Employee retention, a problem no more
Better is the adjective by which most of us lead our lives: better homes, better cars, better lifestyle and, more than often, better jobs. Such is the case that, while employees continuously aim to improve their careers, sometimes by changing jobs, companies strive to come up with solutions to reduce voluntary turnover. Employee retention rate has been and remains one of the most intense battles fought by executives and HR departments.
The turnover reality
Turnover prediction and prevention efforts have grown intensively over the last decade, so much, in fact, that top companies have now hired specialists to deal with such issues exclusively. However, as stated by Mitchell Terence, Holtom Brooks and Lee Thomas in their article “How to keep your best employees: Developing an effective retention policy”, the battle against voluntary turnover is far from being conquered. The authors emphasize that top accounting firms experience major difficulties in retaining their employees, as only 5% of the newly-hired workers will end up signing a partnership. High-technology companies are also at a loss as the average amount of time for an employee does not surpass one year.
Therefore, companies are then left facing a multitude of costs, including administrative requirements, payout of unused vacation time and costs for temporary workers or overtime for existing employees who are asked to fill in. The costs of replacing an employee are not to be underestimated: job advertising, candidates’ processing, interviews and, finally, selection of an appropriate candidate can use valuable company resources and time. The above mentioned authors consider that an employee who decides to leave the company also leaves the organization with a series of indirect, unquantifiable costs such as expertise gained through experience and, where the case, close relationships developed with clients. In “25 years of voluntary turnover research; A review and critique”, Carl Maertz and Michael Campion estimate that organizations in the USA pay $10,000 for half of all jobs and $30,000 for 20% of all jobs.
Considering the above-mentioned disadvantages of employee voluntary turnover, it comes as no surprise that a large amount of academic studies and researches focus on establishing the best strategies in order to prevent workers from leaving a company. In “Organizational Culture and Employee Retention” Sheridan E. John, sums up the prevailing principles from both academic and practitioner literature, which highlight that employee retention is a successful combination between job satisfaction (salary, work environment, tasks, supervision and chances for promotion) and job alternatives (those who are offered many job alternatives have higher chances to leave a company).
Developing a retention plan
In order to be thoroughly effective, employee retention efforts must commence prior to a worker expressing his/her intention of leaving or actually leaving the job. Thus, focusing on what makes an employee stay in a certain company might prevent future turnovers. Elements such as connections between an employee and co-workers, clients, other organizations, the worker’s compatibility with the job and the company he/she works for and the culture it promotes, combined with the sacrifices a worker has to make in order to leave a job contribute to helping executives develop a comprehensive plan that will prevent employees from leaving.
However, it must be pointed out that there is no single magic formula to enhance employee retention and each plan must be personalized accordingly to the company’s values and goals. A worthy example, in this case, comes from observing professional sports where not even paying someone millions of dollars per year does not prevent that worker from quitting.
Another step to developing a retention plan is to make some investigations within the company, in order to find out the reasons why workers are either leaving or staying with the firm. Interviews are excellent tools to extract the needed information in such cases. By examining these issues, executives can learn whether turnover is a problem in the company, who is leaving and why do these people want to leave, if it is better for these workers to quit or not and also what makes existing employees want to remain with the company.
Helpful long-term strategies
After having taken these measures, the company can determine how serious the turnover problem is, isolate the major recurring issues employees see within the company, develop an appropriate retention program and, thus, find and take the necessary solutions to enhance employee retention. It is also worth mentioning that a retention plan does not have a specific ending point, but it is rather a continuous attitude. Only after it has been applied over a certain amount of time can such a plan become truly successful.
Once the plan has been established, there still remain a significant number of parameters that a company must regularly monitor: assess job satisfaction and commitment to the company on a routine basis, be prepared to adjust or change strategies based on employees’ feedback, pay attention to sensitive topics such as pay, working environment and company values, prepare workers for potential crisis or shocks, be realistic when explaining the job previews to a new employee and take some measures to counter-balance the most frequent reason of turnover (Maertz and Campion suggest that, if pregnancy is what makes a considerable number of employees quit, then companies should consider day care or extended maternity leave as a measure that might sustain employment).
It is a well-known fact that the success and even survival of a company is closely linked to that firm’s ability to retain its key employees. Moreover, the quality of work and products, customer satisfaction and even company image are directly proportioned to workers’ job satisfaction level. The sooner a company understands the importance of developing a retention plan, the better it will prevent and deal with employee turnover.
- Maertz, C.P., & Campion, M.A. (1998), 25 years of voluntary turnover research; A review and critique
- Terence M. R., Brooks H. C., Thomas L. W. (2001), How to keep your best employees: Developing an effective retention policy, The Academy of Management Executive;
- Sheridan E. J. (1992), Organizational Culture and Employee Retention, The Academy of Management Journal