How to Retain the Best Talent in a competitive market

How to Retain the Best Talent in a competitive market

Did you know that companies and businesses with lower turnover rates can produce four times more profits on average?

While a healthy turnover rate is good for a company as it creates room for new talent, but it can backfire too in your company or business if not looked into seriously.

There may be one or more reasons that are responsible for voluntary turnover and the good news is that you can control and reduce it.

Understanding the employee turnover by going to the roots of it would be the first step in retaining the best employees in your company.

For small businesses and startups to excel and thrive in today’s highly competitive market they need to hire team members correctly, look after them and also retain their best employees so that they can compete with top players.

If you are frustrated by the high attrition rate, your employees quit often, or your retention rate is really low this article will help you get an overview of the reasons, effects, and strategies to hire and retain the top-performing employees in your company.

Today I will cover:

Top reasons why employees leave their jobs

About one out of four people quit their job in a year in India according to a survey. On average, an employee looks to change their job in 2 years. That means he/she will work in 15-20 different companies in his whole career.

In these tough times, many in the working force have realized and identified that they are not happy with their current job or business. They have discovered that most of them are just working like robots to meet deadlines and hoping for a great career.

During the Covid-19 pandemic, employees have enjoyed the freedom of working from home, and as a result, they could spend time with their families. They have all now been introduced to this new working style.

However, it is not just this, but there are some other reasons too, that are responsible for making employees quit their current job:

  • The company’s culture is poor 

Culture is something that relates to the set of rules which are followed and regulated by a community, it defines the standards and procedures in the case of a company.

If you do not set high standards for yourself and your company it will hamper the overall growth of you and your company as well as the employees who are working in the company.

  • Employees are burned out

Employee burnout is a considerable state of psychological and emotional stress or depression. It is caused when employees undergo prolonged periods of stress.

It can be detrimental to the emotional and physical well-being of the employees. Long work hours can make employees tired and exhausted. Fatigue can soon translate into detachment from work.

This happens because of long working hours, unfair treatment by colleagues, or even the lack of moral support to the employee.

Also Read: How to reduce employee burnout at workplace.

  • Employees feel disengaged

Every employee expects a fun time at the workplace. Employee engagement activities help in increasing productivity and in developing more employee involvement. It leads to productive interactions that generate new and innovative ideas that help the organization grow in all possible directions.

If your workers have a difficult time enjoying their work, they won’t stay with your company for long.

Also Read: [60+] Awesome Employee engagement activities for startups

  • Work timings are not flexible

Most of the employees today, expect some flexibility in their work schedules. They are not expecting a 9-5 gig.

Long working hours, without adequate breaks, can be a big reason why employees quit their job as it leads to physical and mental disorders due to monotony. Organizations are beginning to now focus more and more on the employee output, rather than looking at employees’ input in terms of time.

  • Team management and leadership issues 

According to a survey, 93% of employees are more likely to stay with their current job if their boss is empathetic with them. As a team leader, you must take care of each of the staff members with diligence. If you keep them happy, motivated and make them feel valued, they can go that extra mile for you.

Till now we have identified the causes of why good employees leave your company. Now we should also look at what happens when they quit in large numbers, what amount of loss it can cost to the company, and all the related points.

What happens when your company has a high turnover ?

Before understanding the effects of high turnover we should understand what high turnover actually is.

What is (high) turnover?

With reference to human resources, turnover is the replacement of an employee with a new employee. Turnover can be voluntary (employee decides to leave the company for specific reasons) or involuntary (when the company decides to replace a particular employee due to poor performance, policy violation, or for something else).

As said earlier, employee turnover can also create room for new talent to fill the gap and it ensures progress and overall growth for a company. But it is concerning, if you find employees unhappy and quitting, or if the employees are not performing up to the mark and as a result, you have to let them go.

What causes high turnover?

A high turnover rate can be a result of employee dissatisfaction, poor hiring, and also sometimes because of bad company management leading to poor performance. This causes both loss of money, as well as time.

Here are some of the reasons for voluntary turnover:

  1. Poor employee selection
  2. The employee is approached by another organization and got the offer letter
  3. He or she no longer wants to work with the company

Reasons for involuntary turnover

  1. Poor performance of the employee
  2. Violation of company’s policy
  3. Other disruptive activities

Cost of employee turnover

It can be really expensive to hire a new employee in place of an old one, as there are many processes involved to recruit top talent. It is estimated that hiring new employees takes up to 33% of the annual salary of a pre-existing employee, which is a huge number.

Cost increases with the ads which are running to attract the potential worker, all the interviews, pre-employment tests, and training of the employee after the selection process also adds up.

If your company wants good employees, then you have to offer a competitive salary to the person in order to make him/her stick with the company. This may even lead to the short-term cost going very high.

However, if a good employee left the job then it is possible that some of the other employees may also quit as there is always a mutual connection between the employees when they work with each other.

