How to Improve Employee Retention

The benefits of improved retention are enormous:  Reduced turnover costs, improved service productivity, higher customer satisfaction, a more knowledgeable workforce and better employee morale.

Retention is a result of thinking strategically and doing many things well.  There is no one tool or technique that alone will get results.   The entire talent supply chain must be reviewed to get maximum benefit. 
1.  Many organizations ignore the basics.  
  • Be data driven. You have to know where you are before you can figure out a plan to improve.  Good data will drive good decisions.
  • Few organizations truly understand the cost of turnover.  Costs include recruitment, selection, orientation, loss of productivity, vacancy costs and customer impact costs.   Knowing the costs is an important first step because it creates the resolve to make changes.
  • Know why your employees are leaving your organization.  Exit interviews are helpful, but may not give you accurate data.  Employees will often cite pay as a reason for leaving because they don't want to hurt feelings or create waves.   Better are interviews with former employees who left six months before. 
  • Know the best sources for your new hires.  Cultivate relationships with these sources to increase the number of candidates applying for positions. 

2.        Develop a profile of your ideal candidate.  Retention begins with recruitment, but a recruitment effort is flawed from the beginning if you don't have this.  Identify the key elements of the kinds of people you want to attract and keep - those that will fit your culture, support your mission and enjoy their work.  For example, people tend to prefer working with either other people, things or ideas.  Which kind of people fit best in your jobs?

3.        Develop a compelling value proposition. You must be able to answer this question:  Why should a good candidate come to work for your organization?  Make no mistake, this is marketing.  Your challenge is to differentiate your offering from all other competitors.  What makes your mission appealing to exactly the kinds of people you want?  Why are your jobs the best for your ideal candidates?  How do your rewards and worklife benefits best fit the needs of the people you most want to hire?  Too many organizations focus on pay, when in fact, the work itself is often what can be most attractive to the right candidates.  
4.        Increase your pool of candidates.  To increase retention, you must hire only the  candidates who are most likely to stay and be productive.  Yet being selective requires that you have a pool of candidates from which to choose.  If you hire whomever you get, you're in trouble.  Identify the most productive, best places to recruit, then put together a focused recruitment plan to increase the numbers of viable candidates.
5.        Improve your selection process.  Your selection process needs to be fast and valid so that you can identify good candidates and make offers quickly.  Map the selection process and work through solutions to improve both cycle time and the quality of hires.  Focus on the ideal candidate characteristics and select for the profile traits.  Many selection tools are available, but you must be careful they fit the job (are a bona fide occupational qualification).  Don't rely on interviews alone - research has shown that interviews are one of the least valid tools for selection.
6.        Invest in employee orientation.  You must make sure a person has a positive entry experience in your organization.  Half of all people who leave a job in the first ninety days make that decision on day one or two.  You'll never have a more eager employee than on the first day.  Capitalize on it be giving people reasons why you're pleased to have them and why they should feel great about being selected.  Don't park them at a desk reading the employee handbook!  
7.        Focus on people development.  People want to learn and grow.  If employees are not mentally challenged, you will lose them.  People will check out mentally long before they check out physically.  Mentor programs can be highly effective in boosting retention of great employees.  Well designed mentor programs speed development of both the new employee and the mentor.  Identify ways to keep people learning and developing even after a few years on the job.  For example, special projects or a transfer to a different part of the organization can help keep high performers stimulated and challenged.
8.        Develop your managers.  A 25-year-long Gallop poll of employees reveals there are several factors that will keep an employee in one company.  The most important factor is quality managers.  Employees stay where they have a manager who truly manages them. Great managers listen to employee ideas and encourage collaboration.  The converse is also true:  many studies cite ineffective managers as the number one reason why good performers leave.  The best performers will not stay with you if they work for a jerk.  Make sure that your managers and supervisors demonstrate high quality skills.  When employees leave, they usually leave managers, not companies.  
9.        Run a high-performing organization.  People want to work for winners.  The best performing organizations have a tremendous advantage in getting and keeping good people.  Align your strategy, structure, people and processes.  Make sure your employees understand the big picture and can see how they individually support the strategy.  Establish measures and let everyone know how you're doing on a regular basis.
10.        Provide employee recognition.  Employees stay where they feel appreciated.  Encourage individual management recognition but also develop organizational recognition vehicles.  Simple recognition of jobs well done in the quarterly newsletter, pictures on the bulletin board, dinner gift certificates, and other small rewards provide a high return on investment.
A methodical approach to assessing your talent chain is the best way to identify ways to improve outcomes.  Remember, retention is the result of doing many things well.