15 Effective Employee Retention Strategies in 2023

In the last year and a half, millions of employees from multiple sectors around the world have joined a mass exodus from the workplace. Many have tried explaining the mass exodus, but reports indicate it may be due to inadequate salaries, limited career advancement, poor work-life balances, general unhappiness with management or the company and numerous other reasons.

This so-called Great Resignation, spurred by the COVID-19 pandemic, has turned employment into a worker’s market. TikTok users have coined phrases such as “quiet quitting” and “act your wage” as employees find community with others who don’t feel properly valued or appreciated by their workplaces.

As employees decide what’s right for them, employers are having to reconsider what actually makes their company worth working for. If you feel like your business may be at risk of losing top talent, or you have already begun losing your best workers to the Great Resignation, it is probably time to consider some employee retention strategies. Here are 15 effective strategies to boost employee job satisfaction and help you hold on to your best workers.

1. Offer Competitive Base Salaries or Hourly Wages

Offering a wage worthy of sacrifice and hard work should be the number one priority when making your employees feel their work is valued. Proper compensation is far and away more important than any other item on this list; you will not retain employees effectively unless you pay them what their time is worth.

Not only should employees be paid fairly for their time and work, they should also be able to afford the cost of living where they live, their wages should be regularly adjusted for rising inflation and they should be additionally compensated as their experience level with the work grows. Additionally, every time their responsibility increases, so too should workers’ reward increase.

The first step to offering your employees the right wage is to determine the living wage in your area. Keep in mind that though the federal minimum wage is currently $7.25, reports show that that hourly rate is below the living wage in nearly, if not every, county in the U.S. MIT offers a living wage calculator to help estimate the cost of living in each state, city or metro area. This should be the absolute base pay for any position and wages should increase from there.

The second step is to research what your competition is offering in terms of salaries and wages, and what kind of raises competitors have been handing out. If you are not offering the top wages compared to your competition, you will be more likely to lose your best employees. Lower performers will take their jobs, costing you significantly more money in the long haul than were you to just pay the best employees more.

Hiring and training a new employee is significantly more expensive than raising the wages of an existing employee. The Society for Human Resource Management estimates it can cost six to nine months of an employee’s salary to replace them after consideration of headhunting, hiring and training costs. For example, that’s $30,000 to $45,000 to replace an employee making $60,000 a year—not to mention the massive loss in productivity, revenue and workflow during the hiring and training process.

2. Let Your Employees Work From Home

According to Upwork’s “Future of Workforce Pulse Report,” 36.2 million Americans will be working remotely in 2025—an increase of nearly 90% since before the COVID-19 pandemic. Remote work isn’t just convenient to reduce the spread of disease, but has been shown to make employees happier and more productive at work. With modern technology, working entirely (or even partially) from home is possible in a vast array of industries.

While more research needs to be done on the long-term effects of remote work, Upwork’s report shows positive effects of work-from-home include a reduction of nonessential meetings, increased schedule flexibility, commute elimination, fewer distractions and greater autonomy. When your employees do not have to spend time sitting in traffic, stressing about child care or losing productivity due to scheduling issues or lengthy meetings, they will be more productive and happier.

Remote work will not likely be a permanent solution for many businesses, and more and more Americans return to offices each month, but offering flexible work-from-home options may be an incentive to keep the best employees with your company for the long run.

3. Provide Flexible Scheduling and Reduced Workdays

Along with offering remote work, studies from the Society for Human Resource Management also show businesses offering more flexible work options maintain significantly better worker retention. Even before the pandemic made work-from-home a norm, a 2019 study showed nearly two-thirds of workers found themselves more productive outside of a traditional office due to fewer interruptions, fewer distractions and less commuting. Creativity can’t always be turned on like a faucet, so offering your employees flexible hours encourages them to find the times they will be most efficient and productive to focus attention on the work.

