Staff Turnover and Retention: The Importance of Employee Engagement
Blog // 22-03-2021

Staff Turnover and Retention: The Importance of Employee Engagement

by Claire Ross, Head of Culture and Engagement

Being able to hold on to your best employees is a key factor in determining whether your business will be successful.

While competitive remuneration and enabling satisfactory career progression are important in keeping your employees happy, improving your staff retention rate is about much more than that.

What is employee retention?

It’s about making your colleagues want to stay. Of course, a certain amount of turnover is to be expected – people retire, change profession, move away or win the lottery. But if your retention rate is low, it’s likely to be a sign that your employees are not happy – and it means you’ll be finding it harder to hang on to your best operators.

If you wait until it becomes a problem before taking action, it’ll be too late. You need to give it constant attention from the very beginning, which is why things such as developing a positive company culture are so important.

Why is staff retention important?

As in other areas of your business, there are costs and benefits associated with employee retention. High staff turnover can be very expensive, both literally and figuratively. You have to go through the recruitment process time and time again.

If you keep losing staff, you risk eventually discovering that there is not a bottomless pit of high-quality replacements. And reputations travel far – if employees are constantly looking to move on elsewhere, word will get out, and the best people won’t be keen to join you in the first place.

If you manage to maintain high staff retention rates, you don’t hold on just to the individuals – you also get to benefit from all the experience and knowledge they have picked up from working for you over the years.

But the landscape is constantly changing in all sectors, in an increasingly digital workplace.

What are the benefits of a high rate of employee retention?

There are several ways in which you will benefit by keeping your staff turnover rate low.

  • You’ll need to spend less time and money on the recruitment process
  • Fewer hours training new people and integrating them into their new teams
  • While your best employees are with you, they are not helping a competitor
  • There’s a greater chance of good employee engagement, and the benefits that come with that such as better productivity and better customer service

And what are the costs of high staff turnover?

On the other hand, there are plenty of costs that you’ll face if your employee retention rate is too low.

  • You’ll lose the knowledge and experience that your staff have acquired while working with you
  • Teams will be disrupted and bonds with colleagues will be broken
  • There will be the costs of recruitment, including advertising and interviewing – all without the guarantee that you’ll find the right candidate at the end of the process
  • Your rivals can reap the rewards of the skills that your former employees picked up

As already mentioned, you won’t be able to eradicate all employee turnover – even if you could, that wouldn’t necessarily be a good thing, and things could soon become stale.

But just consider the things you have to do with each recruitment process, without even being able to guarantee that you’ll find the right candidate in the end:

  • Reviewing and updating job descriptions
  • Advertising the role
  • Sifting through the applications
  • Interviewing
  • Following up references
  • Running background checks

And all this before any associated costs of inductions, training and relocation.

If your employee turnover rate increases, these costs will increase accordingly.

Why employees stay with you

It’s therefore important to understand why employees stay put, and what your business can do to entice them to remain with you.

Decent pay and benefits – including competitive holiday allowances, attractive pension schemes, healthcare support and on-the-job training – play a big part in generating employee satisfaction.

But there are other, less quantitative ways to help keep your staff happy. After all, not everyone within your business wants to get to the top in the usual sense– ‘getting to the top’ means different things to different people. A bigger office and a better car might be the be-all and end-all for some members of your team, but for many others feeling a sense of engagement with their employer is just as important.

The notion of ‘a job for life’ has disappeared. Gone are the days when someone’s career was almost preordained for them, and they would stay in the same place until they retired.

But while this can lead to more job insecurity for some employees, it also means that when they find a job they like, they will want to keep it. So if you make your work environment and company culture as attractive as possible, you will be going a long way to keeping your retention rate high.

Employees who feel valued and part of a team are likely to derive greater job satisfaction – and as well as keeping them happy at work, you will be helping to boost productivity and, ultimately, profitability.

How can you increase staff retention?

As mentioned above, a decent salary can help, but there are more subtle things you can do at the same time.

An employee retention plan should also address:

  • the workplace environment
  • the company culture
  • employee engagement

It is the third of these points – employee engagement – where the HR team can play a particularly significant role.

If your employees are engaged and take pride in their work and in the wider organisation, they are more likely to want to stay with you.

Why is employee engagement so crucial?

There’s an anecdote from JFK’s visit to NASA’s headquarters when he was US president. He met a cleaner there, and asked him what he did. “I’m helping put a man on the moon,” was the reply.

The story may have been embroidered over time, but it’s a great example of how employee engagement can permeate throughout an organisation. It shows how people who might appear to be peripheral to the main operations of your business can also be brought into the wider culture.

Consider how engaged that man was with his job. He didn’t tell people that he cleaned floors and emptied bins – he told them that he was a crucial cog in the machine trying to get someone to the moon. He was fully engaged in his role but also in the wider objectives of his employer.

And it is easy to see how this can benefit everyone involved. Would you rather your organisation had employees fully invested in your mission and your objectives, or would you be happy that they just got on and mopped the floor without any interest in what the people around them were doing? It’s a no-brainer, isn’t it?

