Having a strong employee retention strategy is important for any business.
After all, your employees are your most valuable asset, and you want to keep them around for the long haul.
A recent survey by Survey Monkey found that 51% of employees would take another job if offered. What’s more, The Wall Street Journal estimates that it costs more than twice the amount of an employee’s salary to find and train a replacement, and according to Investopedia, it takes 6.2 months to have a new employee trained up to the base level of the employee they replaced.
Let’s look closer at why employee retention is so important and how you can develop a strong retention strategy for your business. Don’t let high turnover rates jeopardise your company's success – start planning for retention today!
The importance of talent retention: Why do employees leave their jobs?
According to the US Bureau of Labour Statistics, during the months of April to June, 11.5 million employees quit their jobs. Across the pond, Personio and Opinium reported that 38% of workers across the UK and Ireland have made plans to quit their jobs within the year while a global survey by Microsoft found that 41% of workers were considering leaving their role or changing professions.
There are many reasons why employees decide to leave their jobs, including limited development opportunities, an unsatisfactory company culture, and stagnant salaries.
For example, a lack of potential for career advancement can cause workers to become disillusioned and seek out more rewarding opportunities elsewhere.
Similarly, an organisation’s internal atmosphere can have a large impact on employee morale. If people feel like their voices are not being heard or that their ideas and opinions are not valued, they will begin to look elsewhere for employment.
It is also worth noting the different expectations among generations when examining why employees leave, with Millennial and Gen Z employees leading the charge.
The biggest difference between early- and later-career professionals? The desire for quicker rotation and more continuous feedback.
Younger workers expect to stay with the same company for much of their careers, but also want a variety of experiences to support their development.
Retaining Millennial and Gen Z employees
Based on Adobe’s The Future of Time report, 35% of workers across the United States, the United Kingdom, Germany, Australia, New Zealand and Japan plan to change jobs in the next year. Out of this group, 56% are Gen Z workers and 49% are Millennials.
There are many reasons accountable for this desire to switch and one that stands out is low levels of engagement in the workplace. A recent Gallup report found that only 29% of Millennials are engaged at work and that the majority (55%) are actively disengaged.
Failure to address this issue can result in huge losses for businesses. When the future of your workforce is indifferent to their work and disconnected from their company, the more they are likely to jump on a new opportunity when it presents itself.
Employers need to look inwards and determine how they can provide Millennial and Gen Z employees with compelling reasons to stay or risk losing them to the competition.
Business leaders around the world are currently faced with two sets of challenges: They must identify how to attract Millennial and Gen Z talent who are on the lookout for new opportunities, and they must also determine how to retain their existing employees.
By addressing these issues and creating an environment that encourages growth, employers can boost employee satisfaction and ultimately retain more of their talent.
The best way to do this is by building an employee retention strategy.
9 employee retention strategies to consider in your talent planning
A robust employee retention strategy is key to creating a long-term vision for the business and ensuring its success.
Employers often overlook the importance of a solid retention strategy in boosting long-term growth. It may not seem like a priority, but everyone across the business feels high turnover rates, which can have a detrimental knock-on effect on morale, productivity, and consistency.
1. Plan in advance
By planning in advance, employers can make sure that their staff are well taken care of, no matter what the future may bring.
Employers should have contingency plans for any foreseeable changes or disruptions to the business, such as redundancies or other workforce transformations.
Succession planning is critical to help train and mentor staff that show promise and leadership skills.
Without knowing the skills you have and the direction you need people’s careers to take, you will be left with knowledge and capabilities holes if anyone leaves.
Knowing that their employer has taken steps to future-proof the business will give employees some assurance.
2. Invest in training and development programs
Career progression was cited by 31% as the main motive for switching sectors in the 2022 GETI Report suggesting that companies must do more to help their staff develop their careers.
In the report, 63% of respondents say the best way to get the necessary skills to handle the challenges of a changing energy landscape is to improve in-house learning and development, followed by re-training existing employees.
Training programmes help to map out clear career paths and increase motivation. That's why your company should implement this initiative, attracting new professionals and keeping your team motivated.
Not only does this offer companies an opportunity to benefit from upskilling and supercharging their teams’ capabilities, but it also provides employees with the chance to learn new skills and advance in their careers. This both retains talented workers and attracts new talent into the company.
The role of digitalisation in training and development
Beyond this, the shift towards digitalisation also requires an engaged and tech-savvy workforce. This could see the energy industry competing for a younger generation of STEM talent with other industries regarded as more exciting and technologically advanced.
According to Accenture, the answer may be retraining and re skilling existing employees for energy industry jobs. It will result in six times more cost savings than hiring new employees, add a wealth of experience back into the sector, and help reduce the skills shortage.