What are the signs of high turnover?

  • Lack of job satisfaction
  • Change in behavior of the employee
  • Disappearing often during working hours
  • Office boredom
  • Lack of enthusiasm and eagerness

How to reduce employee turnover?

A happy employee is a great asset to the company as he/she will be enjoying his work to produce extraordinary results which will lead to the overall growth of the company.

Here are some of the ways to reduce employee turnover:

  1. Invest in your employees and human resource department
  2. Provide compensation and rewards whenever your employees perform well. Also, praise their work as this creates a positive atmosphere around the workplace and respect for employees amongst each other
  3. Hiring process must be strongly focused upon. You should invest in the human resource department of your company which is often ignored by many of the startups and small businesses
  4. Feedback and suggestions from your employees is important
  5. Keep the work hours balanced   

Here is a guide on how and when to make your first HR hire.

Enough about why workers leave their jobs. Now, we should focus on what is the solution to these problems and what areas we need to focus on as a leader and owner of the company or your business.

This takes us to the most important part of the article.

What is employee retention in Human Resource and why is it important ?

Employee retention is the process of retaining employees after recruiting, and thereafter working with them. This can be represented as the ability to retain your workforce over a certain period of time.

For instance, if your employee retention rate is 80% then you are able to retain 80 out of 100 employees in a particular time period.

In business settings, it is important for a business to thrive and compete by recruiting, training, and retaining its best employees.

Most of the companies do not bother about employees leaving the company till the time the turnover rate goes very high. There also are some companies where the rate of employees leaving is greater than the rate of joining the company.

Employees may join and go from one organization to another which is normal, but when this rate of leaving the job increases then it becomes important that you invest your time in making a retention strategy to reduce the turnover which is hurting you in the long term.

This is a growing concern for companies and startups, as it is both costly and time-heavy.

Also Read: What are the [25+] HR key responsibilities and roles

Importance of employee retention in Human Resource

There are a lot of reasons to avoid enrolling a new employee in a company. Here are some of them for your reference, so that you can understand the value of retaining a good employee in your company.  

  1. Hiring is a backbreaking process.
  2. Turnover expenses are higher than you think as we have discussed
  3. Your team loses morale
  4. Work is interrupted which causes loss of time and capital
  5. Your loss can result in another company’s gain

Benefits of employee retention program

You get an edge over your competition if you have a proper employee retention program set up, and the benefits are not just limited to the above five points.

With better retention, while the cost of recruiting and other associated expenses goes down, the team spirit and combined teamwork over the long term go up. Better productivity is achieved when employees do not frequently shift their jobs.

Moreover, there are other advantages of it as well:

  • Company revenue increases
  • Productivity goes up with focused results
  • Better customer service
  • Employee is engaged and satisfied
  • Overall growth of business

Also Read: [Startup Hiring] How to easily hire your first 10 employees

Employee retention in sales

Every business has its sales goals which are achieved with the help of the sales team and retaining good sales workers should be the priority for that business.

Sales employees may get frustrated or unsatisfied with work and leave due to certain internal issues, working conditions, or they may even get offers from other companies in the market.

This is where employee retention works for you to save your top sales team from saying goodbye to you. 

  1. Gifting or incentivizing the sales team with perks and benefits
  2. Increase in commission on every sale
  3. Improved training and working opportunity

Employee retention in Marketing

Marketing is one the most important parts of your business. It helps in brand promotion and creates authority for your business as a leader in the market. Marketing not only means advertisement of your brand but also includes creating a perception of your brand in the customer’s mind.

Because of these above-mentioned reasons, retaining top talent in the marketing function is very crucial. 

There is no secret behind retaining top marketing employees where you need to provide them something extra out of the box.

  • Your training should communicate properly with the workers
  • Involvement of every employee in the campaigns
  • Teamwork matters the most

Employee retention in small businesses and startups

It is so important to realize why your employees are leaving you, as every organization has different types of employees working and they may have different working conditions, resources, and fields.

There are many different programs that can be implemented for different businesses across the world. However, understanding your employees better should be one of your primary responsibilities. Reduced employee turnover will help you understand your employees better, and will enable you to hire top talent in the industry.

Top strategy for boosting employee retention 

Career development and personal development – organizations should conduct regular webinars, meetings, and interviews to know more about their employees’ personal thoughts for career growth and interests. This can help both the company and the employee in meeting their goals, particularly when the company may even offer tailored opportunities as may be demanded by the employee.

Onboarding and orientation when an employee is first introduced to a company or an organization, this is the time he/she decides to stay with the company. Within the first six months so, this is the best time to introduce and explain what the company is aiming for and expecting from the employee so that there is clear communication and a fixed target to move forward.

Motivation and engagement – this is one of the important areas where you can become a hero for your employee. Whenever your employees are depressed or unmotivated you should provide motivational seminars, interviews and all the support in his/her difficult times. He or she also expects some kind of engagement during working hours which is explained here in detail.

