Employee retention isn’t just a human resources challenge, it’s also a business one—the cost of employee turnover keeps going up. According to research by Gallup, U.S. businesses have a $1 trillion problem. Rallied by a strong economy and record-low unemployment rates, risk-takers are quitting their jobs.
The age of the employee is also a big factor when it comes to employee retention. U.S. Bureau of Labor Statistics data shows that the median employee tenure for workers is about four years. But for those between 25 and 34 years old, it’s less than three years.
Gallup had more than half of their employees voluntarily leave their jobs. They reported that their bosses or company could have prevented their exit. Here’s a list of ways managers and companies can invest in their employees and retain top talent.
1. Employee retention and engagement starts with leadership
If there was an award for most-used human resources buzzword, “employee engagement” might take the win. But that hasn’t always been the case. The term only came out of the woodwork a decade ago, says Christopher Mulligan, the co-founder and CEO of consulting firm TalentKeepers and author of its 2019 report on engagement and retention trends.
Mulligan says that when his company first started publishing the report 15 years ago, it predominantly canvassed administrators involved in recruitment and training. These days, employee engagement is considered a “business imperative at all levels,” according to Deloitte’s Global Human Capital Trends report, as more companies realize the impact that an engaged workplace can have on the bottom line.
“Employee retention and engagement will never be higher than your leader,” Mulligan says. “Everyone is an employee within the organization, from a frontline employee to the CEO. And we have to be concerned with the engagement at all levels.”
Many leaders don’t consider that they might be an impediment to employee engagement, however. “Leaders, especially frontline leaders, will underestimate the influence that they have on engagement and retention levels of their teams,” Mulligan says. “They will cite schedule, pay, the work itself before themselves.”
Mulligan recommends that businesses track leadership engagement metrics. For instance, tracking turnover rate by leader, in order to understand how many employees leave a leader’s team, is essential data every human resource team should keep track of and monitor.
2. Listen to employee feedback
Engaged leaders are effective communicators and listeners who are able to build trust among their employees—and trust in the cornerstone of employee retention. Jenn Hyman, the co-founder and CEO of fashion rental service Rent the Runway, tells Inc. that listening to employee feedback is both key to her leadership style and a regular part of her company’s business operations.
Hyman explains that she has regular one-on-one meetings with her staff and also distributes anonymous employee surveys every six months. The survey gauges employee happiness and satisfaction with their leaders. The results are then shared with the whole company, and action plans are created. “It’s the follow-through that’s so critically important,” she says.
To make sure you get valuable feedback from a survey, communicate your intentions with your team beforehand.
3. Create and support an inclusive culture
An Arizona State University study showcased that companies are losing more women than male employees. The high employee retention challenges have been linked to challenges in adapting to workplaces and, in some cases, to lack of support from managers.
A McKinsey and LeanIn.org study showcases that women are less likely to have managers support them at work. Compared with entry-level men, women at the same level are less likely to have their work accomplishments promoted to their colleagues, or to receive the same opportunities to engage in social activities outside work.
“If you don’t create the conditions for people to stay, you can do an amazing job at hiring and then people aren’t going to stay,” says Diego Scotti, executive vice president and chief marketing officer at Verizon, in a Wall Street Journal interview. According to Scotti, despite initial progress in hiring women, it’s an ongoing struggle for marketing agencies to execute effective employee retention strategies.
Working with the nonprofit Center for Talent Innovation, Verizon is now monitoring factors influencing the decisions of women to stay in or leave marketing, communications and media jobs. Research efforts include a national survey, employee interviews and focus groups.
4. Invest in employee growth
When looking at the reasons people leave their jobs, compensation is often not the main motivator. At Facebook, engagement survey results illustrated that people were leaving because of the work and the roles they were in.
In a Harvard Business Review article, the authors write, “Managers can play a major role in designing motivating, meaningful jobs. The best go out of their way to help people do work they enjoy—even if it means rotating them out of roles where they’re excelling.”
Another big reason employees leave a job is a lack of career growth opportunities. Says Mulligan, “Clearly, career growth needs to happen more quickly, when 68% of organizations are experiencing their highest turnover sometime within a new employee’s first 12 months on the job.”
5. Take advantage of exit interviews
Known as a leader on work-life balance (read: mandated employee surf breaks) and for its unusually low employee turnover rates, outdoor clothing company Patagonia is known for doing things differently. Its approach to exit interviews is no less unique.
Dean Carter, the company’s chief human resources officer, told an audience at the Qualtrics X4 Experience Management Summit that he has been moved to tears during exit interviews. He suggested starting the conversation from the beginning, with how employees came to join the company in the first place, rather than why they are leaving: “After that, it’s ‘Did we do that?’ ‘What was the experience we delivered for you?’ ‘Where was the difference in that?’ ” he said.
Employee retention means investing in your employees
Effective, multifaceted engagement with employees is hard—but replacing them is even harder and extremely expensive. Leaders and companies that invest the time to figure out what employees need to stay engaged in their jobs will be most successful in keeping them. A strong employee retention strategy will also appeal to a happier and more productive workplace.
Start your employee retention strategy with LEON.