Employee turnover is expensive. For example, SHRM estimates that "direct replacement costs can reach as high as 50-60 percent of an employee's annual salary." That's not to mention the indirect and hidden costs, which must be considered as well if we want to deduce the total cost associated with turnover and replacement.
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One thing is clear above all else: Retaining employees will always be more cost-effective than hiring new staff.
When it comes to top talent, it is of particular importance to develop the right retention strategy. Both big corporations and small businesses are fighting to hire the best contenders. Small companies may feel intimidated by the prospect of competing with large enterprises' salaries and perks, but smaller organizations have flexibility and agility on their side. These can be precious advantages when it comes to retaining top talent.
The key to keeping star employees in your business is to build a happy workforce of engaged employees who can be your brand advocates. This retention strategy is ideal for small companies because it does not require enormous investments. Instead, it requires the fostering of genuine bonds between employees.
The following steps should help you retain your most valuable employees, even when the companies with bigger budgets come knocking:
1. Listen to Your Employees
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As Rob Bogosian, founder and principal of RVB Associates, explains, "One of the best ways to retain talented employees is to foster a culture of voice – where employees aren't afraid to speak up." Many organizations claim to have such cultures, but how many are actually doing it right?
Startups are in a better position than larger corporations to listen to their employees. In small companies, people at various levels tend to intermingle and work closely together. This makes it easier to arrange meetings in which members of different teams and at different levels can present their ideas to top-level managers.
It is recommended to regularly hold such meetings and to encourage employees to come up with and share new ideas for business improvement. But don't stop there: After these meetings, top managers should follow up with employees to let them know how their opinions have been taken into account. In your monthly meetings, you can showcase the best ideas in front of the whole company and compliment them in public.
2. Find Personalized Motivators
There are no one-size-fits-all solutions in employee retention. What pleases one employee may not satisfy another. For instance, the perks that excite millennials early in their careers may not be the same ones that engage baby boomers reaching retirement.
It will be most cost-effective to let employees decide what types of benefits they prefer. While some young professionals may fancy a membership to a local gym or free food and drinks in the office, others may want more flexible working hours or the possibility of working from home.
Adapting to what your employees are demanding is critical if you want to compete with large corporations. You can analyze your employees' ages and lifestyles to deduce what type of perks will keep them engaged, but the most important thing is to talk to them. Find out what they really want straight from the source.
3. Introduce Small, Continuous Responsibilities
If you can gradually give your talented employees key responsibilities, you will make them feel useful, valued, and irreplaceable. This procedure works especially well for millennials because, as Millennials Incorporated author Lisa Orrell explains, they "have fast minds and get bored quickly, but it's your job as their employer to help eliminate the 'boredom' factor."
When you have new business problems to solve, let your employees help you out by coming up with possible solutions. Giving your employees this type of responsibility will make them feel useful – and who doesn't like to be useful?
Talented employees need to feel valued. A good way to show them your esteem is to reward them with more responsibility. If you continuously give them new tasks to work on, they will understand how much their managers trust them.
Responsibility will also help employees feel irreplaceable. An employee who acquires unique duties and obligations becomes harder and harder to replace.
4. Understand Why People Leave Your Company
Many companies conduct exit interviews, but how many do it effectively? The truth is that you can only retain employees longer if you first understand why people leave your organization.
The main objective of your exit interview should be to identify opportunities for improvement. Ask questions aligned with this purpose. If you identify a widespread issue, take action to resolve it as soon as possible.
5. Conduct 'Stay' Interviews
Don't wait until your top talent tells you they are leaving. Be proactive and plan 'stay' interviews that will help you address issues before they become big problems.
According to the Wall Street Journal, some good questions to ask during a stay interview include:
Why did you come to work here?
Why have you stayed?
What would make you leave?
What are your non-negotiable issues?
What about your managers?
What would you change or improve?
Talent retention should be a primary objective of your company culture. Connect talented employees to the core of your business, and they will consider themselves significant parts of the organization. When employees feel this way, they are less likely to leave.
Maria Onzain is a digital marketing expert who writes about career, education, ed. tech, and life hacks.