If your staff seems like a revolving door, you’ve got a problem: replacing staff is incredibly expensive. The cost of replacing one employee can be as high as five times the employee’s annual salary.
As the unemployment rate drops — some sources say it is the lowest it has been since 1969 — it’s no wonder that many companies, such as those in manufacturing, have found it difficult to recruit employees.
Low unemployment rates are directly tied to retention rates, but retention rates lower as employees become more confident in a strong job market. To combat this, here are some steps your company can take to improve retention rates.
First: Track Retention Rates
Do you know your company-wide retention rate? Some companies track retention on individual projects, but if you don’t know your company-wide retention rate, now is a good time to start calculating it.
The good news is that it’s not difficult to calculate your retention rate. Use the following formula:
(# of individual employees who remained employed for entire measurement period / # of employees at start of measurement period) x 100
Many companies calculate their retention rate on an annual basis, but you can also choose smaller measurement periods. For instance, if you wanted to evaluate the immediate results of recent retention initiatives, you could calculate your company’s retention rate over the previous six months. Or, you can evaluate how your retention rate was impacted over a period of years, especially in regards to bigger events like a recession or a company merger.
Second: Find New Ways to Improve Retention
After determining your retention rate, you can actively work towards improving it. Some of the best ways to improve employee retention include:
- Conducting exit interviews. There are many reasons why employees choose to leave their jobs. And it’s important for your company’s growth and retention rates to know why employees are leaving. Setting up an exit interview process for departing employees can give you great insights into areas that need improvement. Post interview, start looking for trends in the responses, and don’t make sweeping changes from one comment; just because one employee is leaving because they feel underpaid doesn’t necessarily mean it’s time to reexamine your compensation package.
- Directing stay interviews. Stay interviews can be used to ask employees what motivates them to continue to work for your company. Maybe Friday after-work drinks with coworkers is hugely important to your employees; or maybe the top-of-the-line equipment your company provides matters most to them. Scheduling stay interviews can also help you identify opportunities at your company to make employees happier before they decide to give notice.
- Paying employees more. Offering competitive pay and benefits is always important, particularly during periods of low unemployment. If your retention rate is low, examine how much your competitors are paying, and ask employees in exit interviews if compensation played a factor in their decision to leave.
- Providing learning opportunities. Nearly half of U.S. workers are unengaged at work, and almost half of those respondents (46%) said that limited opportunities to learn is the number one reason they’re disengaged. Offer your employees the chance to learn new skills to increase your retention rates and to grow a more skilled team.
- Improving your onboarding process. All companies need onboarding, and it is particularly important for industries with high compliance requirements. Onboarding also increases employee retention. If you notice employees are quitting within the first six months of being hired, consider strengthening your onboarding process to keep them longer.
Employee retention is a statistic that can be overlooked. Take the time to track your retention rate to find out where you can improve your employee processes and incentives. Before you know it, you’ll be spending less time hiring and more time improving the company for employees who are eager to stay. Schedule a demo today to find out how BirdDogHR can help you increase your retention rate with software that simplifies the HR process.