The business case for improving employee retention is clear. Simply put, staff turnover costs money. According to the Center for American Progress, the median cost of turnover equates to 21% of an employee’s annual salary. With so much at stake, it is no surprise that organizations focus so much time and money on efforts to improve employee retention.
What Problems Do Companies Face Around Employee Retention?
While employee retention is undoubtedly a focus for the vast majority of employers, not all are successful in their efforts. There are many reasons for this; some are internal and specific, but others affect every type of organization. Those more general factors include:
Younger Workers Have Lower Tenure Rates
Figures from the US Bureau of Labor Statistics show the median tenure of waged and salaried American workers stands at 4.1 years.
However, that overarching number hides some major generational differences. Median tenure is generally higher among older workers. For instance, it rises to 9.9 years among 55 to 64-year-olds but drops to 2.8 years for those aged 25 to 34.
Not all of this is because younger workers want to move around more; job insecurity is an issue that disproportionally affects younger demographics.
However, broadly speaking, younger workers are open to moving jobs more frequently than their older peers. They tend to have fewer obligations, which makes it easier for them to try new things and move to new locations.
Technology Makes New Jobs More Accessible
There is no doubt that technology makes it simpler to find and apply for jobs.
Once upon a time, job listings would appear in newspapers. Most of those who looked at them would be active jobseekers.
In contrast, today, social media makes it much easier for passive candidates to see job ads. Furthermore, active candidates can browse and apply for a vast catalogue of listings through online job boards.
The “Side Hustle” Effect
One-third of working Canadians have their own side business and two-fifths work more than one job, according to research from Sage.
Self-employment, freelance jobs, and the so-called gig economy enable workers to supplement their income with extra money or even earn a job replacement income. Furthermore, the internet has made it quick and easy for people to start and promote their own businesses.
As a result, many workers are ready and waiting to ditch the traditional workforce and focus on their current side business once it starts to gain traction.
3 Tips for Improving Your Employee Retention Rate
With all those challenges, and many more besides, it is hard for organizations to improve their employee retention. However, here are three steps that can help:
1. Give Employees the Flexibility They Crave
The overwhelming majority of employees (96%) say they need flexibility, yet just 47% report being able to access the types of flexibility they desire, according to Harvard Business Review.
This is a major employee retention issue because a lack of access to flexibility makes employees twice as likely to feel dissatisfied at work. Furthermore, half of employees say they would leave their job if presented with a more flexible alternative.
2. Lead with Empathy
According to Gallup, the average US employee feels unengaged at work, while half are actively looking for new jobs. Empathetic organizations are best placed to combat this.
Per the latest Businessolver State of Workplace Empathy Study, 72% of employees say empathy makes them feel more motivated at work. Motivated employees are more engaged, which in turn makes them less likely to leave.
However, just one-quarter of employees believe their organization is sufficiently empathetic.
3. Increase Your Leadership EQ
Emotional intelligence, otherwise known as EQ, has been a major topic among business leaders and managers in recent years.
Research suggests that EQ has an impact on many areas of business, one of which is employee retention. Other benefits of improved workplace EQ include increased sales and stronger leadership.