Advantage
This employee retention myth is based on believing that employees are only after the money (which in most cases large organizations have more off) and the perks (which again large companies often have more of). The reality is that by simply being a small business you have a competitive advantage and there’s a host of other benefits you can offer. If you’re a small business and don’t believe that, maybe you just haven’t’ thought about it?
Get Creative; What’s your Competitive Advantage?
Here’s a story…
I worked for a tech startup for two and a half years. The pay was by no means high. However, I was able to get involved in multiple business areas. I was given much responsibility and freedom. Freedom to come up with new ideas. Freedom to take my own initiative. I was able to travel, present to clients, dress code was casual, and we had open offices. It was a friendly, small, warm, and inviting atmosphere. I place immense value on all these things. Also, the company incentivized me with a commission structure.
The moral of the story: smaller companies can compete to retain employees. You just need to look at your unique selling proposition. Can you offer a flexible work schedule? Can you offer casual dress code? Can you offer a relaxed work environment? Can you incentivize employees by offering commission? Can you offer free mentoring or development programs? What is your USP?
Myth 6: Everyone is Replaceable
Busted: The Actual Cost Is Far Greater
Yes, in theory, everyone is replaceable. When an employee leaves, you might list ads in local newspapers, release a press release, use your agency, or any other means to recruit suitable candidates. You then Interview a list of people, whittle down the list, and then select the most suitable candidate. It just involves spending a little cash and you’re all set. Right? Wrong!
Employee turnover can cost at the least 16% of an annual salary for a low-level employee and up to 213% of an annual salary for an executive. When employees leave you’re losing a lot more than just the monetary cost of replacing them. You lose customer relationships. Productivity diminishes. Expertise disappears. And a vast amount of knowledge is simply lost, if not all of it. In fact, according to a statistic cited in Tinypulse, employees take 70% of their knowledge with them.
Get Creative; Put Your Best Foot Forward to Retain Employees
- Provide employees with the best possible technology. No one wants to be using a laptop from the 90’s.
- Include an afternoon nap areas. Afternoon naps boost creativity. You may be thinking, “I don’t pay employees to sleep and besides it’s lost time and profits for me”. Well, how valuable is someone who has no energy and is walking around the office like a Zombie? Besides they’ll feel rejuvenated after and probably be more productive.
- Put effort into your welcoming process. Make them feel valued. See how the folks over at FanDuel do it?
How would you feel if this was your welcome into a new company?
I’d bet you’d feel pretty special.
Retaining your employees is so crucial to the success of your business. You need to make a concerted effort to craft the right employee retention strategies. To do this it’s important to understand exactly why people are leaving. You need to:
- Accept that it’s not about money. There are other factors like flexible work hours.
- Realize that as a small business you can compete. What’s your USP?
- Invest in your employees for better productivity. If you don’t they’ll leave a lot sooner.
- Invest in your recruitment process. It starts with hiring the right people.
- Accept that you lose far more than just the cost to replace the employee. You lose all the knowledge that comes with it.
Get to grips with this and then craft retention strategies that show you value your employees. Because ultimately, they’re people. And people aren’t solely driven by monetary rewards.