Employee Retention

What is employee retention?

Employee retention is the phenomenon in which employees stay with their current company. There are many reasons for employee retention, including job satisfaction, lack of external opportunities, or a strong sense of loyalty to the team.

Why is employee retention needed?

A high employee retention rate is directly related to low employee turnover, and reducing the costs of recruiting, hiring, and onboarding. However, it is also possible that the retention of employees who are not performing to standard can hurt the company’s profits.

What are the factors that affect employee retention?

Research has proven that employee retention can be predicted by lifestyle and workplace behaviors. Management style also affects employee satisfaction, and as a result, employee retention.

Types of employees more likely to have high retention

• Parents and married workers: Due to extra responsibilities that children and marriage bring, parents, husbands, and wives are less likely to leave a company.
  
• Managers and higher-ups: The more responsibility a role entails, the less willing an employee is to leave. This can be a result of higher pay, a sense of responsibility, and kinship to co-workers.

• Veterans or first-years: For full-time positions, workers in their first-year benefit from gaining experience and are unlikely to leave their first year. Those who have grown comfortable with a company for over five years are also less likely to leave.

Employee Retention Indicators

• Role definition: When a job description is clear and indicative of what the role encompasses, that helps companies achieve higher retention rates. On the opposite side, whenever employees are expected to fulfill more duties than they have time or resources for, they are more likely to leave. Having contradictory roles than what was established and lack of support from management are also predictors of low retention. 

• External opportunities: When there are more opportunities in the market, employees are more likely to leave. When the economy takes a turn, individuals who still have a job are less likely to take a risk and leave. Of course, if individuals need to be let go to sustain a business, that also increases the turnover rate. If your position is competitive and better than other offers out there, you won’t need to worry about external opportunities increasing the turnover rate. 

• Goal-orientated communication: When communication focuses on defining goals and targets, employees have a clear guideline of their tasks. This reduces stress and allows them to fulfill their work requirements, improving retention rates.

• Work satisfaction: The more narrowly defined a role is, the higher the work satisfaction often is. When a job aligns with a person’s career, retention rates are increased.

• Co-worker and leadership satisfaction: When employees have a positive relationship with co-workers and their boss, they are less likely to leave. The more a manager treats those under them as individuals rather than one of a group, the more likely they are to have a positive relationship with them. Understanding the individual workers helps with providing opportunities for them to grow within the role and the organization, increasing retention.

Some industries inherently have higher employee retention than others. However, many of the factors that affect retention and turnover can be changed by improving management processes. 

People Management factors for low retention rates: 

• Hiring the wrong people: Are you doing a lot of firing? Perhaps your hiring and onboarding process does not enable the right people to fit into the role.
• Communication gaps: Are the expectations for tasks, schedules, and feedback clear? If communication is tedious, often duplicated, and confusing, this will lower employee satisfaction.
• Co-workers and supervisors: Does everyone in the workplace fulfill their role and treat each other with respect? Can team members give feedback to management? Good workers often leave teams that they don’t work well with to find a better fit for their skills. 

Work Satisfaction factors for low retention rates:

• Compensation: Are employees making a fair wage compared to industry standards? Pay satisfaction and distributive justice can cause employees to leave.

• Job satisfaction: Is the role what your employee expected it to be? Are workers challenged in areas they want to grow in? Sometimes, alternative opportunities are more desirable to certain employees, so ensuring the right fit from the beginning is important in reducing turnover rates.

• Upwards mobility: Are there options for employees looking to expand their role? Employees thinking long-term may want to make more money or do more interesting work in the future.

• Work-life balance: Are days off, vacations, and leaves respected? Depending on the industry and the type of work needed, expectations may be different. However, a lack of work-life balance will affect your workers’ productivity regardless of if they leave or stay. Use our vacation pay calculator and time off request form to organize this process.