16 Jul Improving Employee Retention: The Savvy Organization’s Guide

Organizations of all sizes are familiar with the challenges that come with employee turnover.

The perpetual cycle of recruiting, training, and onboarding new talent drains valuable resources and disrupts the flow of productivity, and the toll it takes on team dynamics and your bottom line is undeniable.

This is why prioritizing employee retention is so essential.

In this article, we will dive deep into everything you need to know about employee retention and the specific strategies that can set your organization up for long-term success and growth. Specifically, we’ll cover:

• Employee Retention FAQs
• 26 Best Practices to Improve Your Retention Rate
• Key Steps to Improved Employee Retention
• How RealHR Solutions Can Help

As you take the necessary steps to improve your organization’s retention rate, you may find that you need assistance implementing the best practices and policies that will improve the employee experience at your organization. Consider partnering with an HR consultant, who can offer a third-party perspective and broad HR expertise to help you make your strategy the best it can be.

Let’s dive in!

Frequently Asked Questions About Employee Retention

Understanding your organization’s retention and turnover patterns is important because it provides valuable insights into the health of your workplace. Analyzing the trends and reasons behind employee departures empowers you to proactively address issues contributing to high turnover rates, allowing you to implement targeted retention strategies, enhance employee engagement, and foster a culture of loyalty and growth. Moreover, a comprehensive grasp of your organization’s retention and turnover dynamics enables you to make informed decisions that contribute to long-term stability, operational efficiency, and sustained success.

To get started, let’s go over some fundamentals of employee retention.

What is employee retention?

Employee retention refers to an organization’s ability to retain its employees over time and minimize employee turnover, whether voluntary or involuntary.

Your employee retention rate, which compares the number of retained employees at the start of a specific time period to how many of those original employees are still there at the end of the period, can be calculated with this formula:

What is a “good” retention rate? While this will look different for all organizations, generally a retention rate of 90% or higher is ideal.

What is employee turnover?

Employee turnover refers to the rate at which employees leave a company and are replaced by new hires. It is a key metric used to measure the movement of staff in and out of an organization over a specific period.

Calculating the turnover rate will complement the retention rate by showing the percentage of separations in the same period. Turnover rate is often defined as the number of separations, either voluntary or involuntary, divided by the average number of employees during that same time period, and it can be calculated as follows:

Generally, a turnover rate of 10% or less is ideal, though this varies based on industry, location, and job type.

Why does turnover happen?

Again, the specifics will vary by organization. However, there are some common reasons employees quit. According to Employ’s Quarterly Insights Report from Q1 of 2023, here are some common motivations survey respondents gave for leaving their jobs and seeking new ones:

• Career advancement opportunities (52% of respondents)
• Being able to work remotely (45% of respondents)
• Seeking better company leadership (31% of respondents)
• Seeking better company culture (28%)

This data tells us that turnover isn’t just about money. Employees clearly care about the environments they work in. They want better work-life balance and more flexibility. They want to progress in and achieve their professional goals. They also want to work in positive environments, where their contributions are valued and they feel like they belong.

There are plenty of strategic moves you can make to ensure your workplace is up to par with current (and future!) employees’ expectations. Jump ahead to explore our recommendations!

How can an organization monitor employee turnover?

Organizations can monitor employee turnover patterns by:

• Conducting exit interviews with departing employees to pinpoint areas of improvement within the organization
• Analyzing turnover rate demographics within certain departments, job roles, and tenure levels to reveal commonalities

Employers should also pay attention to signs that an employee may be getting ready to depart their organization, including:

• Decrease in engagement, productivity, and performance
• Frequent absenteeism or tardiness
• Exploration of external opportunities
• Shift in attitude
• Loss of interest in professional development or long-term projects

According to the Society for Human Resource Management, your organization should ideally calculate its turnover and retention rates annually, so that it can accurately measure progress as part of its overall retention strategy. An experienced HR consultant can help you with this, providing specific recommendations for next steps to improve your retention strategy.

Why does employee retention matter?

There are many reasons why employee retention should be a priority for your organization. An effective retention strategy will result in:

• Reduced turnover and associated costs. Turnover drains your organization of talent, institutional knowledge, and money. Employers estimate that the cost to recruit a new employee can be three to four times the position’s salary, making recruiting and onboarding costly for your organization.
• Increased engagement and employee growth over time. When employees stay engaged with your organization, they are more likely to grow into new roles, contribute to your culture, and drive greater results for your business.
• An improved employer brand, which can help with recruitment. Being known as an organization whose employees enjoy their work and stick around for the long term is a major asset and can create a helpful flywheel effect in which your employee-focused brand helps attract and retain top talent over time.
• Overall improvements to your bottom line. Taken together, the benefits listed above result in better overall financial health and resilience for your organization. Money saved by reducing turnover can be more effectively allocated to push the business forward and drive even higher retention.

Ultimately, a thoughtful retention plan is pivotal in cultivating stability, growth, and long-term success for the organization.

