What Are the Key Factors in Employee Retention?

Ideally, your staff will want to continue their employment with you for a long time. If not, you may need to review your employee retention.

Having a high rate of employee retention provides several benefits to your company. Such as, increasing employee satisfaction, productivity and morale.

If your company has low employee retention, it could indicate problems within your workplace - such as poor work life balance. Moreover, staff frequently leaving may encourage others to follow suit.

In this guide, we'll discuss staff retention, employee retention strategies, as well as how to lower employee turnover and attract top talent.

What is employee retention?

Employee retention refers to a company's ability to retain employees and prevent them from leaving. It includes involuntary turnover - such as resignation, and voluntary turnover - e.g. redundancy.

Employee retention has a huge impact on your business. If it's low, it means that few employees have left your company over a specific period. If it's high, it indicates the opposite. And suggests there are issues in the workplace.

Is employee retention the same as employee turnover?

The difference between employee retention and employee turnover is that retention refers to employees staying in a business. Turnover refers to when employees leave a business.

A high turnover means lots of employees leave over a specific time period. Low staff turnover implies the opposite.

Why does employee retention matter?

Employee retention matters because it suggests what could improve in your workplace. For example, if several employees quit in succession you might see a pattern emerging.

This is especially true if they work in the same department, or have similar duties. Consequently, you'll be able to establish the reasons why these employees have left. And can come up with a plan of action to combat the problem.

The benefits of high employee retention

Unsurprisingly, retaining employees is beneficial to your business. Whilst it can have a positive effect on your company's culture, it might also attract top talent. Other advantages include:

High employee engagement

Having a high employee retention might increase employee engagement across your company. This is beneficial as engaged employees are more interested in your business and its potential. In turn, they'll likely see the advantages of staying at your company.

Increased employee productivity

Another benefit to high employee retention is that it could increase productivity in your company. Longer term employees know their job well, and what's required to succeed.

Moreover, if you internally promote them, they'll already have a better understanding of the company. So you can onboard them more efficiently, and spend the time saved growing your business.

Improved employee job satisfaction

High employee retention means having plenty of long-term staff. You'll have a better rapport with them than you would with new employees. Meaning, you'll likely feel confident voicing any issues or concerns you have to the other.

And if you quickly act upon any improvements they suggest to their working arrangements, you'll have a good chance of increasing their job satisfaction.

What are the reasons for low employee retention?

There are several reasons why employees decide to leave a business. Ensure you are aware of them all so you know what your workplace does and doesn't offer. Reasons might include:

Poor facilities

Poor facilities are another reason why employees might leave a role.

For example, your workplace might not have a large enough break room. Employees may look for another place to work that does offer this if they feel it impacts their satisfaction. As a result, these factors could lower employee retention.

Unhealthy work life balance

If your employees have an unhealthy work life balance, it might encourage them to look for a job elsewhere. When employees establish a boundary between their personal and professional lives, it helps them to unwind after work. They can come back refreshed with a better sense of focus.

If they have an unhealthy work life balance (because of the pressure of their role), it will be harder for them to establish boundaries. Their job may become overwhelming and affect their personal life, as well as their relationships. Consequently, it could cause them to leave your business and increase employee turnover.

Inadequate salary

Another reason why you might experience low employee retention is if staff are unhappy with pay. Dissatisfaction with pay can cause employees to withdraw from their roles, as they might not feel valued for their work.

For example, if your business doesn't provide competitive compensation, staff may find similar roles with competitive pay. If they do, it could encourage other employees to look for a position elsewhere, especially if they find more compelling job opportunities. Ensure you conduct industry research to find out what competitors are offering.

What are the consequences of low employee retention?

Low employee retention can have a significant impact on your company - and even other employees. Let's take a look at the consequences your workplace could experience because of a low employee retention rate.

Time consuming recruitment process

One consequence of low employee retention is that you will inevitably spend a lot of time constantly recruiting - which can have a negative impact on your business. For example, if employees are consistently leaving, you'll have to find other individuals to replace them.

This means you'll have to initiate your recruitment procedure again and again. If you have a HR department, it mightn't be an issue. But, if you control your own business's recruitment, it may be time-consuming and take you away from your workplace priorities. Subsequently, your business might suffer.

Lower morale

Employee morale may decrease as a result of low employee retention. Because it will be harder for staff to form long-lasting workplace relationships. This can decrease employee satisfaction because staff will see more employees (and likely, friends) leaving the workplace constantly.

