Even with the COVID-19 pandemic still in full swing, businesses can't afford to ignore their employee retention strategies.
\Right now, the labor market in much of the world is in a state of upheaval. The ongoing COVID-19 pandemic brought a sudden end to consecutive years of low unemployment and high labor participation rates. And nowhere has the damage been greater than in the US.
For that reason, it might seem like an odd time for businesses to worry about employee retention. But the truth is, although the pandemic caused a temporary reduction in the number of workers voluntarily leaving their jobs, the overall quit rate has already bounced back to near pre-pandemic levels. And that's not the only retention-related problem businesses are about to run into.
There's also the fact that rounds of furloughs and temporary layoffs mean that many businesses face the possibility that their most valuable employees won't return when the pandemic recedes. And that means they're going to have to recruit and train replacements – and the latest statistics indicate that new hires display a disturbing tendency to depart within a year of their hire date.
That means that despite the pandemic, right now is exactly when businesses should be worrying about employee retention. And to avoid the oncoming workforce turbulence that is on the way, here are four ways that they can turn themselves into employee retention all-stars.
Embrace and extend flexible work programs
When the pandemic began, businesses almost universally turned to remote work options in a desperate bid to keep operating amid in-person restrictions. The funny thing is, many of those same businesses had previously resisted allowing remote work, citing varied – and sometimes illusory – reasons.
But now, thanks to the pandemic, the cat's out of the bag. And so far, it appears that productivity hasn't suffered at all from allowing employees to work from home and on their own schedule. If anything, the limiting factor is that many businesses lacked the technology infrastructure to enable their remote workers to thrive.
Going forward, however, a large majority of businesses now plan to allow more flexibility in their operations. And since survey after survey indicates that flexible work policies are a critical retention tool – with 80% of workers reporting that they encourage more loyalty to an employer – any business that doesn't embrace flexible work is going to encourage turnover and harm recruitment of top workers.
Review and reimagine compensation packages
Depending on who you ask, an employee's compensation package is either their biggest motivator to keep working, or merely a small factor in that decision. The truth, though, is likely somewhere in between. In the real world, an employee will only leave a job over a compensation issue for one of two reasons: they're grossly underpaid or another employer makes them an offer they can't refuse.
But that doesn't mean that compensation isn't critical to employee retention. It's just that the point is less about money and more about offering an irresistible combination of benefits. So, businesses do best when they engage in a thoughtful compensation management process that takes more than the total dollar value into account.
For example, offering a group life insurance benefit isn't always a high-dollar add, but can be an attractive retention tool beyond what its dollar value would suggest. This is because more people than you might think struggle to find individual policies at competitive rates. Individual life insurance for diabetes sufferers is particularly tough to find, even though around 10.5% of all Americans suffer from the condition. For them, access to quality life insurance might be worth sticking around for. So, to build a compensation structure that encourages retention, it pays to get to know your workforce and get a little creative rather than opting to throw money at the problem.
Roll out a continuous onboarding process
For many years, businesses tended to use a sink-or-swim approach when it came to new hires. They'd provide some rudimentary training and instructions, and then leave the employee to their work. And that turned out to be one of the biggest causes of self-inflicted employee turnover of all.
These days, businesses have learned that properly supporting workers right from the beginning can drastically increase the odds that they'll succeed and remain with the business. Some surveys report retention gains from proper onboarding procedures as high as 82%, so their importance cannot be overstated.
But in the present environment (and going forward, as well), businesses need to reimagine onboarding to turn it into a systemic solution rather than an up-front requirement. In other words, they need to create a continuous onboarding process that begins at the date of hire and continues throughout each employee's tenure with the company. That way, they'll communicate the fact that the goal is to help every employee build a career – not just to get them up to speed on their current role.
Invest in training managers for retention
Sometimes, a business can get everything right concerning employee retention from an organizational standpoint. And then, a strange thing happens. Their managers find ways to drive good employees away. They don't usually mean to (most of them, anyway), but the net result is the spoiling of all of the company's other retention efforts.
And the effect is more dramatic than most people realize. According to Gallup's State of the American Manager report, managers are responsible for 70% of the variance in employee engagement, so they can have an outsize impact on turnover rates. So, it's clear that businesses have a vested interest in giving their managers the tools to succeed at keeping employees both productive and happy.
To do it, a whole lot more emphasis on providing retention-oriented training for managers is a good place to start. There are plenty of skills that managers require to be successful at improving retention, ranging from communication skills to understanding how to be an effective coach. They should also learn how to be mentors, which can change the employee-manager dynamic into something more akin to a symbiotic relationship that's better for everyone.
The bottom line, though, is that most businesses are going to discover that they have managers in certain positions that ought not to be there. Management, like any other role, requires some innate skills. And since companies often promote managers from within rather than hire for the role, they sometimes have to face the fact that their managers just aren't very good. And when that happens, it's necessary to move them to other roles in favor of a better-suited candidate.
Ready to face the future
Even if they're not seeing high turnover right now, businesses can be sure that their reprieve is a temporary one. But they're not powerless to stop an employee exodus when and if the labor market returns to its pre-pandemic conditions. Nor do they have to accept a high attrition rate among their new post-pandemic hires.
By putting in the work to make structural and operational improvements that promote employee retention, a lot of future pain can be avoided. And with so many economic challenges already on their plate, the time to act is now. That way they'll face the future with all hands on deck and with everyone working toward the same goal – to emerge from the crisis stronger and better than ever before.