Employees are instrumental to your success, which makes employee retention more important than ever. Competition for good employees is on the rise, and businesses have to work hard to hold onto top employees. Don’t wait until a valuable performer resigns to learn why that employee has decided to move on. Position your company for success by identifying what motivates your employees, provides job satisfaction, and, ultimately, leads to employee retention.
What is the employee retention credit?
As part of the CARES Act, the Employee Retention Credit is a refundable tax credit that encourages businesses to keep employees on their payroll. The employee retention credit is for businesses that have been financially impacted by COVID-19.
Why Employee Retention is Important
Organizations overall are paying a high price for poor employee retention. According to the Bureau of Labor Statistics, in 2018, the annual overall turnover rate in the U.S. was 26.9%. High turnover has significant costs and consequences for businesses, including:
- Cost of hiring – advertising, interviewing, screening, and hiring.
- Cost of onboarding and training
- Cost of lost productivity – New employees are often slower and more prone to making problems, and will take time to reach the same productivity level as the exiting employee.
- Cost of diminished brand – Turnover is often cyclical; high employee turnover can lead to unengaged employees, depleting employee morale, and over time a diminished employer brand that struggles to recruit quality candidates.
According to estimates by the Center for American Progress, businesses spend about 20 percent of an employee’s annual salary to replace that worker. That number goes up significantly for skilled jobs that are more complex and require higher levels of education or specialized training.
As restrictions are lifted, more businesses reopen, and consumer demand increases, many businesses are finding themselves in a labor shortage. Without enough employees, companies may not be able to generate as many products or provide timely service. When businesses are unable to fill already open positions, it makes employee retention even more important.
Leading Causes of Employee Turnover
While employees leave companies for a myriad of reasons, it is imperative for businesses to understand the motives, and take deliberate steps to retain employees. According to research by Gallup, over half of employees who leave an organization voluntarily report the company could have taken action to prevent them from leaving.
While managers and team leaders need to understand the specific aspects of your business leading to employee turnover, there are some common causes of turnover all companies should be aware of:
- Poor Company Culture – Company culture is foundational to the employee experience. The Society for Human Resource Management estimates 20 percent of Americans have left a job due to unsatisfactory company flexibility.
- Poor Management – Employees often specify that their manager’s behavior was the primary reason for leaving their job. Certain managerial behaviors, such as being inconsistent or using pressure tactics, can lead to greater employee turnover.
- Lack of Growth Opportunities – A report by Global Talent Monitor shows stalled career growth and a lack of opportunities remains a key driver of employee turnover.
- Lack of Recognition – Failing to recognize employees can make them feel unappreciated and undervalued. A survey by Achievers shows over 40 percent of employees look for a new job due to a lack of recognition by their current employer.
How to Increase Employee Retention
Companies that invest in improving employee retention have an opportunity to reap significant rewards that include:
- Reduced Costs
- Improved Morale
- Greater Productivity
- Reduced Recruitment and Training Time
- Better Customer Service
- Increased Revenue
- Improved Culture
There are a number of areas where an organization can focus its employee retention efforts, and it’s not just salary and benefits. Employee retention is a company-wide effort that should include these key areas:
- Company Culture – Focusing on your core values can give purpose and guide business decisions, helping you hire the right people, and cultivate a positive work culture.
- Growth Opportunities – Professional career growth does not need to be limited to upward mobility. Investing in employee education and career development is a powerful incentive for employees to stay at your company.
- Recognize Employees – Employees want to feel recognized and appreciated for the work they do. This recognition can include highlighting both professional achievements and milestones, as well as personal traits that make an employee stand out. Employee recognition drives employee engagement, which drives business success, so take the time to acknowledge employees, both publicly and privately.
Employee retention is a key contributor to a growing and thriving organization and should be a top company priority in order to maintain a competitive advantage. Your local Safeguard Advisor will learn about your unique goals and then help you with personalized solutions that fit your business. At Safeguard, we know that with the right products, services, and planning, your business can be even more successful moving forward. Call 855-778-3124 to get started.
Key Takeaways
- Employee retention is a key contributor to a growing and thriving organization. Competition for good employees is on the rise, and businesses must work hard to hold on to top employees.
- Organizations are paying a high price for poor employee retention.
- Over half of employees who leave an organization voluntarily report the company could have taken action to prevent them from leaving.
- Your local Safeguard Advisor will learn about your unique goals and then help you with personalized solutions that fit your business.