26 Best Practices to Improve Your Retention Rate

What specific best practices can you use to deepen relationships with employees and reduce turnover? We break them down into five key categories:

Recruitment and Onboarding

Hiring and onboarding practices are your first opportunities to set the tone for your relationships with new employees, so they play an immediate role in driving retention. Here are some best practices:

1. Review and improve your employee recruitment, hiring, and onboarding practices to provide enriching experiences. New hires should feel that your organization is thoughtful, welcoming, and caring.
2. Eliminate bias from your recruiting process.
3. Live your values through the recruiting, hiring, and onboarding process to allow candidates to experience your organization and its culture.
4. Offer new hires opportunities to build relationships with colleagues through planned meetings and structured coaching or mentorships.
5. Make training readily available and ensure that the content is relevant and helps new hires get up to speed as quickly as possible.

Pro Tips to Put These Best Practices Into Action

• Partner with an HR consultant to help you objectively identify bias in your recruiting process.
• Communicate your organization’s values to prospective employees and create specific interview questions that ask candidates to share their thoughts on your values.
• Create a new hire buddy program where new hires are paired with experienced employees who can help them get a successful start at your organization.
• After they have completed the onboarding process, ask new employees to provide feedback on your recruitment, hiring, and onboarding efforts so you can make improvements.

Employee Compensation

There is much discussion around the role of compensation in shaping the employer-employee relationship and impacting retention. While intangibles like your culture, management philosophy, and an immediate supervisor’s management style have an increasingly large impact on retention, compensation and benefits still also play important roles. Hone your compensation strategy by employing the following strategies:

1. Offer salaries and wages at rates as competitive as possible for your organization.
2. Take a total rewards approach to compensation. This entails breaking compensation down into its direct components (salaries and bonuses) and indirect components (benefits, culture, work-life flexibility, management styles, etc.) so that you can take a more holistic view of your overall strategy.
3. Ensure pay equity across your organization.
4. Help employees understand the steps you are taking over time to review, adjust, and manage your compensation strategies. Consider whether compensation will be tied to performance. This can be determined based on a number of factors.
5. Offer benefits packages that meet the needs of your employees, offer flexibility, and provide the greatest value while simultaneously watching employer and employee costs.

Pro Tips to Put These Best Practices Into Action

• Partner with a compensation consultant to evaluate your current compensation strategy. These experts can help benchmark your strategies, conduct pay equity audits, and develop other improvements.
• Create a plan for communicating with employees about your compensation strategy.
• Consider offering flexible spending accounts to allow employees more freedom and flexibility to meet their healthcare needs.

Employee Growth, Engagement, and Recognition

Over 70% of employees view the development opportunities offered by employers when seeking new employment opportunities. Learning and development are critical for engagement, and recognition is essential for long-term retention. Here are some best practices to optimize your growth, engagement, and recognition efforts:

1. Genuinely recognize and express appreciation for employee accomplishments.
2. Offer learning and development opportunities, and regularly discuss career growth with employees. 94% of employees say they would remain at their current organization if it offered learning and development pathways.
3. Encourage teamwork and skill set development by identifying opportunities employees have to work together.
4. Set individualized goals and plans of action during your performance management process, and support employees with the tools they need to achieve them.
5. Encourage managers to give regular feedback (both positive and constructive) to their direct reports. Also, encourage employees to offer open and honest feedback about what your organization could do to improve their employment experience.

Pro Tips to Put These Best Practices Into Action

• Experiment with different ways to recognize your employees, from creating systems for leadership and peers to submit “bravos,” to offering spot bonuses or prizes for major contributions, to building in recognition as an ongoing part of employee-manager conversations.
• Look for opportunities for cross-training between different teams or departments to encourage skill development and collaboration.
• Invite managers to give feedback to their direct reports in each one-on-one meeting they have together, and ask them to record the feedback to monitor larger trends and patterns in employees’ performance.
• Send out regular surveys or questionnaires that allow employees to provide candid feedback, suggestions, and ideas for improving your organization.

Company Culture

Your organization’s culture and the workplace environment you foster can play major roles in employee engagement, well-being, and ultimately, retention. Here are some strategies for making your internal culture stronger:

1. Actively foster a flexible, diverse, and inclusive culture. Encourage employees to get to know one another and understand each other’s roles and responsibilities.
2. Create open lines of communication across the organization.
3. Develop and communicate your diversity management efforts to reflect your commitment to diversity, equity, and inclusion (DEI) and to creating a culture of respect, equity, and belonging.
4. Offer flexible work arrangements to whatever degree you are able. The ability to work remotely full-time or on a hybrid schedule has become a significant driver for many employees seeking new jobs.
5. Launch employee wellness programs that help your staff members prioritize their physical and mental health.
6. Encourage work-life balance.

Pro Tips to Put These Best Practices Into Action

• Create opportunities for employees to get to know each other by planning regular team outings, whether that means arranging a happy hour or getting tickets to a local sporting event.
• To champion employee wellness, try offering stipends for exercise classes, hosting stress management workshops, or having healthy lunches catered at your office once a month.
• Reinforce your commitment to work-life balance by modeling a healthy balance yourself—this means disconnecting from your work email after hours and avoiding work when taking time off.
• Provide transparency into the reasoning behind leadership decisions that impact employees.
• Celebrate affinity months like Black History Month (February); Women’s History Month (March); or Asian American, Native Hawaiian, and Pacific Islander Heritage Month (May) to encourage employees to get to know and appreciate everyone’s culture and background.

