Employee Retention – Keeping Your Best Talent
Employee Retention – Keeping Your Best Talent
The value of retaining a current customer as opposed to investing resources into discovering new ones is widely known and understood.
The same, however, can’t be said for internal recruiting. It’s time we understood that the recruitment process shouldn’t end with the hire.
In fact, the real ROI in recruitment comes in employee retention.
Otherwise, employers are just spinning their wheels, replacing employees as fast as they recruit them. The official term for this cycle is employee turnover, and it can seriously disrupt an organization’s productivity levels and employee morale, not to mention its bottom line.
What you’re about to read is a guide on the how and why of employee retention.
- Why Retain Your Employees
- Ways to Improve Employee Retention
- Differentiating Your Employer Brand
- A CTO’s Guide to Employee Retention in Tech
It’s always easier to understand the value of something when you can attach tangible figures to it. The same can be said for the value of employee retention.
It’s predicted that replacing a salaried employee costs 6 to 9 months’ salary on average. For a software developer making £72,000 a year (the UK average) that’s up to £54,000 in recruiting and training expenses alone.
Loosely, you can break down the cost of losing an employee into 3 sections:
- Separation costs are the immediate costs an employer incurs when an employee leaves. These include things both routine and anticipated – severance pay, unemployment insurance claims (depending on the circumstances), continued benefits, etc. – as well as costs that businesses might not expect – the time other employees spend processing the employee’s termination, time spent conducting exit interviews, etc.
- Recruitment costs are those that an employer incurs looking for someone to fill a position, from the time it takes to update the job description to the cost of training the new employee, and everything in between. The longer it the hiring process takes, the more expensive the recruitment costs become.
- Productivity costs are a little harder to quantify than separation costs or replacement costs. Included in this category are not only the hours of productivity the company loses while the position goes unfilled but also the time other employees spend trying to pick up the slack. Then there’s the time it takes for the new employee to get up to the level of production and productivity of the previous employee, which can range from just a few days to a few months depending on the type of position.
And it isn’t just the money that talks. Retaining top tier talent is a currency that can be used to buy a whole range of benefits.
Many businesses have embraced the idea that customers are potential evangelists; the most ardent of them will spread the word about your company’s products or services without pay. But it’s important to remember that managers—even those outside the marketing department—can be evangelists too.
Social media has taken a traditionally silent cog in the working machine and turned them into conduits for your company for both positive and negative experiences.
Working on a retention strategy will coax your talent towards the former and create evangelists for your brand who go out of their way to tell their peers about how good you are to your staff.
In fact, some companies have taken this one step further and made the Evangelist a formal role.
So the value of working on an employee retention strategy is plain for all to see.
But how do you go about building out systems that compel your employees to stick around?
If you want to focus on employee retention it’s beneficial to know how you stack up against other teams vying for your talent.
To do this effectively you’ll need to audit several aspects of your package.
Here are a few areas that often go neglected that you need to look in to:
Using tools like IT Job Watch will help keep you competitive but outside of that it’s more about being fair with your pay than it is being the highest.
Erin McCann, VP of People at SevenFifty shared this advice for salary analysis.
“It’s more important that the pay is fair. That it’s equitable for what they’re doing at work. People are more reasonable than we think.”
Have a look at the training you currently have, the outsourced training you accommodate for and how easy it is to upskill your technical staff.
Are you delivering the latest training?
Be transparent with your tech talent and ask them where their skills gaps lie.
Do you have a clear value proposition that starts at the top of the business?
More importantly, does your tech talent has a clear view of how they are impacting these values?
Benefits can often be the deciding factor between two very similar jobs.
How competitive are your benefits? Are they aligned with things like your office location? (Gym membership, bike to work scheme)
With a clear perspective on your tech talent and an understanding of how competitive your offering is, the next step is to consider what you can do to improve.
The first step in retaining the best talent is finding it in the first place.
Recruiting someone who isn’t a good fit for your business immediately puts you at a disadvantage.
So it pays to build out a robust screening and interview process that not only just checks for expertise suitability but also how they’d fit into the team.
Bringing members of the team into the recruitment process is a good way to test this. For technical roles, consider a practical interview. Development roles regular use a Pair Programming Exercise as a technical test that involves the candidate sitting down with an existing developer to run through a coding exercise.
This not only tests for the candidate’s coding proficiency but also how they work with other developers.
Good onboarding contributes to improved staff retention: employees are 69% more likely to stay with a company for three years if they experience great onboarding, according to a recent survey. Further research that suggests up to 20% of staff turnover happens during individuals’ first 45 days with an organisation further reinforces the importance of getting this period right.
While you’ll want to create an onboarding programme that is broadly the same for each new starter – covering IT setup; orientation; and organisational values, strategy and culture, for example – the most crucial elements will be tailored to the division, department or team the new employee will be working in. These might include:
- Learning that is specific to that role, function or department, and is suited to the employee’s learning style
- Policies and HR documentation
- Objectives, goals and performance management
- Reward and benefits information, which may differ by seniority level
- Start times and flexible working arrangements
- Safety information and procedures
A personalised experience will not only make the new starter feel more valued and better supported – it’s also likely to be more effective than a standardised induction programme.
