8 steps to building an employee retention strategy

An employee retention strategy that effectively reduces employee turnover is critical to remaining competitive in today’s talent market. In fact, according to recent surveys asking C-suite leaders to rank stakeholders in order of importance, employees rank above shareholders, emphasising just how important employees are to an organization’s success.

A successful retention strategy helps organizations retain valuable talent, minimize costs associated with employee replacement and training, and maintain institutional knowledge. Most importantly, it fosters a stable and productive work environment where employees can give their best.

In this article, we cover eight key steps to creating a successful employee retention strategy.

1. Develop a positive workplace culture

A positive workplace culture is one of the most important factors employees consider when deciding whether to stay with an employer. And though employers may be eager to make whatever changes necessary to ensure their culture is excellent, they can’t effectively develop their culture if they don’t understand it. So, before taking steps to make changes, be sure to research your workplace culture to understand where it stands.

Common ways of researching organizational culture include:

• Conducting employee engagement surveys followed up with focus groups of employees run by external facilitators.
• Reviewing ratings and employee reviews on websites like Glassdoor.
• Reviewing the organization’s mission and value statements.
• Ensuring exit interviews include questions directly related to organizational culture.

While researching, be sure to consider both the formal and informal culture. The formal culture of an organization is expressed through corporate channels, for example the organization’s mission statement and values. The more dominant, informal aspect of organizational culture is expressed through employee behaviors and norms.

From this research, you can begin developing a series of initiatives to help make it a great place to work. This may include:

• Leadership training.
• Psychological safety training.
• Team building exercises or retreats.
• Policy or company statement adoption.
• New employee resources groups.

2. Design an effective onboarding experience

A well-designed onboarding experience can make or break an employee’s decision to stay with the organization. In fact, around 70% of employees decide whether they’re going to stay—or leave—within their first 30 days of work.

Onboarding is pivotal because it serves as the employee’s first impression of the organization as their new employer, and it communicates to the employee what kind of support they’ll receive to succeed. Onboarding is even more important for remote employees, who are more likely to feel lonely and less integrated into a team without proper onboarding.

Onboarding helps both new employees and their line managers. For the new starter, an effective onboarding experience will help them:

• Become effective in their role.
• Feel that they are a valued member of the team.
• Engage with the purpose of the organization and its values and culture.

For the line manager, a good onboarding experience gives them the opportunity to:

• Connect with their new team member quickly.
• Identify their skills and how they can be deployed.
• Identify what areas they need to develop.
• Build a trusting relationship with them.

And for the organization, effective onboarding means it can achieve a return on investment. A common problem for many employers is that new starters are not able to hit the ground running. With a positive onboarding experience, employers can resolve this problem by providing employees with clear expectations, the resources to perform effectively, and the motivation to tackle new challenges in their work. With the tools employees receive in a supportive onboarding experience, they’re more likely to be effective quickly and work to their highest potential.

To create an effective onboarding experience:

• View onboarding as a continuous experience that goes beyond the first weeks or months of employment.
• Leverage onboarding platforms and other tech to enhance the onboarding experience.
• Ensure consistency across the program through checklists and other progress tracking methods.

These and other strategies will help ensure new employees feel welcomed, ready to tackle their new roles, and most importantly, committed to staying.

3. Improve line management skills

The quality of line management and the working relationship between an employee and their manager are often a major influence on an individual’s decision to stay or leave the organization. According to research from Boston Consulting Group, great managers are associated with a “72% reduction in attrition when comparing employees who are very satisfied with their managers with those who are very unsatisfied.”

Indeed, line managers are increasingly expected to implement people management policies, including those relating to leave, flexible working and performance management. They’re also the individuals who employees have the most day-to-day contact with, making their relationships with employees paramount. With such impactful responsibilities, it is essential that line managers are competent and confident in carrying them out.

To improve line management skills, aim to provide training to promote awareness and understanding of the organization’s policies and procedures. Also, focus on developing the competencies and behaviors that line managers need to carry out their role effectively, for example leadership and interpersonal skills.

If managers are good at managing and motivating people, they are more likely to have teams that are productive and committed to their jobs. Their team members are also less likely to resign and leave management with the headache of having to recruit and train a replacement.

4. Prioritize employee well-being

Research into the financial benefits for employers of investing in employee well-being is at an early stage, but initial studies suggest that the return on investment is quantifiable and directly affects the bottom line. One of the less direct costs of poor employee well-being is increased employee turnover.

Employees often leave an organisation for reasons directly related to their health. Some employees may leave the workforce entirely due to their health, while others may seek alternative employment with an organization that will better accommodate their health problem through, for example, flexible working. Costs associated with high turnover due to poor health include direct recruitment costs, the cost of obtaining temporary coverage, and orientation and training costs.

Holistic well-being

Workplace health promotion should be more than a series of standalone initiatives. While it is important to introduce well-being programs focused on individual well-being, for example smoking-cessation or healthy-eating campaigns, employers should embrace a holistic approach that acknowledges the combined impact of a range of factors on employee well-being, including environmental, organizational and societal factors.

