The other day my wife and I were heading to our favorite restaurant to eat dinner. We decided to call to see if we needed reservations. No one answered the phone. When we arrived, the restaurant was closed.
There was a note on the door saying that they would be closed on Monday and Tuesday for the rest of the summer due to staffing shortages.
If you think staffing shortages are only happening in the hospitality industry, you would be wrong. According to the U.S. Chamber of Commerce, we have a deficit of four million workers across all industries.
At The Team at HR Stories, we talk to business owners and human resources professionals across the United States who echo the same sentiment. It is hard to find qualified candidates willing to work.
When we follow up and ask them why they are looking for new employees, most small business owners say, “It’s because we have to replace employees that have left.”
I was doing a Human Resources Workshop on Employment Basics the other day, and I asked people to raise their hands if the people they are hiring are to replace an employee who has left. Guess what? A hundred percent of the people in the room raised their hands.
It didn’t surprise me. And probably didn’t surprise you, either. When you look across the United State’s economy, there any many signs that companies are holding back from starting new initiatives. They are still hiring but at slower rates and typically only replacing employees essential to the business.
So, my follow-up question was, “What are you doing to retain your employees?”
The room fell silent.
I started to hear a few whispers. “We are starting to pay more.” “We have increased our benefits package.” “We have stopped pushing people to be back in the office.”
I asked, “Do you know your turnover rate? The churn in which your employees are leaving your company.”
A few hands went up.
Are you reading this and thinking, “Oh, I know my turnover rate!” Congrats. If not, your turnover rate is the percentage of employees who left during a given time frame. Your organization should track the number to understand the impact on your company’s bottom line.
When I talked to Small Business Owners and HR Departments of One, most said they don’t have the time or energy to develop a retention plan. I asked one participant how much they thought it would cost them every time they had to replace an employee.
They looked at me as if baffled. According to statistics, it can cost anywhere between thirty percent of an employee’s salary to four hundred percent based on their level of position within the organization. However, the actual cost is higher because you must calculate the engagement costs or loss of productivity, institutional knowledge, increase burned out on the other employees, and decrease in the morale of the other employees.
So, what can we do to reduce turnover?
Here are seven actions all employee retention plans should have.
- Hire Right: Hiring the right person for the position and the company is critical to ensure longevity with the company. Most managers hire to fill the position when they should focus on whether this person will be a good fit for the organization’s long-term growth.
- Proper Orientation and Onboarding: According to the Carrot Principle, ninety-seven percent of employees are still determining if they made the right career decision after the first week. When asked, most new employees will say they aren’t sure if they belong. What are you doing to make your employees feel welcome?
- Pay and Benefits: Evaluating what your employees are being paid against other organizations in your industry is critical to retaining our employees. However, many employees may leave based on the benefits you can offer, so don’t forget to review those.
- Creating Seniority Programs: Rewarding employees for staying is a great way to retain employees. Giving bonuses after so many years with the business. Providing additional time off based on the number of years with the company is also a good lever that you can use to keep your employees around.
- Opportunities for Growth: The younger generations, Gen Z and Millennials, are looking for opportunities to grow with the company, and when they cannot find it, they will quickly look elsewhere.
- Increase flexibility: After Covid-19, many employees are looking to increase their work-life balance and for greater flexibility in the workplace. This doesn’t just include time off but also includes location, work procedures, and tasks.
- Manager Training: It is true that employees leave managers. If managers treat their employees poorly or even as an afterthought, many will leave instead of sticking it out. Managers need to know how to work with diverse employees and give them the recognition they deserve.
These are just some components of a strategic employee retention plan. The Team at HR Stories created a workshop to help organization get better at retaining employees. In this workshop, we will break down the essential parts of a strategic approach to employee retention, including how to calculate your employee turnover rate, setting employee retention goals, deciding which actions will best help your organization keep employees, and how to get your leadership team on board.