Why businesses should prioritise employee retention efforts
According to the Office for National Statistics (ONS), the number of job vacancies in the UK has hit a record high. While employee turnover varies between industries – traditionally, the highest levels are found in retail, hospitality, construction and media; the lowest in legal, accountancy, education and the public sector – Monster put the UK’s average turnover rate at 15% a year, with LinkedIn advising a global turnover of 10.9%.
A degree of staff turnover is normal. Employees leave roles for a variety of reasons: the attraction of a new role and career development; a change in personal circumstances; dissatisfaction with a job or company; dismissals. It’s a key component of human resource (HR) departments; where recruitment and retention are concerned, there are wide-ranging push and pull factors at play, resulting in both voluntary turnover and its antithesis. For many HR managers, it’s considered a necessary process, preventing lack of motivation from taking root while drawing in fresh ideas and skills.
Why is planning for retention and staffing shortages important?
The nationwide increase in vacancies is indicative of the issues some companies are having with attracting and retaining a workforce.
Statistics further highlight the associated complexities that business leaders and HR professionals must navigate:
- Nearly 50% of employees hired over the last 12 months had two additional job offers (Gartner).
- £11,000 per person is the average cost of employee turnover (The Business Magazine).
- It takes approximately six weeks to fill the average position (SHRM).
- 91% of HR leaders are concerned about employee turnover in the immediate future (Gartner).
- 41% of all businesses with ten or more employees reported more difficulties filling vacancies in 2021 (ONS).
Time, money, competition, effort: all prices to pay where talent management is concerned. Hiring new employees – and retaining good employees – is not always straightforward, and turnover expenses not insignificant. Losing skilled, experienced human capital can often mean losing valuable knowledge – particularly where it hasn’t been shared with other team members.
From a purely business perspective, those very same skills and expertise may also end up benefiting a direct competitor. Another common complaint is that, for teams suffering from high attrition rate, morale and teamwork often suffer. Even for engaged employees, remaining motivated and productive in the midst of constant change, increased workloads, fractured culture and relationships, and the constant drain of training new hires, is difficult. It’s evident that across all businesses, comprehensive human resource planning – particularly in relation to staff forecasting – should be at the top of the agenda and incorporated into any business plan.
In addition to avoiding the aforementioned issues, there can be numerous quantitative and qualitative benefits to implementing robust workforce planning strategies within the workplace:
- Increased productivity and reduced absenteeism
- Reduced costs and greater profits
- Enhanced employee engagement and morale
- Better workplace and team culture
- Greater job satisfaction
- Recruitment and training efficacy
- Improved customer service
And, if all those metrics aren’t convincing enough: planning processes for the human resource of a business can positively impact brand association and brand loyalty. When word spreads of how employees are engaged, prioritised and invested in, you’re not only likely to retain your best employees, but also attract the best external hires – much-needed fortification and future-proofing for a business competing in a crowded marketplace.
How to improve employee retention
Generally speaking, an individual is more likely to remain with an organisation if the pay, working conditions and developmental opportunities are equal to, or greater than, the contributions – such as time and effort – required of them.
Employee retention strategies tend to work best when they are developed in response to certain key aspects: work environment; workplace culture; benefits and incentives; development and career opportunities; recognition and reward.
Here are three key examples:
- Create a better work environment. Clearly, a work environment should meet basic needs in terms of, for example, facilities and personal safety. Above and beyond this, are there elements that can be improved on both a wider and individual level? Wider improvements could include examining job design – and outsourcing certain tasks to ensure workload remains manageable – or introducing wellbeing initiatives, such as private healthcare, free or subsidised lunches or gym membership. On an individual level, this may be more subjective; for example, building flexibility into roles to enable remote working, offering job security to those on insecure contracts, offering adequate parental leave or encouraging a better work-life balance. The trick is to achieve a balance which meets both employee and business needs.
- Address management issues. Are there fundamental reasons that skilled, high-performance employees are leaving? Are certain managers experiencing higher turnover than others? For many, feeling maligned or improperly managed by a supervisor is a contributing factor to resignation. Monitor workplace interactions to identify if anything is amiss and conduct exit interviews with good employees. The latter can be a particularly useful tool to facilitate open, honest dialogue, uncovering embedded issues and highlighting solutions.
- Focus on career development and opportunities. Team members who feel valued, challenged and motivated, with chances to develop and progress in a work setting they enjoy and believe in, have less reason to look elsewhere for the next career step. Focus on an individual’s career aspirations and personal interests – asking them what they see in their future, what projects they’re interested in, what skills they’re keen to develop – and provide relevant training, mentoring and support to achieve results.
The good news is that there are plenty of proactive steps that can be taken to deliver lasting, longer-term retention – from taking a closer look at current retention tools and upgrading outdated recruitment strategies, to considering the wider culture and ethos of a work environment and keeping in touch with valued former employees.
Retention efforts in a globalised world
Addressing retention rates in our interconnected global business environment requires more than simply forcing a one-size-fit-all approach.
Cultural differences within global workforces – and even within teams with diverse employee demographics – can lead to differing expectations regarding work assignments, employee benefits, pay benchmarking and more. As such, both national and cultural differences must be factored into any HR planning, including a strategic approach to retention.
Excel in human resource management and planning
If you’re keen to understand how turnover rate and succession planning should factor into wider business strategy, look no further than the University of Lincoln’s online MSc Management with Human Resources programme.
By studying this master’s degree, you could gain the skills and knowledge to pursue senior managerial roles in business and leadership – and attract and retain potential employees. This flexible degree covers the key aspects of human resources in a global context – from managing employment relations to organisational design and development. You’ll have the opportunity to become adept at project management, strategic planning, marketing, finance and accounting, information systems, people management and more, all with the support and guidance of our experts.