Taking a holistic approach to well-being will allow you to support the whole employee and meet their unique needs. To do this, you’ll need to establish a holistic well-being strategy, which should include a vision and plan of execution. Each of these should directly address what holistic well-being means to the organization.

The strategy should also include the adoption of a well-being policy, which will help you execute on specific well-being initiatives. The well-being policy should cover all dimensions of well-being that the organization intends to address.

The role of managers

Ensuring a mentally healthy workplace is key to improving employee well-being, and in turn, retention. Line managers play a key role in this endeavor. However, many line managers find it difficult to have conversations about sensitive issues.

To foster mental well-being among employees, prioritize strengthening line managers’ abilities to support employee mental health. Line managers should be trained to provide coaching and encouragement, navigate difficult conversations and build a psychologically safe environment. Effective training is important, as it helps line managers understand how their management style and practices can promote, or impair, the mental well-being of their employees.

5. Build a culture of recognition

Recognition can have a significant impact on how engaged employees feel at work, and a lack of recognition can have a detrimental impact on employee turnover. An employee who feels that their efforts go unrecognized is more likely to move on, potentially resulting in the loss of a valuable member of staff.

Conversely, employees who have been recognized for their positive behavior are more likely to exhibit those behaviors again, leading to further performance and/or productivity improvements for the organization. Ensuring that employees are recognized will help to create a positive working environment, meaning employees want to come to work and make an impact.

A rewards and recognition program formalizes the act of recognition through a (typically) centrally managed and controlled process, often with nominations and tiers of awards. If an organization is serious about recognition, having a specific recognition scheme may be only part of building a recognition culture within the organization.

It will be vital to cultivate a management style that sees basic recognition as being part of effective management. As a matter of course, managers should be thanking employees for good work and contributions and saying “well done” when it is merited, rather than commenting only on the negatives.

6. Offer learning and skill-building opportunities

Your organization will benefit from a competitive advantage if you develop your workforce – from apprentices through to future business leaders.

Access to learning and development opportunities not only enables employees to improve their knowledge and skills, but it can also increase their engagement. It can also be a useful tool in retaining staff in a time of skills shortages.

Investing in learning and development to remain competitive, or to implement a specific initiative such as leadership development program, are key reasons for organizations to increase spending in this area. For organizations seeking to cut back on training costs, there are alternatives to simply reducing the output of their training activities, including making more use of online and informal learning methods.

Whatever the learning and development initiative, don’t forget to pay attention to the most appropriate method of learning delivery, and evaluate the outcomes to ensure that your organization receives value for money and meets business needs.

7. Investigate all possible flexible work options

The experience of working from home, forced on many people by the COVID-19 pandemic, has dramatically changed attitudes towards flexible working. Based on their experiences and business needs, many employers have now implemented a full or partial switch to remote or hybrid work. Employers have also implemented other flexible arrangements, such as compressed hours (full-time hours over fewer days), annualized hours (fixed number of annual hours with core hours), job sharing and changes to start and finish times (flex time).

Individuals are placing more value on their physical and mental well-being and are aware that creating and maintaining a healthy work-life balance is essential to achieving this. Offering flexible working arrangements is a direct way of helping employees achieve a better balance between their work and home lives. In doing so, it can boost their loyalty and commitment to the organization.

8. Develop meaningful communication between the organization and employees

Two-way communication with employees is key to building trust and ensuring transparency in both good and challenging times for the organization. Generally, your organization should aim to communicate information about its activities to all employees on a regular basis. You should also encourage employees to provide ideas and feedback to management on all aspects of its operations.

Regular communication between an organization and its employees can produce benefits for all, including the following:

• Improved motivation and commitment.
• Better identification of and solutions to day-to-day problems.
• Better management decisions.
• Increased understanding about management decisions or the need for change.
• Increased levels of trust and improved working relationships.

Information provided by management representatives to employee representatives might include:

• The organization’s general progress and profitability.
• Any recent and probable developments in the business, for example information about the organization’s performance and strategic planning.
• Recent and probable developments concerning the organization’s economic situation, for example contracts won or lost.
• Planned structural changes within the organization, especially if circumstances arise that might create a threat to job security.
• Any management decisions likely to lead to changes in work organization.
• Any potential changes to policies and procedures and/or the terms and conditions of employees’ employment.
• Information about health and safety issues.
• Information about equal opportunities matters.
• Departmental information, for example changes in work methods or specific issues that have arisen locally.

A lack of frequent two-way communication between leadership and employees can cause uncertainty among employees about organizational issues and hamper their ability to carry out their work. Good communication, on the other hand, can result in better retention levels because employees feel more valued and committed to the organization.

Looking ahead

Building a successful retention strategy is a long-term project, and what makes yours successful may not be the same for other organizations. When building your organization’s retention strategy, be sure to evaluate it frequently and make adjustments when needed. Most importantly, consider the input of your most important asset: your people.