In PWC's Global CEO Survey, 45% of Energy, Utilities & Resources CEOs note that upskilling is the preferred solution to the skills shortage and emphasises developing data science and analytics skills.
The World Economic Forum Future of Jobs report claims that 2020 saw the highest number of energy employees requiring more than one year of reskilling efforts. For these professionals, this could increase the chance of transferring between industries, as certain skill sets are needed across all sectors.
3. Offer flexible working options
On average, people spend a third of their time at work. For this reason, employers need to create a space their team is excited to work in every day and give 100% of their effort. So how can employers go about doing that as part of an employee retention strategy?
According to the EY’s Work Reimagined Survey, 54% of the 16,000 employees surveyed across 16 countries and 23 industries would prefer to have flexible working hours. Nine out of 10 employees want to be able to choose where and when they work. This is a massive game-changer.
This renewed sense of value for flexibility and remote work means that more employees are beginning to see it as a necessity rather than a perk.
However, while remote work has its advantages, it can also be isolating. The study found that social relationships suffer when employees work from home. This is a major challenge for organisations that want to retain talent.
To overcome this hurdle, businesses need to prioritise social interactions. HR departments can play a key role in managing this issue, and social relationships should be included in remote work policies.
For businesses that plan on retaining and attracting employees now and in the future, they must implement this as part of their talent retention strategy. Making room for collaborative, creative, and recreational spaces in a workplace can have a really positive impact on culture and overall productivity.
4. Promote and support mental wellbeing
While fun and quirky perks, recreational spaces, bonuses, and other benefits can all contribute towards a great employee retention strategy, supporting and nurturing the mental health of your workers is essential.
Creating a supportive environment starts at the top and is spearheaded by strong, compassionate leadership.
It’s clear that taking steps to invest in employees’ mental health and well-being by cultivating a culture of respect, where employees are listened to, understood, and supported, is vital to retaining talent.
With the right mindset and leadership, companies can create an environment that employees are excited to be a part of. One where they feel their skills are appreciated and their contributions are valued.
Appointing a mental health ambassador in your business and investing in some training courses is also an excellent way to help employees to feel more supported at work and is relatively inexpensive to do.
5. Hire strategically
It is essential that employers are strategic in their approach to hiring new staff. It’s important to analyse which skills and experiences an employee needs to have to succeed in their role.
This means you’ll need to consider not only the current needs of the team but also where the company will be heading in the future and what skills may be required to get there.
By focusing on hiring well-rounded individuals with relevant experience and transferable skills, you can build a sustainable employee retention strategy, as well as a workforce that is equipped to handle whatever comes their way.
The Employee Stock Ownership Plan (ESOP) can be a great way to boost employee productivity and a company's revenue. We all know the formula: a company offers its employees the opportunity to buy company shares at a specific price on or after a certain date. This is similar to the Management Stock Ownership Plan (MSOP), which focuses on company management.
ESOP has become a popular compensation program because it aligns company and employee incentives, provides a way for employees to earn money through dividends, and doesn't affect the company's cash flow.
This research from 2023 shows that ESOP implementation can reduce employee turnover intention; job satisfaction also has a big impact on turnover intention, with higher satisfaction leading to lower turnover rates.
However, the study found that the implementation of ESOP is not the biggest factor in reducing employee turnover. Instead, the biggest factor is getting job offers from other companies. Additionally, employee dissatisfaction with their salary is a major factor in turnover intention.
So, while ESOP can be a useful tool in improving employee productivity and company revenue, it's not a magic bullet for reducing staff turnover and it’s important to incorporate more factors into your employee retention strategy.
7. Make sustainability a core value
When climate change and sustainability are placed at the heart of a company’s values, it shows employees that their concerns are taken seriously. This can help engage and motivate workers who want to make a difference.
To do this, set meaningful goals that resonate with your workforce. According to the 2022 GETI report, 86% of workers say that ESG concerns are now a factor in whether to join or leave a company. Organisations must therefore create a specific ESG strategy, complete with goals and buy-in from stakeholders.
It’s important that companies are clear about their plans to tackle climate change. Employees want to know what their company is doing to address the issue and how they can help meet these goals.
Here are some ideas about how you can communicate your climate change goals with your staff:
Encourage employees to talk about your organisation's climate change and energy transition goals, and suggest any changes they would like to see.
Create forums or discussion groups where workers can share ideas and ask questions about your organisation’s plans.
Make it easy for employees to reduce their own carbon footprints at work. This could involve providing energy-efficient equipment or offering incentives for using public transport or car-sharing.
Encourage employees to get involved in energy efficiency and renewable energy projects at work. This could involve anything from energy audits to solar panel installations.