With all this, the company’s culture matters the most as employees can’t work in a toxic culture.

Talent retention framework

This is the proper planning and implementation of data, insights which will help you in recruiting the top talent, understanding your employees, and creating a better work environment. This will provide clear communication for both the employer and the employee, and improve teamwork which will result in the growth and development of the organization.

Here is the talent retention framework which you can implement today and see the changes:

  1. Start with the hiring process (analysis of what you need from the employee)
  • Skills you need in an employee that fits the role in the position.
  • What talent he/she possesses so that it can be a plus for you.
  • Experience in the working field.
  • Overall soft skills of the employee.

2. Recruiting the employee (attracting the top talent)

  • Advertising and sourcing
  • Define the Employee value proposition
  • Refining the proper fit for the position

3. Onboarding and orientation (defining why employee needs to be here)

  • Goal alignment and planning
  • Interviews and sessions

4. Training and development 

  • Learning with business process
  • Continuous learning culture and new opportunities

5. Success planning and feedback

  • Executive learning 
  • Bigger roles and responsibility
  • Continuous feedback

6. Reward and recognition

  • Compensation and incentives
  • Employee recognition
  • Perks and benefits

Creative ways to retain employees

Join, stay and leave model is one of the most creative ways to understand your company’s environment and employee lifecycle. It includes:

Why do employees want to join you? Whether they are just there for some time or do they like what you do so that they have decided to join you.

The offers and benefits you provide to the employees attracted them to the job.

What an employee is looking for in the job and what you expect should be addressed.

New hire surveys and interviews can address all the issues and expectations of both parties. 

If they have joined you will they stay for long enough to contribute or do they just want to join for gaining experience, try their hand in different fields, or something else?

When employees join an organization he/she develops connections within or outside of the workplace, if these connections are strong most probably he/she will not leave.

The stay of an employee also depends on how well he/she fits in the job profile.

If they decide to leave what could be the potential reasons for resigning. Understanding the causes and improving them can greatly reduce the number of attrition in the long run and exit interviews can greatly help you do so. You can analyze the potential reasons and work out them.

Also Read: [Employee Offboarding] 11 step guide for an effortless process

What can be your talent retention initiatives ?

  • Analyze the past data on why employees leave your organization, what are the reasons for leaving so that you can influence other employees when they are leaving. 
  • Develop a better policy on employee retention, your working hours and flexibility as well as the compensation, perks and benefits you provide and all the things around it. 
  • Develop your own framework with better strategies so that you hire better talent, work for long and retain them.
  • Include onboarding surveys, orientation programs and exit interviews in your strategy so that you can have a clear understanding of data and insights of questions like why someone wants to join, stay and leave your company.

Employee Retention with human resource software

cta hrms
  • Onboarding  The hiring process needs to be smooth so that the employee gets to know more about the company and its mission. This can all be done with our software in the matter of minutes in one time set up.
  • Compensation – Automated payroll is one of the great headaches in hr which is being taken care of with other compliances as well. Bonuses and other perks can be assigned to employees without any need of third party apps with their regular payslips.
  • Learning opportunities –  Our hrms can also be linked with learning management system so that continuous learning is being taken care of and new employees can be trained through the same which saves a lot of time and money.
  • Artificial intelligence in hr Technology can do wonders for you as in the case of AI in hr which will give you a great insight and data on what is happening with an employee, do he enjoying his work, also other feedback so that you can improve those areas. 
  • Analyze the turnover rates – Analyzing the reasons for discontentment of an employee is important to reduce the rates of employees leaving the company. A hrms integrated with an analytics and feedback system can help you do so and also it can reveal the most probable employee to leave your company.

Takeaways

  • High turnover and its cost.
  • Strategies to reduce high turnover rate
  • Retain the best employee in the market
  • Join, stay and leave model in place 
  • Develop a more inclusive strategies and ways to retain the employees
  • Employee success is the organization’s success
  • Hrms in employee retention

Employee retention FAQs

  • What is the employee retention definition and formula? 

Employee retention refers to the ability of an organization to retain its employees in a particular time frame. It is one of the important aspects in business settings. It is calculated by total number of employees minus employees that left to the total number of employees multiplied by 100.

  • Which factors affect employee retention

Here are the five factors that affect employee retention:

  1. Making sure employee fits in the job position
  2. Balance to work-life and flexibility
  3. Job security
  4. Company’s culture matters
  5. Compensation and other perks
  • Why employee retention is important

Considering the amount of time and cost of recruiting and training of a employee that will lead to slow productivity, low morale among the existing employees and also do not forget about the other issues such as employee burnout it is understood that employee retention is one of the important aspect to look upon.

  • What helps employee retention
  1. Best recruitment process and onboarding
  2. Socialization 
  3. Job training and learning
  4. Effective leader
  5. Employee engagement
  6. Compensation and benefits