June 7, 2022

The Great Retention: How to Hold onto Your Most Valuable Asset, Your Employees

By Christine

By Penny Horton, SHRM-SCP, Executive Management and Human Resources Consultant penny.horton@hrraw.com

By now, we have all heard terms like the great resignation and the great reprioritization, as well as a whole litany of arguments on all sides of the debate surrounding why employees are leaving the workplace in record numbers and why we have more job vacancies than candidates.  Regardless of why, the fact of the matter is that most employers are facing real challenges today when it comes to staffing levels, and that strain is felt at nearly every level of an organization. Unfortunately, there is no single approach that will automatically solve this problem.

However, that does not mean all is lost. There is an old saying that the best time to plant a tree was 20 years ago, and the second-best time is today. Employers need to evaluate and weigh their possible options and begin acting today to help mitigate the impact of turnover in their organizations. A multi-faceted approach, one that includes both immediate activities as well as long-term systemic changes, is likely warranted. 

Employee retention has always been important, but when your candidate pool is limited and job openings are abundant, it’s downright critical. Retaining the right employee is always more cost-effective than replacing them. Let’s look at the factors that impact employee retention. 

Engage Employees

  • First, consider the current level of employee engagement within your organization. Various definitions of employee engagement exist, but generally speaking, they all have to do with the mental, psychological, or feeling of connection the employee has to the work and workplace. To achieve a connection with their work, employees need to understand how their daily tasks and job duties have meaning and value. When employees don’t have access to the resources, tools, equipment, and information necessary to perform their jobs, frustrations rise and an employee’s ability to connect meaning and value to their work is strained.

    Highly engaged employees will typically go the extra mile, usually without being asked, to accomplish objectives on behalf of the organization. Employers need to find ways to encourage, reward and recognize these employees. 

    Disengaged employees, at their worst, will create toxic work environments and sabotage the company’s efforts. Employers need to exit these employees from the company.

    Employers need to actively engage with those employees who are in the middle, between highly engaged and disengaged, to make sure they understand the value and meaning of their role and to make sure they have everything they need (resources, tools, equipment, and information) to be successful.
  • Second, get a pulse on the employees’ perspective, as it is now, before they make the choice to leave. Find out why current employees are staying, and what it is they like about their role and the company. You can take the conversation one step further and solicit feedback on suggestions to improve things. But a word of caution about soliciting feedback: If you are not truly open to their suggestions or have no intention of implementing any changes, avoid asking for feedback. Asking for employee feedback and not acting on any of it is the quickest way to cause disengagement and frustration in the workforce. 

    Employers have a variety of ways in which they can gather information from their employees that range from easy to difficult as well as free to costly. Some examples include stay interviews, brief questionnaires, engagement surveys, suggestion boxes, town halls, one-on-one meetings and focus groups just to name a few.   
  • Third, create a culture in which people want to belong and enjoy their time. Humans are social beings. According to numerous studies, on average, Americans spend about half of their life sleeping and about a third of their life working or performing work-related activities. So, if the average American spends the overwhelming portion of their waking hours engaged in work and humans by nature are social beings, it only makes sense that we should capitalize on this by making the workplace someplace employees want to be. That starts with hiring the right people for the right roles in the organization, ensuring their contributions are recognized, rewarded, and valued, treating them with respect, creating an inclusive environment, encouraging team building, and nurturing the social aspects of work, even in remote work environments. 

It should be noted that none of the factors that impact employee engagement specifically mentioned wages or compensation. That isn’t to say that compensation isn’t important or doesn’t play a role. In fact, most workers in the workforce today are in it to earn money. By and large, most Americans are living paycheck to paycheck. Recently, LendingClub Corporation indicated 64% of consumers, and 48% of those making over $100,000 per year, were living paycheck to paycheck in January 2022.[1] Inflation is rising, and the cost of living continues to climb. This added strain on the employee’s pocketbook and finances only reinforces the importance of compensation. But before you open up the company checkbook, there are several points employers should consider about rewarding and recognizing employees.

