Employee retention is a critical issue facing today's enterprises as they compete for talent in a recovering economy. As Josh Bersin, principal at Deloitte and founder of Bersin by Deloitte, spells out, the costs of employee turnover are increasingly high, as much as 1.5 to 2 times an employee's salary. There are also other, soft costs, such as lowered productivity and a decrease in employee morale. These all add up to big trouble for businesses that aren't investing in their human capital.
If you wait until a valued employee's exit interview to find out why he or she decided to move on, you've missed out on keeping a productive member of your team. And if they aren't forthcoming about why they are leaving, you also miss a golden opportunity to identify obstacles and challenges within your organization and fix them before you lose others.
So, how can you increase retention rates? CIO.com reached out to technology and business leaders to find out how to better retain your precious investment.
Retention Starts With Recruiting
"Retention starts from the application process to screening applicants to choosing who to interview. It starts with identifying what aspects of culture and strategy you want to emphasize, and then seeking those out in your candidates," says Dan Pickett, CEO of Nfrastructure, an infrastructure, managed services and network services firm.
Nfrastructure currently employs about 400 people and a retention rate of 97 percent - almost unheard of in the IT industry -- or any industry, for that matter. It's a statistic each member of the company works hard to maintain.
"It's an increasing returns model; the longer someone's with your company, the more productive they become over time. You have to look at this as a long game, and take steps to ensure you're doing it right by making sure each employee is completely engaged with and part of the company's ongoing success," says Pickett.
So how can you choose candidates that are more likely to stay? There are some key indicators right on their resume, according to Pickett.
Study Job Histories
One of the first items to look for is how long candidates were at their previous positions. Job-hoppers are something of a gamble. "While they might just be looking for the right place to land, a candidate who has had, say, 10 jobs in 12 years is going to be really difficult to retain for any company, "says Pickett. Choosing people with longevity at their previous jobs increases the odds in your favor.
"You're looking beyond what's written on the resume. Have they worked at a company for many years through ups and downs? That speaks to loyalty, perseverance and engagement, "says Pickett.
What Do They Care About
Finding out what your potential hire cares about can give you insight into their character, according to Pickett. "Look for someone who plays team sports, who has committed to volunteer or [does] activities outside of work," suggests Pickett. "That can help tell you [whether] they have the mindset to stick with something they really care about," he says.
Clear Paths to Advancement
According to the Wall Street Journal, organizations should promote from within whenever possible. Doing so will not only provide a clear, forward-looking path to greater compensation and responsibility, but will also help employees feel that they're valued and a crucial part of the company's success as a whole.
Provide Ongoing Education
Employee development and education is also critical. Whether by providing training for new skills or tuition reimbursement for outside courses, "furthering your employees' education can help them feel valued, important and invested in the company," says Pickett.
"Learning cannot just be an afterthought," says Kevin Griffin, CIO, GE Capital. "It must be a core focus of any strong organization."
At GE Capital, for example, the focus is on learning throughout an employee's entire career, with extensive skills training, leadership training and professional development.
"There is never a point during your career at GE Capital when you're done learning," says Griffin. "As a current example, we're now focusing on improving how we offer technical training to all of our IT associates," he explains. "We're proposing that every IT employee, regardless of level, undertake at least 40 hours of technical training a year."
That's because GE Capital and other businesses recognize that education is key to higher retention rates. A commitment to training is seen by employees as an investment in their worth and a powerful incentive to stay at the company.
Offer the Right Benefits
Benefits and perks also play a large role in keeping employees engaged and happy. But benefits should go beyond healthcare coverage and paid sick leave.
For example, consider offering stock options or other financial awards for employees who exceed performance goals or who stay with you for a certain time period. Or consider offering flexible work schedules or the opportunity to work remotely.
Generous paid leave policies also go a long way toward helping employees feel they are valued well beyond what they contribute at the workplace. For example, Change.org, an online social change platform, recently announced it will offer employees up to 18 weeks of paid parental leave, and it is encouraging other organizations to do the same.
If employees are not offered leave, or are forced to return to work because they cannot afford unpaid leave, they may become "distracted and resentful," says David Hanrahan, Change.org's global head of Human Resources. That distraction and resentment can build, and can often drive an otherwise satisfied employee to consider other options.
Be Transparent and Open
Creating open communication between employees and management can help foster a sense of community and a shared purpose. By holding regular meetings in which employees can offer ideas and ask questions, as well as having an open-door policy that encourages employees to speak frankly with their managers without fear of repercussion, helps employees feel that they are valued and that their input will be heard.
Get Employee Feedback
Another way to measure employee satisfaction is to periodically survey them. You can do this by using an employee polling tool, like TINYpulse, which sends out a single question to a company's workforce at pre-set intervals and then tallies results anonymously.
"Everyone knows that the business changes more than once a year, and so do people," says David Niu, the founder of TINYpulse and TINYHR. "You don't check on your finances or your business strategy once a year. So why do you think you can do that with your people?"
Using a strategy like sending out a brief questionnaire, or single question to employees - such as "What is one process that, if eliminated, could make you more productive?" - can help HR identify issues early on and rectify them.
"The fact that the employees are being heard, that they are being listened to, is important and can improve retention, even if there's no way the company can address their challenges at the moment," says Niu.
Sometimes Good Employees Leave
Of course, sometimes turnover is inevitable. People move. They change careers. They get a better offer someplace else.
"It's difficult when we lose someone who's a rock star, but that's one of the things you have to be prepared for," says Pickett. "Especially in the IT industry, which is so competitive. But it's also healthy," he says. "You don't want someone who doesn't want to be there anymore."
Retention and the Bottom Line
If your employees feel valued and excited about working at your organization, and fairly compensated, they will not want to go elsewhere. Moreover, their commitment and enthusiasm will be evident to your customers, says Pickett "That enthusiasm, that excitement and that investment comes through in every interaction."
This story, "How to improve employee retention" was originally published by CIO.