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How to Identify and Minimize Employee Retention Risks
With increasing employee mobility and abundant employment opportunities, employee retention has become a pressing issue for organizations. Companies should aim to prevent employee flight by identifying retention risks in time. Creating a maintaining an organizational culture that prioritizes employee happiness, engagement, and empowerment can also help.
Employee retention is at least as important as recruiting.
In addition to finding and recruiting top talent, successful organizations maintain an active focus on employee retention. Leaders who head such organizations know that without a clear employee retention strategy, around 25% of their workforce is packing their bags at any given time. And talent is increasingly expensive to replace.
According to research-based estimates, the replacement costs of an employee can amount to half a year’s salary or more, depending on skill level. Highly skilled, key employees are even costlier to replace.
Although they may have employee retention strategies in place, the mistake organizations make is that they fail to identify employees who already have exit strategies. By the time such employees announce their plans to leave, it is usually too late to convince them to change course.
How Can You Assess Employee Flight Risk?
How can an employer identify employees looking to move on to greener pastures?
Employee happiness is the key to retention, and we know quite a bit about the factors that make up this variable. From the perspective of the employer, the key factors that define employee happiness — and consequently retention — are:
- Recognition and reward. People like to feel appreciated. They also like to receive what they perceive as due remuneration.
- Being in the loop. Uninformed employees are little more than pawns with no control over their fate. Ensuring that they have enough information to see and understand the big picture is essential for the long-term happiness of employees.
- Empowerment. To develop mastery in whatever it is that they do and to find enjoyment in their work, people need control and the ability to make decisions.
- Psychological and physical wellbeing. These are essential components of employee satisfaction. A stressed-out workforce isn’t just a less effective one; it’s also much more likely to disintegrate.
- Challenges to meet and take pride in. Taking pride in what they accomplish work-wise provides employees with new challenges and opportunities for growth.
Above and beyond tracking and tweaking these variables, effective employee retention calls for a series of additional proactive measures, such as:
- Tracking employee turnover by department and position.
- Having exit interviews and keeping an eye on the online reviews current and former employees leave on the company. Learning the reasons for employee flight is essential in creating an effective plan to counter the phenomenon.
- Accounting for exit reasons employees may be reluctant to address in their exit interviews and reviews.
- Conducting compelling studies on the factors that make employees stay.
What Can You Do to Reduce Flight Risk and Improve Employee Retention?
Once you understand why your employees stay and why some choose to leave, you can create a compelling strategy to improve workforce retention.
As I have pointed out in my blog posts and leadership development books, investing in professional development should achieve results well beyond optimizing the value of the human assets the company has. Through such investments, companies motivate their talent, giving employees opportunities for growth and improving engagement.
To facilitate the flow of ideas and boost creativity, organizations should strive to create feedback-rich environments that do not smother employees through micromanagement. By being in the loop, employees feel valued and understand that their contributions make a difference.
A company should communicate its purpose, vision, objectives, and policies clearly and unequivocally. This way, it can provide a frame of reference for employees, creating stability and a sense of purpose. Companies should make efforts to consistently enforce their policies, lending them weight and true meaning.
Competitive pay is one of the basic elements of the employee happiness equation. Getting duly rewarded for one’s efforts is both motivating and empowering. The problem with competitive pay is that some employers may consider throwing money at their employees a be-all, end-all solution for retention. And it isn’t.
Competitive pay alone can’t solve the problem of employee flight.
Personalized benefits and flexible working conditions are as important as competitive pay for employee happiness.
Job-jumping has become the societal norm, and people are less and less inclined to be loyal to an employer when opportunities abound. Under these circumstances, focusing on workforce retention and employee flight identification has become a top priority for organizations large and small.
If you want to learn more about intelligent leadership and what it entails in your particular situation, pick up my leadership development books.