Getting a new starter up to speed required a significant investment of time and energy not only from their team, their line manager, and the HR department, but also from colleagues in the wider organisation. Senior leaders should understand why it’s important they take time to greet or meet with new employees; to explain how their role fits into the wider organisational structure, and contributes to your overarching mission and goals. That requires you to encourage and promote a collaborative culture; one where staff are happy to share their time and expertise with new colleagues. You may even want to set up an internal network of mentors who are on hand to provide extra support and insight for new hires.
You may also want to consider working on the employee experience before, during and after the hire.
While 50 percent of small businesses now have an onboarding program, only 30 percent last more than a week. Meanwhile, 22 percent of staff turnover occurs in the first 45 days of employment, and replacing an employee in the first year can cost up to three times their salary.
Building out a mentorship program that supports new hires long enough for them to realise where they need help is an important part of a retention strategy.
Successful business mentoring hinges on creating the right kind of mentor-mentee relationship. Done correctly, both parties should get value out of the arrangement. Get it wrong and it’s likely to lead to annoyance and frustration. So what does the “right” kind of relationship look like? Here are 5 companies with great mentorship programmes.
Employee recognition is a key aspect of maintaining an engaged workforce. Studies have repeatedly shown that feeling appreciated at work is a leading driver of employee engagement. This should hardly be a surprise. Nobody wants to feel as though their efforts are taken for granted.
But the unfortunate reality is that employee recognition is one of the areas where employers routinely disappoint their staff. Most of the time this is down to lackluster ideas of what constitutes ‘recognition’.
At many organisations, there is a tendency to resort to generic, impersonal employee recognition methods like “Employee of the Month” awards and bulletin board announcements in the break room. Needless to say, pretty much everyone views such approaches as lifeless and corporate. They don’t resonate with the things employee actually care about.
So what should be done instead? Build more meaning and connection into your workplace. Give people a chance to make a real impact. And use your staff recognition programs to reinforce that meaning, connection, and impact.
When two roles are competitive in both salary and seniority, it’s often the ‘brand power’ elements of that role that make a difference to the candidate.
The same goes for those looking to move away from a role. If you’ve worked on differentiating yourself and building a strong culture, you’ll find it easier to retain top talent.
According to a new study from Deloitte, Millennials hold businesses to high standards when it comes to their positive impact on society. In fact, 80 percent of young Millennials say they “would be more motivated and committed at work if they felt their employer made a positive impact on society.”
And although this is just one portion of the workforce, it proves that if you aren’t thinking about how you can deploy your resources to give back, you’ll be harming yourself in the long run.
At Venturi we operate a Charity scheme for those who work within the local community. Anyone who needs a day off to give something back will have it.
Allowing employees to have an impact is a great way to keep employees engaged and motivated.
Your staff love benefits packages. Think about it, when it’s a candidate’s market, with salaries being quite competitive, it’s elements like free gym membership and flexible working that make the difference.
One such benefit is flexible working.
The introduction of flexible working legislation in the UK in 2014 sparked a significant shift in employee working patterns. The new requirement states:
All UK employees now have the right to make a statutory application for flexible working once they have been employed for at least 26 months.
This legislation has led to increasingly widespread adoption of flexible working practices. According to a study conducted by Lancaster University’s Work Foundation, more than 70% of businesses are expected to accommodate flexible working by 2020.
Flexible working often means employees feel in control which can be very empowering. They can set up their work environment in the way that best suits them and works to a tailored schedule which boosts their output. Furthermore, greater freedom and flexibility allows for a better work-life balance. Happier workers are usually more productive and less likely to take time off sick.
Competition for the A+ talent is at it’s all time high. This assertion is supported by findings of the ADP National Employment report which posits that in 2015, the U.S. private sector posted an additional 217,000 jobs.
While this trend is certainly great news for the American talents, it is posing daunting HR recruitment challenges. Chief Human Resource Officers (CHROs) are already experiencing difficulties in recruiting skilled talent.
Rohan, the CTO at Fundera, says, “Finding the best folks in the early day can make or break your startup. It’s seldom the idea and more often the execution – you need the right people to make that happen. Once we had the right people, product direction and company vision became clearer and easier to iterate.” Rohan goes on to explain that the recruitment challenge is only half of the equation. “Retaining the best and brightest talents is what ultimately matters,” He says. “The most successful and innovative companies in the modern world have realized this, and they have taken it to a whole new level.” He concludes.
His views are seconded by Kerr Michael, the author of the book titled ‘The Humor Advantage,” and an international business speaker. Michael says, “Finding the best talents is expensive and time-consuming to begin with, so retaining them for dear life must be a priority.” The same message has been echoed by The Technology Councils of North America (TECNA) which reported that earlier this year, most organizations are struggling to complete the hiring process due to what they termed as “continued shortage of qualified talent.”
So, how can SMEs solve this recruitment and employee retention problem? We talked with Rohan and his team at Fundera, and he had interesting insights.
Employee Retention – Closing Thoughts
Retaining top tier talent isn’t easy, but it’s essential in today’s highly competitive, candidate-driven market.
“The industry is so competitive, and top individuals are driven to chase the opportunity and maximise their earning potential. We need to ensure they have the best level of support and the best level of stimulation.”