7 Employee Retention Strategies for Keeping Your Talent
A recent survey from consulting firm Watson Wyatt showed that more than half of all companies have no employee retention strategy. With the economy improving and the job market heating up, especially for middle market companies, you may find that employee retention, especially of your top performers, has become increasingly difficult. Losing your best people not only damages your productivity, disrupts current and potential leadership, and reduces company morale, it also helps your competitors. Having to match a competitor's job offer in order to retain your top performers is NOT a retention strategy — it only incentivizes employees to seek outside job offers and ask you to match them.
While you may think a formal retention strategy is a big investment (and you're right, it is), it will actually save you money in the long run while also helping you recruit top talent and increasing your middle market company's overall productivity and morale. Here are seven recommendations that should be part of your formal retention strategy.
- Hire the right people. Retainable employees show a clear commitment to contribute their skills and best efforts to your organization for the long term. Seek out people who are intrinsically motivated and interested in developing their skills and careers. Those only seeking money and power are classic turnover risks. Clearly establish expectations when you hire so that disappointments on both sides can be avoided. It's also important to understand your company culture and how potential hires fit into it.
- Have a good system for evaluating performance. Both the company and the employee benefit from knowing exactly where they stand in relation to each other's expectations. By monitoring and sharing results, it becomes clear which employees are meeting (or not meeting) performance expectations. Evaluation gives middle market companies the chance to recognize and reward excellence, a key aspect of employee retention. Employees expect feedback and will leave if they're not getting enough.
- Track your levels of retention/turnover and overall employee satisfaction. This allows you and your employees to know where problems are so you can solve them. Having an employee satisfaction survey, and then acting upon it, can decrease turnover. Questions you'll need to include: Are your people happy with compensation and benefits? With how they are managed? With the challenges the company offers them? With the training opportunities? Collecting this information will help support your ongoing retention efforts.
- Train managers and supervisors in good communication skills so that expectations between employees and managers can be openly established. Evaluation of performance begins with clear, measurable expectations that both manager and employee agree to and track. Giving managers better skills in offering important (sometimes sensitive) feedback is crucial. Employees generally don't quit on the company, they quit on their managers. Having managers who communicate feedback well and behave professionally is perhaps your best retention strategy.
- Offer employees a career path and a career development plan. This will allow your employees to have a better long-term vision of their evolving role inside the company. It will also allow the company to show its commitment to developing its talent, which benefits both the company and the employee. If employees have gaps in their skills or experiences, a career development plan (created by the manager, the employee, and HR working together) lets the employee realize that the company wants to close that gap and prepare the employee for the next step. Thus, employees don't feel "stuck" and without growth potential in the company, problems that are major drivers of turnover and low morale. For more research from the NCMM on this issue of training as a retention strategy, see a full report here.
- Have a recognition program that celebrates employees with excellent performance. It's not just the high achievers who deserve recognition, but anyone who goes above and beyond the call of duty. Reward good examples, and you create a culture where everyone wants to be a good example. This is also a culture that retains people. In addition, managers should seek out opportunities to recognize or appreciate employees informally, perhaps over lunch or during watercooler conversations. These are moments employees remember: Employees who feel valued generally reciprocate by offering their loyalty to the company.
- Customize benefits and work expectations for individual employees as much as possible. This will take a lot of time and effort because it requires companies to better understand the particular needs of their employees. Different employees want different things, so offering the same benefits package and working conditions to all will inevitably create dissatisfaction. This is a turnover risk. While it may be inconvenient to offer more flexible working hours or a customizable menu of benefits, such practices boost employee satisfaction and loyalty.
The takeaway: If you don't want your best people walking out the door, you'll need to build a proactive retention strategy that meets their individual needs for career development, recognition, and work-life balance.
Does your company have a retention strategy?
Boston-based Chuck Leddy is an NCMM contributor and a freelance reporter who contributes regularly to The Boston Globe and Harvard Gazette. He also trains Fortune 500 executives in business-communication skills as an instructor for EF Education. Circle him on Google+.