Along with providing flexible scheduling, reducing the hours in your workday or work week can actually increase employee productivity and encourage more employee retention. A 2014 study by Stanford University found productivity enters a steep decline after a worker exceeds 50 hours of work per week. While we often think workaholics who are the first to arrive and last to leave are more dedicated and productive, that is not necessarily the case if much of the productivity in those hours is lost to burnout or exhaustion.

4. Encourage and Promote a Work-Life Balance

Fourth on our list of key retention strategies for businesses is to encourage and promote a good work-life balance—not just for your employees, but for yourself, too. Especially after the pandemic drastically changed how employees value work, more and more workers cite work-life balance as the reason they consider new jobs or the reason they have refused opportunities. That work-life balance could come by means of remote work, flexible scheduling or reduced workdays, as mentioned above, or simpler acts such as encouraging employees not to check email or answer work questions via phone unless at work or on the job. Respecting employees’ time away from work is key to maintaining a healthy working relationship with them.

5. Recognize and Reward Your Employees for Their Work

Employees who feel appropriately recognized and rewarded by workplaces are much easier to retain long term, but studies also show those employees will work harder and be more productive. Unfortunately, over 80% of American employees say they don’t feel recognized or rewarded. A report by the Brandon Hall Group found companies that prioritize recognizing their employees multiple times per month are 41% more likely to see increased employee retention and 34% more likely to see increased employee engagement.

There are numerous ways to recognize and reward your employees, but it’s important to make sure you prioritize both social recognition and monetary rewards. It feels good to not only be recognized for our work, but to be publicly recognized, as it helps everyone know when others are appreciated, too. Financial rewards, whether in the form of straightforward cash, gift cards or even other perks such as paid time off, are among the most important and most successful rewards you can offer an employee. Consider asking employees open-ended questions about what they’d like in terms of rewards, too.

Make sure you are not only recognizing your employees for results, but also for efforts. Sometimes projects are not as successful as we hoped, numbers are not reached or deals are not closed. While this can be a disappointment, making sure your employees know that, though they didn’t reach the goal, their work is still appreciated. This can help encourage your employees to try harder the next time and support them when they might otherwise feel hopeless or defeated.

6. Create a Culture That Employees Want To Be Part Of

Another key retention strategy is creating a work culture that your employees want to be part of. A 2019 Glassdoor study found that a company’s culture matters significantly not only to employees who are considering a job (77% said they would consider a company’s culture), but also to employees staying in their jobs. In fact, nearly two-thirds of employees cited a good company culture as one of the main reasons they elect not to leave.

Developing a great company culture may involve implementing many of the retention strategies detailed in this list. These efforts might include rewarding your employees not just for success but for effort, creating a meaningful mission for your company and involving your employees in creative decision making about the present and future of your organization’s mission.

It’s also important to make sure your workplace is diverse and inclusive, especially to members of the BIPOC (Black, Indigenous and People of Color) and LGBTQ communities who may often have trouble finding workplaces in which they feel safe and welcome. A workplace respecting people of all races, backgrounds, genders and sexual orientations will attract and retain a wider, more diverse and better community of talent.

7. Build Employee Engagement

One of the most important strategies for employee retention is to build up your workers’ engagement with your organization. A disengaged employee may have lower morale, cause losses in productivity and generally bring down your company. Make sure to give your employees a voice by making them feel listened to and showing them that their opinions matter.

Try introducing opportunities for your employees to feel safe giving candid feedback. It is likely that your workers may know more about the best ways to accomplish a given task than you do if they have been doing it longer, so giving them the opportunity to communicate and collaborate on improvements to workflow and the work environment will help employees feel like they had a hand in developing culture and ensure they remain engaged with the company.

Likewise, do not force unnecessary engagement or push activities designed to build engagement without a specific goal or solution in mind. For those workers who do not wish to participate in any activities unrelated to the job you pay them to do, forced participation in social or other activities unrelated to work can be a reason to leave. Every workplace is different and not every workplace requires the same types of employee engagement—one of the best ways to avoid this issue is to ask employees what they’d prefer.

