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We're all experiencing it. Longer phone hold times with customer service support, less prompt service at restaurants, reduced flight options when booking a trip for Labor Day weekend, and longer wait times in doctors' offices. Some would consider COVID-19 to be a primary reason that businesses may be struggling. That may have been the case two years ago, but now there is a new obstacle that companies across the U.S. are dealing with. Employee retention rates are at an all-time low, and if things do not change, those rates will continue to decline. It's easy for business owners to blame COVID-19 for this issue, but the truth is that employee retention is down due to employers. Harvard Business Review states that, while the pandemic may have spurred the mass exit from the workforce, there were several underlying issues that played a role in this exodus.
If companies can own their part in this issue, then not all hope is lost. It's time to take a fresh look at how your programs, communications, benefits and culture are impacting your ability to retain your team — it's time for a 'retention reset'. We find that many companies are keenly focused on attracting new talent into their organization, but what about the people you already have? Like Zig Ziglar famously says, "everyone is in sales," businesses must take the same approach with their team. We must always be in the business of winning over our employees. For this reset to be successful, businesses need to reevaluate. There are five areas that employers need to improve upon to see a rise in their employee retention rates – Compensation, Benefits, Learning & Development, Culture, and Flexibility.
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As reported by Pew Research Center, 37% of people who left their jobs in 2021 state that the main reason was inadequate wages. With the ongoing pandemic and high inflation rates, employees have had to leave their current jobs to find new opportunities just to make ends meet or maintain their current lifestyle. While wages are extremely important, it is not the sole driver of retaining talent. Building an employee value proposition (EVP) that is authentic and visible allows organizations to remain competitive.
According to research from Gartner, companies that can successfully implement their EVP can lower annual employee turnover by around 70%. Employee benefits play a crucial role in having an effective EVP. Employees are looking for more personal, individualized benefits from their employers. They are no longer interested in the regular benefits that every company offers. One way to customize benefits is by giving employees an 'allowance' to spend on whichever specific benefit they want. For example, an employee may want to allocate more money towards childcare benefits versus dental coverage, and with an allowance, they will have the discretion to do so.
Another way to boost employee retention is by showing employees that they are truly valued. According to Inc., employees are no longer loyal to their jobs because they don't feel valued or heard at their company. It speaks volumes when employers focus on career growth and development. Businesses should be offering their employees multiple opportunities to grow within the company. Otherwise, they may look elsewhere to further their careers if they feel like there is no growth potential.
Read more: The perks that work to retain employees now
Offering room for growth is one sign of a healthy company culture, which is an integral part of running a successful business. If the company culture is toxic, you can guarantee that your employees will not stay long. A recent survey conducted at Pew Research Center finds that 57% of people left their job because they felt disrespected at their workplace. Companies must make a shift and focus on creating a culture of caring.
The final piece of this puzzle is flexibility. Throughout the pandemic, many companies realized how productive their employees can be while working from home; however, if companies want to provide a true work-life balance, they must offer flexible working hours. Pew Research Center discovered that 24% of ex-employees blamed the lack of flexibility in their working hours as the main reason for leaving their job. If employers consider the importance of hybrid work and offer true flexibility, employees will recognize and appreciate it.
When companies start reevaluating their staffing model, their employee retention rate will significantly increase. While retention feels uncertain now, this reset will effectively give employers the tools needed to win back their employees and regain a sense of loyalty and confidence in the workplace.
Shelley McLean, Principal, OneDigital
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