Recognize and Reward

  • First, understand what motivates your employees. Believe it or not, not everyone is motivated by money, particularly when an employee earns a sufficient living wage. Motivation is highly individualized. Take time to find out what makes your employees tick; you might be surprised to learn how many people are motivated by non-monetary reasons like altruism, increased responsibility, leading others, public recognition, time off work, prime office space, sabbaticals, autonomy, and even impressive job titles.
  • Second, identify creative ways in which you can reward employees. Some of these may be low cost and some, if implemented properly, can help the organization achieve even greater rewards than just employee retention. 

    For example, never underestimate the power of food. With increased food costs, it’s becoming more and more expensive for Americans to eat lunch. As an employer, doing something like providing an employee’s lunch presents an opportunity for you to not only reward and recognize employees, but also meet the fundamental and basic need of nourishment, save the employee an out-of-pocket expense and in many cases, eliminate the need for them to leave the workplace. That’s a win-win-win-win situation! Just don’t forget subsidized meals can be considered taxable incomes since they are a fringe benefit. Consult with a tax professional before implementing such a program. 

    Think about other everyday costs and time burdens your employees experience and find ways to help alleviate or off-set those. Things like transportation and fuel costs, childcare expenses, housekeeping services, dry cleaning, haircuts and personal care, student loan debt, out of pocket medical costs and more offer possibilities for which employers can offer assistance and relief—whether it’s by directly covering some or all of the costs, making them easier or less time-consuming for the employees or even giving them as random or earned prizes. 
  • Third, opt to have more flexible work schedules and work arrangements. You can easily reduce the time and cost of commuting to the office by offering remote working options or switching to a three-day or four-day work week. Doing so may even end up lowering some of the company’s overhead expenses like utilities and rent. The flexibility also gives employees more personal time to handle matters that may otherwise have resulted in their absence from work or reduce other costs for them, such as childcare. 
  • Fourth, increase the other elements of the employee’s total rewards rather than increasing their base pay. Total rewards include all the benefits, compensation including base wages and bonuses, development opportunities and perks an individual gets for being an employee of the company. Additional forms of compensation or additional benefits are viable options for recognizing and rewarding employees. Retention bonuses, profit-sharing programs, and performance bonuses are ways to increase an employee’s annual compensation without increasing their base pay and are typically tied directly to how long an employee stays with the company or the satisfactory performance of both the employee and the company. Additionally, employers may also consider covering a larger portion of an employee’s benefit’s premium, covering the cost of other benefits such as life insurance policies, short-term and/or long-term insurance, accidental death and dismemberment policies, supplemental insurance, or even offering a 401k with or without an employer match or another retirement savings plans.

However, regardless of how incentivized workers are and no matter how engaging the work and the workplace are, turnover will still exist. Natural attrition is always something employers have had to contend with, and this will remain true even after an employer has addressed any employee engagement concerns and long after the COVID-19 pandemic. As such, employers need to anticipate turnover and have strategies in place to respond. Let’s look at ways in which employers can mitigate turnover’s impact.

Mitigate Turnover

  • First, consider all the ways in which work, and processes, can be reimagined to allow for high turnover. To reduce the impact of turnover, employers need employees to be able to achieve competency in their roles as quickly as possible. The impact that results when someone leaves the organization is less detrimental if it takes days or hours to learn how to do the functions than if it takes weeks or months. Perhaps processes or functions can be “leaned” out (optimized for efficiency), automated, or standardized. Documenting processes and tasks that employees can quickly access and follow, such as written or recorded work instructions, standard operating procedures (SOPs) and other tools, will help ensure critical knowledge doesn’t walk out the door when talent leaves the organization.
  • Second, make sure your bench isn’t one-deep. No one employee should be the only person to know how to do a task or a process. Besides creating work instructions, SOPs, and other documentation, employees should be regularly and systematically cross-trained on other functions in the organization. This will ensure employees can be a backup resource and will help them grow their skills, in turn making them even more valuable to the organization and likely more engaged. Additionally, succession planning—the act of identifying key positions and their critical tasks, conducting an analysis of potential successors within the organization and developing a strategy to address any succession or skills gaps—will help you identify and prioritize the areas in which you may be “one-deep”.