If your employees are fully engaged, they are likely to:

  • have a clear idea of what is required of them
  • be willing to go the extra mile
  • have greater job satisfaction
  • have high morale
  • feel closely involved with the business
  • feel they are part of your success
  • be more productive

A lack of engagement can result in people doing solely what they have to, in order to scrape by. They will view their jobs as means to an end and will show no passion for doing anything other than securing their monthly paycheques. You shouldn’t expect any new ideas or creative solutions to problems from these people – they won’t care about the wider picture.

In extreme cases, disengaged employees can be bitter, create a difficult atmosphere and sometimes undermine their entire team.

The difference between these people and those who are keen to go the extra mile can be stark.

Gallup has identified what it calls 12 foundational elements of employee engagement that predict high team performance. These elements involve employees:

  • knowing what is expected of them
  • having the materials and equipment they need to do their work
  • having the opportunity to do what they do best every day
  • receiving recognition or praise for doing good work
  • having a supervisor who seems to care about them as a person
  • having someone who encourages their development
  • believing their opinions count
  • feeling that the mission or purpose of the business makes their job important
  • having committed fellow employees who are dedicated to doing quality work
  • having a best friend at work
  • being given feedback about their progress
  • being given opportunities to learn and grow

Some of these are harder for the HR team to achieve than others. You can’t force your employees to be the best of mates, for example.

But collectively these factors will lead to high staff engagement with all the benefits that brings both the business and your colleagues.

So what can you do to create high employee engagement? Communicating with employees plays an important role, as does training and development.

It’s also important to devise a system that enables you to keep track of employee engagement across individual teams as well as the wider business.

Two-way communication

Communication on various different levels is vital to achieving this.

Make sure employees receive thanks and praise – particularly those who carry out less recognised and menial tasks. Like the cleaner at NASA, the wheels would quickly come off if those people didn’t do their jobs properly, and giving them positive feedback and making them feel part of the team will boost their engagement.

Employees should also receive regular updates on how their team is doing, and how the wider business is faring. When the organisation does well, communicate that to everyone and let them know they have all played a part in it – even those teams that might not have been directly involved in a particular achievement.

If your employees are kept in the dark and are not told about the wider picture, it’s going to be much harder to keep them engaged and excited about what they are doing.

Communication should be a two-way process, however. Make sure your employees are given a forum to air their concerns. Ask them what they do and don’t like about their roles, the wider business and the workplace. And when they speak – listen. There’s little more damaging than asking for input from someone and then not absorbing or considering what they have to say. You don’t have to action their every qualm, but they should feel like they’ve at least been considered.

It’s important they feel they can speak freely, otherwise, they might not be honest. So have a process in which you can collate their feedback without identifying them. Confidential one-on-one chats could be the way forward with this, or anonymous surveys.

And as well as exit interviews, ask your departing employees if you can contact them a few months down the line to see what their longer-term feedback is. They might leave you in the expectation that the grass is greener elsewhere – it can help to find out if that really is the case and whether your competitors are offering their staff something that you are not.

Training and development

Investing in keeping your employees’ skills up to date and relevant doesn’t benefit only your business – it benefits your staff, too. If they know you believe they are worth investing in, they will feel more valued and have more affinity to your business and their colleagues.

On the flipside, if they get the impression you think they are there simply to carry out prescribed tasks, and you don’t have any interest in their personal development, you risk losing them to more forward-thinking competitors.

Making sure supervisors and managers show empathy and concern towards the members of their teams can also boost employee engagement.. The best managers work with their teams rather than simply issue instructions and look to utilize skills of their team members that may be under-used. Giving constructive feedback and helping their teams develop benefits everyone.

To this end, you should make sure your organisation gives the managers the support they need.

Plenty of brilliant sports players have been found severely wanting when it comes to turning their hands to coaching, while some of the most successful coaches were never very good players. It’s the same in business: department heads might be superb on an operational level, but have they been given help and training on how to manage and bring out the best in other people?

Measure your employee engagement

Although some aspects of employee engagement are difficult to measure without the right tools, you should try to audit what you can.

Carry out analysis of which sorts of employees leave your business most often. Are certain departments showing signs of lower engagement? Do people carrying out the less glamorous roles show more signs of having itchy feet? Do your feedback surveys suggest that unhappiness follows a particular manager around the business?

Combining your day-to-day observations and gut feelings with more quantitative feedback can show you where in the business more work needs to be done.

Take a look at our Cloud HR software to see how it can help you measure and reduce your staff turnover.

Blog Human Resource
Claire Ross

Claire Ross

PUBLISHED BY

Head of Culture and Engagement

As Head of Culture & Engagement, I'm focused on building positive moments that matter which in turn strengthen the relationship our colleagues have with Advanced. Our employee experience is key to our business performance and from a background as a HR generalist, I see every aspect of the employee lifecycle as an opportunity to reinforce that we are an employer of choice.

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