8. Create an Emphasis on Teamwork

Another key part of employee retention in some environments is creating a strong emphasis on teamwork. Creating chances for collaboration—including interdepartmental collaboration—can promote not only teamwork, but overall employee engagement. Strong teamwork not only encourages bonding between coworkers, which can create a better overall culture, but it also drives higher overall performance. Good teamwork will help managers and employees pair up strengths and weaknesses within departments and more strategically balance the workload.

9. Reduce Employee Burnout

A 2020 Gallup report, Employee Burnout: Causes and Cures, found that 76% of employees sometimes experience burnout on the job and 28% stating they feel burnout “often” or “always.” While it is often assumed burnout is caused by overwork and can be solved by taking days off or reducing work hours, Gallup’s study found burnout is actually more influenced by how employees experience their workload than the literal number of hours they work. Employees who feel more engaged by their work, who are properly recognized and rewarded and who are offered better job flexibility via reduced hours, remote work or flexible scheduling actually report higher well-being.

The Gallup report found the top five factors that lead to employee burnout are:

1. Unfair treatment at work
2. Unmanageable workload
3. Unclear communication from management
4. Lack of manager support
5. Unreasonable time pressure

Developing and improving your overall company culture, building better employee engagement and offering clear communication, consistent management and transparency will all help reduce employee burnout. Additionally, providing wellness offerings and other perks can greatly help with employee retention.

10. Provide Wellness Offerings

The COVID-19 pandemic has reminded us that both physical and mental health are paramount to a happy, functional society. Taking care of your employees’ health doesn’t just include offering things such as flexible scheduling or remote working. You should also make sure that your workplace is clean and hygienic with health and safety protocols in place and that you have strict rules against employees coming to work while sick. This also means providing sick pay to incentivize employees required to be at a location to stay home when sick. Make sure to also provide quality health insurance with excellent coverage and numerous tiers and options so your employees know their health is valued.

Some companies, including LinkedIn, have also found success in providing all employees mental health time off to cope with burnout at the same time. This collective week of time off reportedly allowed burnt-out workers to not feel like they were missing important emails, meetings and project notes.

11. Give Other Job Perks

While many of the retention strategies on our list this far may be seen as perks of a specific job, job perks can come in a number of shapes and forms. In addition to offering the basics, such as remote work, flexible schedules and good healthcare, you can give your employees discounts on things such as cell phone service, travel costs, car rentals, food and more.  AnyPerk.com, CorporatePerks.com and BenefitHub.com are all similar services, with affordable rates as low as $5 per employee per month, that give your workers great benefits and discounts at national businesses. You can also make your own connections with local businesses that might be happy to offer discounts on products.

12. Foster Growth and Offer Professional and Personal Development

A great business recognizes how important training is during the onboarding process of an employee, but a business with strong employee retention also recognizes the value of continuing to invest in training and upskilling employees. Upskilling your employees by investing time and resources and providing them access to additional education and training within their field not only makes them happier and more likely to stay with your company, but also makes your company stronger as a whole.

13. Hire for the Cultural Fit

Many people can learn a specific skill or develop certain expertise. But not just anyone fits into an existing team nor shares the cultural values of your employees and your company. Hiring for the cultural fit can ensure long-term employee retention because these new hires will mesh well with the team quicker, making everyone more comfortable and getting productivity back on track faster. In fact, a Harvard Business Review article cites bad hiring decisions as one of the top causes of employee loss, with 41% of surveyed employers estimating a single bad hire costing their business $25,000 or more.