Organization and Management

How your organization structures its teams and manages employees can also directly impact its ability to retain talent. These elements should be periodically reviewed to ensure they are still delivering maximum value for the organization and employees. In particular, we recommend the following:

1. Keep job descriptions up to date to accurately reflect your organization’s positions.
2. Consider broadening your concept of employees’ roles by creating a matrix model that taps into employees’ skills rather than the jobs themselves. This has many advantages—it offers greater flexibility and learning opportunities to the employees and also provides many benefits to the employer.
3. Empower managers by offering the leadership training needed to support your organization’s retention plan.
4. Emphasize goal-setting across all levels of your organization.
5. Consider conducting an HR Assessment to review and evaluate how your HR practices may (or may not) be supporting your retention goals.

Pro Tips to Put These Best Practices Into Action

• Regularly revisit your job descriptions (especially ahead of a hiring effort) to ensure they are accurate and up to date.
• Have regular meetings with your organization’s managers to discuss organizational priorities, challenges, and upcoming initiatives.
• Communicate organizational, team, and individual goals, track your progress, and celebrate wins.

Key Steps to Improved Employee Retention

In addition to considering the five key focus areas discussed above, there are core steps you can take to begin strategically improving your employee retention rate. These are:

1. Work with an HR professional to develop your retention strategy.
   • HR experts can be invaluable partners as you work to improve your employee retention rate. An HR consultant often has experience that spans a wide set of HR practices that impact retention, including recruitment, employee coaching, compensation and benefits planning, and more. They can help your organization develop a comprehensive retention plan of action or dig deeper into the specific areas that need improvement through benchmarking and HR assessments.
2. Calculate your current employee retention rate.
   • This will give you a starting point on which to build your plan. Refer back to the top of this article to review the retention formula.
3. Analyze and benchmark your retention data.
   • Review the current state of your retention efforts. For example, who specifically is leaving? Do most employees who resign do so within a particular amount of time/common tenure? When you conduct exit interviews, an important tool for understanding and managing retention, what (if any) trends emerge in their reasons for leaving?
   • Consider working with an HR consultant to benchmark your own retention data against that of other organizations in your industry.
4. Conduct an employee retention survey.
   • Work with your team and/or an HR consultant to create and administer an employee survey asking questions related to retention. Do employees feel engaged at work? Do they understand why certain decisions are made? Do they feel fairly compensated?
   • Next, review the survey results. Do employee survey responses reveal particular areas that seem to be driving turnover? For instance, you may identify compensation, inclusion, and career development as key pain points for your employees. These areas of focus will anchor your strategy going forward.
5. Audit your current practices in relevant areas.
   • Conduct in-depth audits of your practices in the areas of focus that you identified. Consultants and other specialized partners can conduct thorough, impartial audits of your HR practices, compensation strategies, diversity initiatives, and more.
   • Use your employee survey data to help inform areas of focus for your audit.
   • The results of an effective audit will point you toward specific gaps and shortcomings that can be addressed to drive stronger retention results.
6. Set employee retention goals. 
   • Based on exit interviews, the employee survey, and the results of your audit, set your employee retention goals and create a plan for accomplishing your goals.
   • Plan for incremental changes to your retention rate and build in various deadlines to evaluate success. This will include creating improvement plans.
7. Develop improvement roadmaps and assign ownership. 
   • Lay out plans for addressing the identified issues. Outline specific changes, how they will be developed and implemented, who will own which elements of the plan, timeframes, and any other necessary details.
   • Make sure that involved team members understand why and how their help will support the broader retention plan and goal.
8. Actively track and review progress.
   • Regularly check in with your teams as they progress through the improvement roadmaps. Have a plan in place for measuring the impact of all individual improvements and the broader retention initiative as a whole. As the pieces of your plan come together, remember to recognize and celebrate your teams’ achievements!

How RealHR Solutions Can Help

At RealHR Solutions, our consultants collaborate with you to identify your organization’s unique retention goals and strategize to decrease your turnover rates. Our experience working with clients in a range of industry sectors and a broad range of expertise in implementing effective retention initiatives equips us to tailor solutions that resonate with your specific needs.

A comprehensive retention strategy safeguards against high turnover’s disruptive and costly effects and nurtures a culture of loyalty and growth, ensuring a harmonious journey toward shared objectives. Use the strategies and steps outlined above to get started improving your retention rate, and don’t forget to seek out the help of an HR consultant if you need an extra helping hand.

Want to learn more about driving results for your organization through strategic internal improvements? Check out these additional resources:

• Employee Recruitment: A Guide To Finding the Best Talent
• 19 Top-Tier HR Consulting Firms To Consider For Your Org
• Performance Reviews: Overview & Tips from HR Experts