This could give them the impression that they should leave, as they might find more compelling job opportunities elsewhere. And that the workplace isn't adequate enough for them to thrive.

Reduced productivity

Failure to retain employees might decrease overall productivity at your company. If your staff have low job satisfaction because of the standard of your workplace, it could cause them to withdraw from work. And they might choose to 'coast' through their responsibilities.

For example, a staff member has low job satisfaction and is unhappy in their current role. They find it pointless to excel at work because they don't feel valued. Or that tasks are too difficult. As a result, they don't complete their tasks properly, or to a decent standard. This then results in low workplace productivity.

What is an employee retention strategy?

An employee retention strategy is a plan that advises ways a business can lower employee turnover and increase retention. It includes ideas on how to increase employee engagement and morale.

Businesses might ask their HR departments to conduct employee retention strategies, or implement it themselves. It's best to look at some examples of employee retention strategies if you wish to implement one in your business.

Examples of effective employee retention strategies

You may already be aware of some effective employee retention strategies (also known as employee retention programs). Whilst you might have already implemented these strategies, there may be room for improvement. These include:

Thorough onboarding process

One example of an effective employee retention strategy is a thorough onboarding process. A thorough onboarding process should provide new employees with everything they need to succeed. And details of any benefits, such as private health insurance.

Whether it's equipment, access to facilities, or training, you should ensure you have planned everything properly. Because a poor first impression can linger throughout staff's employment and may cause them to leave.

Personal development plans

Another way you can encourage employee retention is through career development. You could do this by creating professional development plans. A professional development plan includes targets that employees need to hit in order to move up the career ladder.

For example, one employee's plan might note that in a year and a half they should be able to complete certain tasks, or acquire certain skills. If they do, they'll be in a better position for you to promote them. This will give them targets and make them motivated to succeed, as it results in their career development.

Exit interviews

You could also conduct an exit interview when a staff member finds a new job to improve your retention rates. You can ask someone from human resource management to conduct this, or host it yourself.

It might sound odd, but maintaining a relationship with a departing employee can be beneficial. And an exit interview is a good starting point. It's a chance for the employee to detail their reasons for leaving. This gives you an idea of what you could change to improve the employee experience.

It will also make staff feel like valued workers, as you are seeking out their feedback and making changes based on it. Consequently, it could encourage them to consider your company if another opportunity arrives in the future.

How to increase employee retention

Now you're aware of the reasons why employees might be leaving your company, you can try to resolve them. There are several ways you can increase employee retention. These are:

Promote from within

One way to retain employees is to use internal recruitment. When you internally recruit, you hire current employees for open vacancies within your business - instead of hiring a new employee. Not only does it save time - and money on training costs - it might also encourage employee retention.

This is because experienced employees are already aware of your company culture and have a rapport with their existing team. Not to mention, if you lay out a clear career path for them - which encourages leadership development, you might encourage them to continue their employment with you for longer.

Implement flexible working or remote work

Another way you can increase employee retention is by implementing flexible or remote work. Both include an employee being more in control of where they work and when. Flexible schedules and remote work help to promote a healthy balance, as they encourage staff to establish a boundary between work and home life.

A good work life balance means staff will have more time to relax and unwind after work. They will be in a better mindset to do their role, and become more motivated employees. Not to mention, they'll likely want to stay with your business because of this promotion of wellbeing.

Encourage employee wellbeing

If you promote employee wellbeing in your work environment you might also be able to retain employees. Wellbeing is having an overall positive outlook on life - with little to no issues affecting your mental health, personal life, or work.

If you encourage employees to take care of their wellbeing, it might produce happier staff. You could do so by promoting a healthy work life balance with flexible working, providing free fruit, or offering mental health days. Remember the best employees are happy ones, and it's your duty to care for them.

Get expert advice on employee retention from Peninsula

You should ensure your business does everything it can to retain the best employees. This includes reevaluating your current recruitment procedure, considering employee retention rates, and hiring internally.

If your business has low employee retention, it could have negative consequences for your company. Such as lowering employee morale, excessive time spent recruiting, and even reputational damage. The latter of which could even dissuade top talent from applying to your company.

Peninsula offers expert advice on employee retention. Our teams offer 24/7 HR advice which is available 365 days a year. We take care of everything when you work with our HR experts.

Want to find out more? Contact us on 0800 028 2420 and book a free consultation with an HR consultant today.