How to create a retention strategy that reduces employee turnover

Retention strategy

When you own something of great value, what is your retention strategy for keeping it in your possession? Whatever the precious item is, it makes sense to secure it, safeguard it, and keep it well out of reach from other people. There's a strong chance that others will covet what you hold, and look to prise it out of your grasp, so getting your defences up and reinforcing them is all-important.

This is certainly the case in business, especially where employee turnover is concerned. The importance of people to organisations cannot be underestimated - it is they who bring the business to life, whether in the boardroom or out on the front line. Without teams of talented, dedicated and hard-working individuals, most companies will struggle to achieve anything in business.

So if you have talented staff on your books - people who add value to the business on a daily basis - then you need a retention strategy in place to try and secure their services for the long run. No doubt other employers will be aware of their capabilities, and be more than willing to take them off your hands should the opportunity arise. If you fail to treat your staff well, and reward them adequately for their contribution, they may be all too keen to provide alternative employment and leave you wondering why your employee turnover is so high.

Developing a retention strategy

Losing key workers harms productivity, affects team morale and costs time and money. When somebody leaves, a replacement needs to be hired, trained and integrated, which doesn’t come cheap. The departed employee has taken away all their acquired skills, knowledge, experience and contacts, and your loss is going to be another organisation's gain.

The need to oversee the recruitment process also impacts on the productivity of the hiring manager. They are required to spend time developing role criteria, posting jobs, shortlisting and screening CVs, interviewing candidates and conducting reference checks. This can be very time-consuming and costly for organisations.

This is why employers need to think carefully about their retention strategy, and how to reduce employee turnover of their best people. What exactly can you do to keep your best people turning up to work day by day? You need to ensure they feel valued at all times, and are given the necessary incentives to plan a long-term future with your organisation.

First and foremost, you need to create a positive work environment - somewhere people enjoy working, are mentored and are able to comfortably to ask for feedback. And then you need to think about what you offer to employees in turn for their dedication and hard work. Not only this, you have to consider what rival employers may be willing to offer the same individuals, in a bid to poach them. It could be increased pay, a more lucrative benefits package, professional development opportunities, more responsibility, greater flexibility or a combination of these draws.

Tapping into the employee psyche

The chances are, your best people are eager to get on - both in life and in their career. Unless your organisation is able to support their ambitions and promote their development, such individuals are unlikely to stay for long. They will be eager to make their way up the jobs ladder - whether with your organisation or elsewhere - and claim more senior roles that offer more lucrative rewards. In order to satisfy such people, and reduce your employee turnover, you must make it possible for them to fulfil their ambitions - or at least those which are most immediate for them.

If you are eager to keep hold of your top performers, it is vital to be proactive and develop a retention strategy. Encouraging individuals to apply for internal promotions or assume additional duties - which come with increased pay - helps to show they are valued, and have opportunities to progress without having to change employer. This is particularly the case if the offer comes without prompting from the employer - i.e. it is not merely a counter-offer designed to make an employer rescind their notice to leave. With career advancement a realistic prospect at their current organisation, top performers may be encouraged to stay longer.

Combating employee turnover

It may sometimes be necessary to make a significant gesture to retain staff, for instance paying a premium to fend off interest from elsewhere. A half-hearted approach to retention is unlikely to be successful - you need to act quickly and decisively, making an offer your valued employee cannot turn down. If you suspect they are looking to leave the organisation, offering a pay rise or promotion into a senior role may dissuade them from pursuing this course of action.

In the current climate, with an improving jobs market, many employers may well find themselves in such a situation. The reality is that organisations are recruiting again and they are striving to hire the best people. This means there are jobs available for the right candidates - and plenty of them. As such, the UK is seeing an increase in voluntary turnover, with 49% of employers surveyed by Robert Half reporting an increase in the number of employees choosing to leave in the last three years.

In a separate study, a third (33%) of British employees are considering a new job, a figure which rises to nearly half (46%) of those in the 18-34 age category. In London, the dangers of staff attrition are seemingly even higher, with 50% of survey respondents saying they will target new employment. Seemingly, professionals think they can secure a better deal elsewhere as the labour market continues to strengthen.

Many professionals suffered pay freezes during the recession, and some even experienced redundancy. Either way, some may feel their career development has been hampered by economic events over the last six or seven years, and they now need to capitalise on the improving environment. Talented workers may feel they can secure a better deal if they move to a new organisation, and in many cases, they might be right.  All employers can do is try to counter the offensive from their rivals.

Reasons employees leave

Further research reveals that salary woes remain the main reason for employees looking to switch jobs. More than a quarter (27%) of survey respondents said they are dissatisfied with their current rate of pay, and 40% claimed that a higher wage would persuade them to move. This suggests that, for many employers, the offer or increased salary or bonus payments may encourage employees to stay loyal to their current organisation.

But there are various other reasons why employees look to change employers, and business leaders need to be aware of each of them as they plan their retention strategy. In the Robert Half study, respondents cited a lack of promotional opportunities (15%) and boredom in their current role (15%) as being common reasons for leaving, along with dissatisfaction with company leadership (9%).

Employers need to think about how they can do better, and ensure the reasons to stay with their organisation outweigh those to leave. In order to achieve the growth they are looking for, it will be imperative to keep hold of their best people, and ensure they are incentivised to stay for the long term. It won’t always be possible to retain the best staff, but employers should at least try to keep them where possible.

At the very least, top performers should be offered comprehensive benefits packages, tailored to suit their individual preferences. It could be that the ability to work flexibly, top up their pension, drive a company car, receive childcare support is enough to keep them happy - or at least stop them from leaving for now. When building a retention strategy, it's useful to consult resources like the Robert Half Salary Guide to benchmark what salaries are in the market and what expectations are in the market.

For the longer term, it may be necessary to accommodate them in the management structure, or at least pay them handsomely for the job they do. Each company will have its limits, and there will be a point at which they have to shake hands and bid farewell to their best people. But stretching a little further to reduce employee turnover and keep hold of your top talent can ultimately have a positive effect on productivity, output and the business bottom line.