5 Employee Retention Strategies Your Business Needs Right Now

Do you know the best time to put your employee retention strategies to work? If you guessed as soon as an employee’s hired, you’re right! Employee retention doesn’t start after 90 days or two years in—it starts the moment a candidate signs on the dotted line. And companies that take this approach are keeping their employees around longer.

• Who’s Most Likely to Leave?
• What Causes Employees to Leave?
• When and Why Are They Leaving?
• How Does Poor Employee Retention Affect Your Business?
• 5 Employee Retention Strategies Your Business Needs Right Now

So, what about the employees you have now—the ones who aren’t just starting out? Well, thanks to the Great Resignation, 50% of employees are considering quitting their jobs, according to the State of Personal Finance for Q1 of 2022. That’s a whole lot of people who probably have a thing or two to say about their current work situation.

So, if employee retention is important to you, don’t look any further than your own employees for insight into why people stay, why they go, and what you can do to get employees to stay longer.

Let's jump in so you can learn how to slow your turnover rate and start building up your company culture today.

Employees leave their jobs at different points in their careers for all kinds of reasons. But that doesn’t mean you can’t look around and figure out who’s most likely to look for greener grass someplace else. The key is knowing your employees well enough to anticipate their reasons for leaving—and to put the right strategies into action to keep them around before it’s too late.

If you don’t know what those reasons are, stay and exit interviews can give you plenty of insight. Make it a habit to buy coffee or lunch for a handful of current employees and ask them why the heck they stick around at your company. (Pro tip: Bring your listening cap. If you’re doing all the talking, you’ve missed the mark.) Schedule these stay interviews every six months or so. And if your company is too big for that to scale, schedule a regular HR survey to keep a pulse on employee satisfaction.

On the flip side, if an employee is leaving your company, an exit interview gives them a chance to get some things off their chest. These conversations can sometimes be uncomfortable (more so for you than for them), but it’s worth it if you come away with a few valuable takeaways that can help with your overall employee retention.

The first thing to understand is that there are two types of employee turnover: voluntary and involuntary.

Voluntary turnover is when an employee chooses to leave the company on their own terms. This could look like an employee leaving for a higher-paying job, an employee leaving over differences with leadership, an employee reaching their time to retire, a new parent choosing to stay home with their kiddo instead of returning to work, or burnout.

Involuntary turnover is when the business chooses to end its relationship with the employee for any reason. Firings, downsizing, layoffs—whatever you want to call it, that’s what it is.

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The problem is that too many companies think their employee retention strategies should only span from hire to fire when they should actually stretch from hire to retire. Why? Because when you support the whole person and their whole career, you’re more likely to keep them around longer. But you won’t hit a target you’re not aiming for, you know? So if you’re not aiming to help your employees get ahead and feel valued, don’t be surprised when they don’t want to stick around.

There’s no employee turnover calendar you can follow or a specific time of year to plan for (unless you have a lot of seasonal employees). So, the best way to prepare for turnover is to have a strategy that addresses the typical low points employees encounter—things like dissatisfaction, negative experiences, looking for better alternatives and planned changes. Here’s what you should do if . . .

They’re dissatisfied.

When employees are dissatisfied with their jobs or roles on the team, it can be a slippery slope to turnover. You need to keep the pathways of communication open and try to understand the root of the issue. If employees don’t feel they can express their frustration in a safe and healthy environment, it can turn into an expensive problem for your business. But you can easily create that space by scheduling monthly one-on-one meetings and having your employees fill out weekly reports.

They’ve had a bad experience.

Sometimes employees have bad experiences at work. It happens. And those experiences can lead them to just up and quit, or the situation can just keep getting worse and worse over time.

Your job is to look at your work environment and see what’s causing those bad experiences in the first place. Is it leadership? Role clarity? Crappy culture? Were they passed up for a promotion? This is another reason stay interviews are so valuable—they can help you learn when bad experiences have happened. And if you can figure out the cause, you may have enough time to work on a good fix.

They think they’ve found greener grass someplace else.

This one is pretty simple. If you want to keep your employees around, you’ve got to compensate them well and make sure your benefits package beats the competition’s. And yes, that means you’ve got to offer more than just the basics. For example: In The 2021 Financial Wellness Benefits Study, a whopping 90% of employers who offer a financial wellness benefit say it’s one of the most impactful benefits to their employees. So, get creative.

Ask yourself: How can I keep improving our employee compensation and benefits package in a way that will make my employees want to stick around? Today’s employees want perks, flexibility and voluntary benefits to go along with their conventional benefits package. They want the businesses they work for to be just as bought into them as they are into the businesses.

They’ve already planned to make a change.

It’s pretty common for employees to make plans to quit because of changing family situations. And that makes it difficult to keep those employees when their situations do, in fact, change. But there are ways to address the issue of employees leaving for these types of reasons.

Some companies have met employees’ changing circumstances by rewarding their hard work with better compensation and annual pay increases. Another way is to offer more generous maternity/paternity leave, boost PTO and sick time, or offer remote work to allow for greater flexibility.

Of course, only you know what works best for your company and its values. For example: At Ramsey Solutions, we value having our team working together on-site. So offering remote work wouldn’t be a realistic retention strategy for our company. Whatever it may be for your company, knowing your values—and sticking to them—is important as you think through your retention strategies.

Questions your business should be asking:

• Are your employees’ roles clear to them? Does a lack of role clarity create frustration?
• Do you have strong leaders in place? How are your leader-employee relationships?
• Do your employees work well together, or is the team dynamic off?
• How committed to your employees is your company—actually?
• How do you show your employees you value them and are committed to their growth and development?

