Does Your Business Have an Employee Retention Plan?
Are you retaining your best talent? Possibly not, because post-Covid, employee retention is harder than ever before.
Job-to-job moves are still well above pre-pandemic levels, even though lockdowns ended some time ago. According to Microsoft’s 2021 Work Trend Index, almost two thirds of employers were recruiting last year, and this gives employees a lot of confidence they can find something new.
This is why it’s so important for organisations to put in place an employee retention plan.
Why should employee retention be a priority for your business?
Making employee retention a priority for your business is vital.
The ‘Great Resignation’ is still with us, and employees have never felt more confident about getting a new role if you don’t match their expectations.
More than seven out of ten workers used the time given to them during the pandemic to consider their job choices. Failing to prioritise employee retention while your top talent has so many other options is going to lead to you losing that talent in the near future.
The financial impact of low employee retention
There’s a very real financial impact of low employee retention.
The cost to organisations who need to replace just one worker is estimated at £2,697 for a company of 1-50 employees, increasing to over £4,000 for companies over 500 employees.
However, there are also indirect costs.
On average, it takes 8-12 weeks to replace the knowledge an employee has. If that worker contributed £100,000 of revenue every year, if it takes three months to find and train their replacement up to that level your business will lose approximately £25,000.
How to calculate your employee retention rate
If you want to calculate your employee turnover rate there’s a simple formula. Divide the number of employees who have stayed during a given time period by the total number of employees you had at the start of that period, and then divide by 100.
For example, let’s say you begin the year with 55 employees, but by the end of the first quarter you only have 51 employees. The calculation for your employee retention rate is:
(51/55) x 100 = 92.72% retention rate.
Key things to include in your retention plan
So what elements go into an effective employee retention plan?
Hire the right candidate
As much as 80% of employee turnover comes down to poor hiring decisions, so the first step towards a high employee retention rate is to hire the right people in the first place, but who is the ‘right’ person?
Of course, skills and experience are important, but these can be learned over time. What can’t be trained is whether or not someone is a ‘cultural’ fit.
Cultural fit is defined as the likelihood a job candidate will adapt to the core values and collective behaviours that make up the organisation.
Examples of questions you can ask to identify a job applicant as a good cultural fit include:
- What motivates you to come into work?
- What surprises people about you?
- If you were going to start your own business, what would it be?
- What’s the biggest problem in most offices today?
- What did you like most/least about your last company?
Offer a competitive compensation package
With the current cost of living crisis, workers have never been more stressed about their financial wellbeing.
This may well push them towards considering their job options, and if you don’t offer a compensation package that’s competitive within your industry they may well move on—even if they’re generally otherwise happy in their roles.
However, don’t overestimate the part pay plays in employees moving on. A study of almost 20,000 exit interviews found salary was the cause of an employee moving on just 12% of the time.
Focus on professional development
Job satisfaction is closely linked to having a clear progression path, but are you ensuring every single employee has a professional development plan?
Make sure line managers are trained on the importance of developing these plans, and encourage regular one-to-ones in order to keep track of progress.
If an employee isn’t interested in progressing within the organisation, are they likely to be one of your most effective team members?
Implement a rewards and wellbeing programme
A study conducted by Deloitte found that recognition programmes reduce voluntary staff turnover by 31%. What’s more, you only need to spend 1% of payroll on recognition in order to see a positive impact on employee engagement.
Employees also place a lot of importance on their employers supporting their wellbeing in the workplace. Dedicated programmes that support every element of employee wellbeing—physical, mental and financial—can make a huge difference to retention. A survey of HR leaders found that an overwhelming majority (95%) saw burnout as one of the biggest retention challenges.
Understand your employees’ concerns
You can’t improve retention if you don’t know why employees are leaving in the first place.
With this in mind, you should be conducting thorough exit interviews with all departing staff, but you should also survey employees on what they think the organisation is doing well (and not so well) frequently.
Make sure you listen to them though, as feeling ignored by management makes an employee twice as likely to become disengaged.
Make respect in the workplace unconditional
Feeling respected at work, regardless of background, gender or other identifier, is essential in 2022.
Research has found that organisations that embrace diversity and inclusion enjoy higher retention rates—as well as see increased revenue.
Looking for help with your employee retention plan?
An employee retention plan is vital for retaining your best talent, but if you’re looking for support from a partner who has decades of experience in engaging employees, look no further than Sodexo Engage.
We’ve been delivering award-winning engagement solutions for over 60 years, all of which will contribute towards your staff being happier at work, more engaged and more likely to stay with the business for longer.
Our solutions include:
- A Rewards and Recognition programme which boasts an incredible range of employee rewards, including eVouchers, gift cards and celebration packages.
- Our Financial Wellbeing Hub, designed specifically to help you support your workforce during the current cost of living crisis and beyond.
- An award-winning Employee Benefits Platform which helps to build long-lasting connections with your employees and helps you to attract and retain your industry’s leading talent.
If you’d like to find out more about how Sodexo Engage can help you develop an effective employee retention plan get in touch with our experts today.