An employee handing in their resignation is an expensive loss for an organisation. While there can be recruitment costs involved for finding a replacement, there’s likely a loss in production, costs associated with training a replacement, loss of time due to the replacement needing to get up to speed—not to mention the loss of valuable knowledge the exiting employee took with him or her. Also, a resignation can, and often does, lower the morale and productivity of the rest of the team.
As the employer, you should ask yourself: Why are they leaving? And how do you prevent them from leaving in the first place?
According to the 2020 Retention Report from Work Institute, the most common reasons employees leave their jobs in the US are due to lack of career development, lack of work-life balance, manager behaviour, compensation and benefits, and work environment. Let’s have a closer look to some of these reasons.
Career development: Most employees want to climb the ladder. However, when there is no path for them to grow, they’re likely to start looking around to see if they can get a better role in which they can contribute more or have leadership opportunities. It’s difficult for employees to become invested in something they have little or no ownership over. If you want to retain your best employees, offer and encourage professional training and development and make sure they are engaged.
Work-life balance: Research has found that supporting a remote work program can have a meaningful impact on retaining employees. It can lead to a 25% lower employee turnover than companies that don't. It has also been found that working remotely doesn't negatively impact employees' investment in their work as many employers previously worried. Especially after the recent COVID-19 lockdown period, companies’ views on working from home have changed and employees are embracing it.
Manager behaviour: Employees are more likely to stay with a company where they can trust management and senior leadership. Transparency is a crucial element of trust. The resignation usually means that the trust has been damaged. Being transparent and recognizing people’s talents not only boosts individual employee engagement, but it’s also found to increase productivity and loyalty to the company, leading to higher retention. Engaged employees are less likely to be looking for another job. Also, are you praising employees for working late? It might seem like the right thing to do, but it's a dangerous precedent to set—they’ll be on the verge of a burnout and then likely to leave.
Compensation and benefits: Many people leave their current jobs for a higher salary. It’s said that for 20% more pay a year or even less, 75% of people are willing to transfer. The cost of replacing someone, however, is generally one to two times their annual salary. From that perspective, even a small pay rise could spare you a lot of trouble. Have a look at your remuneration scheme; benchmark your scheme and make sure it is in line with the market. It will be considerably harder for your competitors to poach your top employees if you’re already paying them at market rate or better. Also, keep talking to your people. A high salary is not on the top of their list. In the Netherlands, for example, around 33% of candidates want to have growth perspective. See if you can offer them this perspective.
Beat the odds on retention! Retaining people starts from the moment you hire them; your hiring process is an introduction to your company. Make sure new hires feel welcome. Ensure they have access to a colleague or manager when they have questions and socialize them into the culture of the company. Moreover, manage their expectations. Sell the job as it is, not better. Be extra clear about the role and what they are expected to do. You need to build a relationship based on trust. Understand what drives your employees and make sure they have a stellar workplace with a fair market value salary to join.