To effectively increase employee retention, you’ll have to demonstrate to your team how staying in their current role benefits them. One of the most effective ways to retain employees? By offering company rewards.
36% of employees switch jobs because they don’t feel their efforts are recognized. Therefore, to reduce employee turnover, you’ll have to ensure that top talent feels supported and appreciated. Offering rewards translates to keeping employees, which proves beneficial from a financial standpoint, too. Therefore, see your company’s employee retention efforts as a worthy investment.
Today, we’re going to share why employee retention is critical, and how you can utilize rewards to create highly engaged employees that stick around. We’ll also share more information regarding which factors contribute to high employee turnover, and the best employee retention strategies so you can keep your team members around.
Efforts to increase employee retention are multifaceted. And it turns out that by making an effort to keep employees around, you can also see higher levels of job satisfaction, too. The investment you make in keeping your employees happy will repay you tenfold. Here are some of the reasons offering a powerful incentive to keep employees at the company pays off.
First, employee turnover is costly. It takes a lot of time, money, and resources to walk a new employee through the onboarding process. What exactly makes employee turnover so expensive? We will dive into the details more in the next section.
Next, higher rates of employee turnover can hurt company morale. Companies that seem to have a revolving door of employees are a red flag for current employees and potential candidates. It could be quite disheartening for team members to watch their favorite colleagues leave repeatedly. This does the opposite of encouraging innovation and creativity — it encourages fear and burnout.
High turnover rates result in lower productivity because there are constantly people that need to be trained. This could cause a trickle-down effect for established employees. Seasoned employees may have to pick up the slack while new employees are getting up to speed. This could hinder their professional development, sabotage the chances of a healthy work-life balance, and increase employee burnout.
Lastly, improving employee retention rates supports a better customer experience. When your employees are happy, they’ll bring their best selves to their interactions with your customers. And what do happy customers do? They keep coming back!
We mentioned that having a high employee turnover rate is costly. It’s estimated that turnover costs approximately $11 billion USD annually. Let’s unpack that a little bit more.
Studies predict that each time your company replaces a salaried employee, it will cost you between six to nine months of their salary (on average). Think of it this way: if you’re hiring an associate role with a $60,000 salary, you’re spending a massive $30-45,000 on training and recruiting.
If you’re replacing a non-salaried employee, it’s costly, too. It costs, on average, $1,500 to replace hourly employees, up to 213% of the employee’s annual salary for C-Suite roles, and a massive 100-150% of salary for technical roles.
A report by HubSpot also indicates that lost productivity comes with a hefty price tag, too. Businesses in the United States lose approximately $1.8 trillion each year due to lost productivity.
Of course, efforts to increase employee retention rates come at a cost. However, you’ll likely find those costs to be minor in comparison to how much you’d pay to replace your team. Think of it this way: when you invest in ways to improve employee retention rates, you’re actually keeping costs down.
There are a variety of factors that contribute to higher employee retention rates. First, it’s helpful to have a gauge of what a high retention rate even is. It varies by industry, but generally speaking, a retention rate of 90% or higher is considered to be ‘good.’
There are several ways that your business can help bolster higher employee retention rates. Let’s dive into some of these now.
One major contributing factor to high employee retention is work-life balance. In some cases, that means offering a flexible work environment, such as the opportunity to work remotely several days a week. In fact, flexible roles currently attract seven times more applicants than in-person opportunities.
Let’s dive into some of the other critical factors that can drive higher levels of employee retention.
Your recruitment process is an opportunity for you to demonstrate to potential new hires how they’ll be treated at your company. Ask anyone who has interviewed for a role and they typically only remember horrible or exceptional recruitment processes. If you want to be recalled for the latter, invest in creating a recruitment process that makes prospective team members feel appreciated the moment they step foot in the door.
Other highly cited reasons for leaving a company include low pay and feeling undervalued. Therefore, if you’re looking to retain employees, pay them fairly and ensure they feel appreciated — such as through rewards programs that recognize their hard work. Be sure to also offer competitive pay and benefits that allow employees to feel appreciated. For some companies, this means offering unlimited paid time off, or excellent healthcare benefits.
Company culture and engagement shouldn’t be an afterthought. It’s the driving force behind your business and what helps put your mission into practice.
In the U.S., over half of employees say they’re not engaged, which means they feel indifferent about their roles. People who are indifferent about what they do may not feel as interested in showing up and bringing their best selves to work every day.
If that wasn’t enough, in a Hays report, 43% of the people surveyed reported that company culture was the primary reason that they were searching for a new role. This again confirms that company culture is a pervasive reason why people decide to stick with — or say goodbye to — a job.
Employee development also is a contributing factor. Do your employees feel like they can grow at your company? Is ongoing education valued at your company? If employees feel that there’s no room for growth, they may decide to look elsewhere. A McKinsey report demonstrates that 40% of people leaving their job are doing so for this very reason.
It’s obvious that employee retention strategies are necessary to keep your team members interested in growing with your company. But what exactly does that look like in practice? If you’re curious, we’ve rounded up three retention strategies that you can enact to keep employees happy.
You’ve read the statistics, and the numbers do not lie: people don’t want to stay at a company that does not have a positive company culture. It’s cyclic; once you create a company culture that people are proud of, there will be less turnover, which will ultimately offer a palpable morale boost.
Other ways to create a positive company culture include prioritizing respect, allowing people to feel safe to bring their authentic selves into their work, and creating a program where employees can recognize each other for their hard work. That brings us to our next point…
One powerful way to boost employee retention rates is to create a program where team members can be recognized for the excellent work that they do. Whether employees are recognized by their fellow colleagues or managers is up to you, but this can work wonders in demonstrating exactly how vital each and every team member is to the company.
The rewards can be as straightforward or complex as you desire. You can offer employees the opportunity to select their own rewards, or you may choose to have a set reward. If you’re wondering what type of program may be right for your team, learn about what makes a corporate rewards program successful here.
We can’t stress this enough: paying your employees fairly is an absolute must. This means staying on top of how much others with similar experience levels are being compensated in the industry, factoring inflation into their salary, and adjusting their salary if they relocate.
It may not be the most glamorous way to bolster higher levels of employee retention, but believe us on this one: showing people that you are going to pay them what they are worth won’t just help keep people around, it will also help them build trust. And trusting their employer is another reason people choose to stay in their current roles.
Happy employees are key to helping achieve your business goals. Therefore, by investing in improving your employee retention rate, you’re helping set up your company for success.
Behind any successful business are the people who work diligently to keep the company afloat. By showing employees that you care about them with a meaningful rewards program, you’ll improve employee retention rate, boost morale, and demonstrate to your team just how valuable they are.
Are you ready to take your first step toward creating a robust rewards program that employees will love? Get your free demo to discover how Bucketlist Rewards and Recognition can help show your employees how much you appreciate them – and keep them around.