14. Manage for Retention

A 2018 report on the Employee Experience by Udemy found nearly 50% of employees quit their job because of a bad manager. A good manager, on the other hand, acts not as a “boss” but as a “coach.” The key difference being that while a boss is seen as an unsatisfiable source of demand micromanaging every aspect of employees’ work, a coach knows their employees are players on a team. A good employer/coach works to guide employees in the right direction by offering advice, support and goals while still allowing their workers to have a high degree of autonomy.

15. Know When It’s Time To Say Goodbye

Unfortunately, no amount of strategy will guarantee perfect employee retention. At some point, your employees must move on—either to retire or to find work more suited to what they’re looking for. Knowing when it’s time to say goodbye and handling employee offboarding effectively and well is just as important for overall employee retention as any of these other strategies. Remaining employees should know they will be well taken care of whenever they do move on themselves.

Why Employees Leave and Why They Stay

Encouraging employees to stay is important, but knowing why employees leave can be more important to developing an effective retention strategy. Offboarding, the process of closing the employment of a departing employee, can be just as important as onboarding. Offboarding can help encourage an amicable separation, ensures the transfer of knowledge and secures the company’s property and data as well as help a company learn why an employee is leaving and what it might be able to do in the future to keep employees.

A key part of the offboarding process is the exit interview, which can give employers insight into why employees are departing. A few of the most common reasons—especially after the COVID-19 pandemic—include:

• Inadequate salary or hourly rate
• Feeling overworked or burnt out and unsupported
• No, or limited, room for growth and career advancement
• Need for a better work-life balance
• Unhappy with management or the company culture
• More compelling job opportunities

Herzberg’s Two-Factor Theory

American psychologist Frederick Herzberg, perhaps most famous for his work in business management, famously promoted his “Motivator-Hygiene” theory, sometimes also called his “Two-factor” theory. According to the theory, two sets of factors influence motivation in the workplace and either enhance employee satisfaction (and thus encourage employee retention) or hinder it.

The hygiene factors refer to those factors actually enabling motivation in the workplace. Herzberg’s hygiene factors are those that meet the physiological needs each employee expects to have fulfilled. These factors focus on things such as money, job security, good work relationships and positive working conditions. Without these base hygiene factors, employees cannot be satisfied, and no amount of motivating factors will retain employees at the company.

The motivating factors, on the other hand, are dependent on the conditions of the job itself. These are the factors that motivate employees to perform better and strengthen their commitment to the company and their jobs. These factors focus on things such as growth opportunities, professional development or advancement, recognition, greater responsibility and more.

How To Create Your Own Employee Retention Strategy

While all of the 15 employee retention strategies we outlined above are effective in their own ways, each business’s needs are unique and some strategies make more or less sense than others.

Competitive pay, wellness offerings, perks and professional development can all provide direct benefits to the employees themselves. While your business may not be able to offer everything your employee is looking for in each of these areas, if you choose a few of these strategies to focus on, you can still begin working toward enhancing employee retention.

Offering work-from-home opportunities, flexible scheduling, promoting a work-life balance and reducing employee burnout are all important strategies to help retain employees. Since certain business types do not allow flexible scheduling or remote work due to the nature of the business, it may make sense to focus on promoting a healthy work-life balance and offering strategies to reduce burnout.

Creating a strong culture through recognition, rewards, engagement, teamwork and good hiring and management practices are all strategies to create the best environment for your employees. These are all key regardless of your type of business, but it may make sense to focus on certain ones more or less depending on your field of work. No matter how you manage to show your employees you care, the culture you create at your workplace is paramount to good employee retention.

Bottom Line

Employee retention is incredibly important to the operation of a successful business. The strategies we’ve outlined above are not an automatic fix but part of a larger shift toward supporting and caring for employees many companies are not doing enough for. The pandemic has left many workers recognizing the value of their time and energy, so making sure your company is proving you value your workers’ time and energy appropriately is incredibly important.

Ref/Posted on https://www.forbes.com/advisor/business/employee-retention-strategies/#how_to_create_your_own_employee_retention_strategy_section by Chauncey Crail