Don’t know how to improve remote employee retention amidst the sudden shift to a virtual workplace? We’ve got you covered!
What is employee retention?
You can’t control what you don’t know. That’s why we’re covering the question: what is employee retention? Learn what it is and understand its impact.
What is employee retention? In its most simple terms, employee retention refers to the ability of an organization to retain its employees. To add more context, It’s the practice of investing in the employee experience to engage employees, reducing your organization’s turnover.
Most importantly, it’s a business critical function. The financial cost of employee turnover is high, estimated at 1.5-2 times the employee’s salary. This cost doesn’t take into account the hit employee turnover takes on the rest of your team. Employee turnover requires other team members to take on their former coworker’s items as they search for a replacement, which can create burnout and hurt team morale.
Employee turnover can also cause a snowball effect. When key employees leave, their team members and reports should be considered a flight risk. Even if your company adequately plans for turnover, employees may reconsider their role when their friend, manager, or supportive roles resign. If your teams become buried under work as they search or train a new team member, this becomes more likely. Both scenarios hold negative consequences, showing just how essential employee retention is to the dynamics of your teams.
Investing in company initiatives to increase employee retention begins with determining why employees are leaving your organization in the first place. Is it poor organizational design? A lack of career growth opportunities? Find out, and build a strategy addressing these problems to improve employee retention.
Top Reasons Why Employees Leave Jobs
One thing to remember is that employees leaving your organization is inevitable. Employees quit for reasons beyond an organization’s control, such as to:
- Continue their education
- Make a career change
- Have a child
- Look after a family member
Being a remote company actually reduces many of these normal reasons for quitting a job because it can provide employees with more flexibility since they can work from anywhere.
With that being said, many employees leave an organization due to their individual work experience, which can be based on a company’s culture, work environment, leadership team and more. Some common reasons employees become dissatisfied at work are if they feel they are experiencing:
- A career path with no growth opportunities
- A lack of recognition
- Poor management or compensation
- Or sheer boredom
Fortunately, these are all elements of your organization that you have the ability to change and improve when needed. Keep them in mind as you navigate implementing employee retention initiatives and building an optimized employee experience to target any challenges your employees face.
The first step: Measuring turnover
If you’re focused on improving your organization’s employee retention, you’ll likely want a baseline to refer back to. So how can you assess how frequently, and how many, employees leave your organization within a given timeframe?
First exclude any forms of turnover that aren’t voluntary, like involuntary, internal transfers, new hire turnover, etc… From there, use this accurate formula to calculate voluntary turnover for your entire workforce:
Voluntary Turnover = [ (# of voluntary departures) / (average # of employees) ] X 100
The number of average employees should refer to your entire workforce, unless you only want to calculate voluntary turnover within a department or by some other filter. Make sure to keep your time frame consistent among all turnover calculations over time.
Finally, if you are worried about your organization’s employee turnover rates, you can consult industry benchmarks for further context on if your rate is above, below or in line with your competitors. To do this, industry-specific benchmark data is always available for purchase. However, you can also pull annual turnover rates both by industry and region from free reports offered by the Bureau of Labor Statistics.
No matter your industry, it’s good to refer back to benchmarks to gauge how successful your employee retention strategy and employee experience is. However, if your calculated rate is lower than you’d like, or slowly decreasing, there are many available strategies to improve it.
Like what you’re reading?
Becoming an expert at retaining talented employees in the modern workforce starts with the right strategy. Download our full e-book on employee retention in the virtual workplace to learn:
- 5 key strategies for building a vibrant remote work environment
- An employee experience design that markets itself to current and prospective talent