Anyone with any kind of business sense knows their company won’t be as successful as it could be if it’s constantly losing employees. Not only does turnover cost a lot, but it also puts an unnecessary strain on the remaining employees and can limit their ability to bring in revenue.

The Cost of Employee Turnover

Like we said, turnover is expensive. When an employee leaves a company, it can cost between 50% to 75% (or six to nine months) of their annual salary to replace them.¹ And that means, based on median salary data from the Bureau of Labor Statistics, just one median-salaried employee quitting can cost a company more than $40,000.² How? Recruitment and onboarding costs, lost productivity, potential lost revenue, cultural impacts, the burden put on other employees and the errors they may make while filling in . . . and obviously, if you end up paying any severance, that makes it even more expensive.

So, yeah. That’s not sustainable when 50% of employees are currently thinking of quitting.

The Strain on Remaining Employees

It’s not hard to figure out that when your business loses employees, the burden of the work they leave behind falls on your remaining employees (and you). And that increases stress and can create frustration. And if it’s the MVP types that your company is losing, it can start to sow seeds of doubt among their peers. They may start to look around and ask themselves, Is there something wrong with leadership? If they’re leaving, does that mean I should think about leaving too?  This can snowball into an expensive turnover problem for your business. And your business can’t afford to have that happen.

The Impact on Customers

In general, your customers won’t know when employees leave, but it’s very likely they’ll feel it. Whether you’re running a neighborhood restaurant or a company making millions of dollars in sales each month, customers are affected by poor employee retention. It’s hard to feed customers if you’re down two line cooks. And it won’t be easy to maintain million-dollar-plus sales if new business leads can never get a sales rep on the phone. When turnover is high, your customers pay the price.

The Effect on Revenue

Of course, if your customers take a hit from employee turnover, so will your revenue. Fewer hands on deck means less closing power. So if you have poor employee retention strategies, it could be hurting revenue long term and keeping your business from winning. That’s why your employee retention strategies aren’t just something to leave on cruise control—you have to keep your foot on the gas at all times.  Because the truth is, the effectiveness of your employee retention strategies will determine the integrity of your team.

1. Pay them what they’re worth.

Too many companies pay their employees below market value and wonder why they can’t keep them around. You can’t expect employees to feel great about working at your company if you pay them less than they deserve. And if you aren’t competitive with compensation in today’s job market, you’ll put yourself out of business. Remember, all the free lunches and ping-pong tables in the world won’t make up for low pay.

2. Make a regular habit of recognition.

Nothing is worse than an employee doing all the hard work to produce results for their leaders just for leadership to completely gloss over it with no recognition. Employees aren’t just job-doers—they’re people who need to feel appreciated. And let’s be clear: Incorporating more recognition into your employee retention strategies doesn’t necessarily mean putting plaques up on the wall for Employee of the Month. A lot of times, employees just want some good, old-fashioned, genuine appreciation—in private conversation and in front of their peers. And there are countless ways to show it without costing the company a ton of money. Remember how we said employee retention starts the minute you hire someone? Even something as simple as finding out what someone’s go-to coffee order is when they start can make for an easy way to brighten their day months down the line.

3. Don't pass up talented internal employees for external hires.

Okay, here’s the thing. Yes, a lot of times there are more experienced and qualified candidates on the outside. But if you don’t even look at the employees you already have to fill your open positions, you’re doing it wrong. Your employees need to have an opportunity to grow in their careers at your company if they’re going to stay long term. It’s just common sense. Without a clear path to career growth at your company, they’ll feel like their job is just a step along the way to their ideal landing spot—aka that greener grass we were talking about earlier.

4. Do whatever it takes to build trust.

Employees need to feel like they have the trust of their leaders. When they’ve got the freedom to use their skills and talents, they’ll find more satisfaction in their roles. It’s as simple as that.

Now, trust is earned. But the point is that when you trust your employees—and they trust you—they’ll invest a lot more into your company. Remember, business moves at the speed of trust. And that’s why it’s the key to helping your employees stick around and maintaining a healthy company culture.

5. Offer life-changing employee benefits.

Sounds like a high bar, right? Actually, it’s not. The days of offering only the basic benefits are over. Nope, that won’t cut it anymore. But here’s the truth: If you want to be competitive when it comes to both recruitment and retention, you have to offer life-changing benefits.

Consider adding a benefit like financial wellness, which teaches employees how to budget, get out of debt, save for the future, and retire with confidence. And if you know which employees are more likely to leave your company, you can start offering more targeted benefits that interest them. Think about benefits like assistance with childcare, an HSA company match, company-paid-for long-term disability insurance, paid sabbaticals, profit sharing or even student loan repayment and/or tuition assistance.

Your Employee Retention Efforts Can’t Wait

Employees leaving at record rates may not last forever, but the reasons they’re doing it might just become the new normal. So if you’re a business or HR leader, you need to respond by adjusting your strategies to that new normal if you’re going to stand a chance at keeping your talent in-house. And a great first step is adding a financial wellness benefit to your company’s benefits package.

But why financial wellness first? Over half of employees say they worry about their personal finances daily. And without the right benefit to help them manage their money, these employees are going to look someplace else for higher compensation. But SmartDollar can help them take control of their money without having to make a huge leap like a job change. And as an employer, you can offer it to your employees as a financial wellness benefit. This won’t just help them solve their money issues—it’ll make them less likely to leave your company.