Even once the organization successfully mitigates the impact of turnover, that does not eliminate the need for employers to hire employees or fill vacancies. Finding qualified talent and high-performing employees wasn’t easy, even before now. With today’s challenges, employers need to utilize every tool they have in their toolbox to be able to not only retain but also to attract talent.  Let’s look at some of the non-traditional methods employers should consider.

Attract Talent

  • First, employers should always be interested in vetting talent, regardless of whether there is currently an open position in their organization. Sales professionals have a motivational saying, “Always be closing (ABC),” meaning they should always be trying to finalize a sale with a customer. It’s a reminder to be persistent and focused on the end goal. Employers should treat the recruiting process similarly. They should always be looking for the next high performer to join their team. Additionally, when the candidate pool is so limited and the job opportunities are so vast, employers should also be marketing to potential employees with as much effort, intentionalism and focus as they do to their customers.
  • Second, employers need to think outside of the traditional recruiting channels and hiring approaches to help expand the candidate pool. Now is the time to implement alternative work arrangements such as job sharing, part-time shifts, apprenticeship programs, and internships. Seek out and take advantage of local grants, incentives, and tax credits that may be available to you through training in industry programs, employing formerly incarcerated individuals or other individuals who consistently see barriers to employment, hiring individuals with disabilities, and employing certain individuals. (For example, Oklahoma offers both an Automotive and an Aerospace Industry Engineer Workforce Tax Credit that provides company tax credits and personal income tax credits for recent college graduates who gain employment in those industries within the state.) Employers should also consider targeted recruiting campaigns designed to attract non-traditional workers such as retirees and minors. Additionally, you may want to rethink your rehire eligibility guidelines, background check requirements, pre-employment screening restrictions and nepotism practices.
  • Third, expand your reach and efforts by creating incentives that encourage all employees to become recruiters for the company. Implement employee referral programs that reward both the new hire and the employee who referred the candidate to the company. Align the payments with reaching performance and length of service milestones to encourage retention. Create a little friendly competition by holding contests for the employees with the most referrals or successful hires. Ask current employees to participate in career fairs, networking events and social media campaigns. 

As you can see, there is no one single solution or one-size-fits-all approach to mitigating the impact of turnover and shortages in the labor pool. Employers need to consider all the factors, weigh the pros and the cons, the costs and the rewards, and implement strategies to help alleviate the negative impacts. The efforts will require time, money and effort, but if a business wants to be successful in the long-term, that’s the investment they will need to make. 

Key Take-Aways

  • Retaining the right employee is always more cost-effective than replacing them. 
  • Highly engaged employees will typically go the extra mile, usually without being asked, to accomplish objectives on behalf of the organization.
  • Create a culture in which people want to belong and enjoy their time.
  • Motivation is highly individualized. Take time to find out what makes your employees tick.
  • Employers need to anticipate turnover and have strategies in place to respond.
  • No one employee should be the only person to know how to do a task or a process.
  • Employers need to utilize every tool they have in their toolbox to be able to not only retain but also to attract talent.
  • Expand your reach and efforts by creating incentives that encourage all employees to become recruiters for the company.

[1] Lending Club Corporation. “48 Percent of Americans with Annual Incomes over $100,000 Live Paycheck to Paycheck, 9 percentage points higher than first reported in June 2021.” Cision PR Newswire, March 3, 2022. Web. https://www.prnewswire.com/news-releases/48-percent-of-americans-with-annual-incomes-over-100-000-live-paycheck-to-paycheck-9-percentage-points-higher-than-first-reported-in-june-2021–301494770.html 

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