Why is Employee Retention Important?
You’ve probably already heard of the Great Resignation, also known as the Great Quit, the Great Reshuffle and the more recently trending Quiet Quitting. While economists and sociologists argue over the reason for this increase in employees leaving their companies or disengaging in their jobs, HR executives are scrambling to solve a crisis in action. But why is employee retention important? And how can you take steps to increase your employees’ investment in your company while growing as a business?
High employee retention speaks not only of a good workplace environment; it’s also a sign of employees sharing the company’s goals. A happy employee is a productive employee, and training up new workers is a waste of time, resources and money. According to SHRM (The Society for Human Resource Management), replacement costs of a new employee is on average as high as 6-9 months of their salary. No wonder, then, that employers are keen to increase their employee retention.
Workplace Values for 2022
The more recent debate around the Great Resignation has circled on a perceived shift in employees’ values in the wake of the pandemic and as millenials join the workforce. While some have criticised the studies for being overly UK- and US-centric, a Microsoft survey of 30,000 global workers shows that 41% of employees are considering changing professions or leaving their current position within the next year. The currently trending #quietquitting social media posts further show employees pledging not to go above-and-beyond their position, but to do their job and no more. At the very least, this is a sign of a society-wide desire to redefine our work values towards a more employee-centric approach.
Today, successful workplaces are seen as those governed by trust, communication and a shared desire for the company to succeed; companies where employees, managers and employers all work together to fulfil the company goal which, in turn, provides true value for human lives. It’s a work culture where your employees will flag issues before they arise, contribute with innovations, and bring the company forward into the future – because they’re invested in the company’s success. As the 2021 Mercer report shows, employers are well aware of this, with 72% of employers spending more on benefits per employee and 60% increasing investment in employee wellbeing.
Despite all this, employee retention is at an all-time low, and it’s employers’ misunderstanding of their employees that’s the culprit. In a series of surveys encompassing Australia, Canada, Singapore, UK and the US, McKinsey found that 3 out of 4 most important employee values are not seen by employers as significant. Sure, pay, perks and benefits are all important to employees, but the numbers show that what employees crave is the meaningful, interpersonal interactions, feeling autonomous and valued at your workplace, and feeling of making a real difference. In other words: recognition. In fact, feeling recognised makes employees four times more likely to be engaged at work.
How to Improve Employee Retention and Motivation
So, how do you as an employer create a shared desire for company success and show your employees that you recognise their work? Many argue for the need for a big restructuring of company benefits and workplace structure. Of course, a change is needed. But it doesn’t always have to feel like effort to make a big change. A key part of the solution is to seek to understand your employees, create dialogue, and to give direct, immediate incentive for hard work. According to Achievers, 44% of employees switch jobs because of not getting enough recognition for their efforts – while 67% state that better rewards would make them want to stay longer. So, show your employees that you value them! But ask yourself and your employees if that $50 for their birthday really makes employees feel valued? Or if the possibility of increased financial independence – “make money while you sleep” as the old saying goes – and the possibility of owning stock would not lead to greater benefit?
The amount of individual investors, called retail investors, has steadily increased since 2020. In the first half of 2021, over 10 million people joined the stock market – equal to the total joining in 2020. In Australia, the number of active online investors reached 1.25 million by early 2021. A year later, almost 25% of the stock market is in the hands of retail investors. Entering the stock market is very much en vogue as individual share ownership is seen as a first step to generating future wealth. If you can offer your employees company shares for their performance as bonuses and for special occasions, this future wealth is afforded both your company and your employees. How? By making not just the company but also its employees personally benefit from performing better: an immediate acknowledgement of your work being valuable in and of itself rather than in the amount of hours you’ve put in. It’s a way to generate continuous recognition and a possibility of personal profit with a direct impact on higher productivity, lower burnout rate and increased employee happiness. What better way to create shared value and increase your employee retention?