Make sure your managers are trained to have conversations about climate change with their teams. This will help to ensure that everyone is on the same page and working towards the same goal.
By taking these steps, companies can show their employees that they are serious about tackling climate change and making the energy transition. This will help to retain staff and attract new talent to your company.
There also are a number of things employees can do to help your company build a more sustainable future. Making these methods known to your workers and encouraging them to get involved will help show that you’re committed to taking action on climate change.
Some ideas include:
Promote energy conservation practices within the company, such as carpooling where possible.
Set up recycling programs for waste and used equipment.
Invest in projects and programs that offset carbon emissions by tapping into natural carbon sinks such as plants, oceans, soil and forests. This helps to remove GHGs from the atmosphere, reducing their concentration in the air.
Support employee involvement in local environmental initiatives, such as tree planting days.
8. Review benefits packages
Identifying other factors attracting talent and considering alternative working models is an excellent strategy. Leaders must do a comprehensive review of what people value in their region. Benefits such as flexible working, mental health programs, opportunities for relocation, and committing to diversity, equity and inclusion (DEI) are some of the elements that are highly valued by this new generation of energy employees.
Making some improvements to your benefits packages can go a long way in improving talent retention. This Research-Technology Management study explored the work-life preferences of millennials and identified workplace attributes that attract and retain the younger generations of employees.
The study was conducted through a literature review, a survey of technical workers spanning different generations, and case studies of thriving organisations. The primary objective was to find out what implications there are for R&D organisations who are seeking to hire and retain young technical talent.
The researchers found that there are six categories of incentives that millennials look for in potential employers. These were:
Salary and benefits
Professional development opportunities
Flexible work arrangements
Taking these factors into consideration, they ran a survey to investigate the desires and requirements of entry-level technical employees. They also examined case studies of successful businesses to gather information.
The findings may surprise you: early-career technical professionals aren't so different from their older counterparts after all. That's right, there are more similarities than differences between the two groups.
The study found that all employees, regardless of their age or career stage, want the same things: a competitive salary, healthcare benefits, a robust professional development plan, flexible hours, and the option to work remotely.
This is consistent with their survey, which found that lack of compensation increase was the primary reason for one in three employees who left their jobs.
We suggest getting creative with benefits. Look at telecommuting, flex-time, stock options, additional vacation time, or other non-financial rewards if you are unable to match the salaries that the competition offers.
9. Meet salary expectations
If you are looking to retain your workforce, you need to pay them what they are worth. Work with your HR team to make sure that you have up-to-date market rates.
You don’t need to be paying unrealistically high salaries, but paying at or below market rate will make employees feel undervalued.
Provide meaningful annual raises by reviewing your compensation and benefits to ensure you stay competitive. Reach out to your recruitment agency if you need additional details.
Salaries and rates of pay are often treated as private within organisations. The reality is that your employees are talking to each other about pay even if you think they aren’t.
Be consistent with compensation, and when exceptions are made have firm, documented, reasons why. Don’t let unconscious bias get in the way of your reasoning.
How to motivate contract workers and retain talent
Although these employees may not be permanent staff members, it’s essential for employers to make sure that they are motivated and engaged with the company to retain them for as long as possible. This can also be factored into your employee retention strategy.
Work closely with your employment agency to offer flexible working arrangements and regularly review contract benefits and salaries.
Additionally, providing incentives like bonuses or rewards can help to increase motivation and demonstrate that their efforts are valued.
Including contract workers in decision-making, and providing clear career pathways they can progress along is also key to retaining top talent.
Recognising the important roles contract workers play in a company’s growth, and taking steps to ensure their satisfaction, will maximise their performance and keep them around for as long as possible.
By investing in these contractors and giving them the same level of respect as permanent staff, businesses will be able to keep talented individuals around for the long haul, creating a well-rounded and experienced workforce and boosting their overall efficiency and productivity.
Why is employee retention important: Plotting a road-map to long-term success
To harness their human capital, businesses need to ensure their employees stay with them for a long time.
With a comprehensive employee retention strategy in place, employers can ensure that their workers are motivated and engaged, leading to greater success for the company as a whole.
Keeping valuable minds around also helps create consistency within the workplace, which in turn can help improve employee morale, aid communication between departments, and ensure more productive team collaboration.
Summing up: The importance of an employee retention strategy
There are many reasons why people leave their jobs, but some of the most common include a lack of development opportunities and poor company culture.
Offering training and development programs and creating a positive work environment as part of your employee retention strategy can not only lead to happier employees, but also help your business succeed.
You should also invest in employees by providing good employee benefits, listening to their feedback and treating everyone equally.
The more effort you put into making your workplace a pleasant and rewarding place to work, the more likely it is that your employees will stick around for the long haul.