Why Employee Retention is Key to Success

Many employers have faced substantial challenges with recruiting staff. Unemployment levels of UK citizens is generally at its lowest, meaning there are fewer candidates in the job market than ever before.

The impact of Brexit, the subsequent change in immigration rules and the pandemic has also meant that attracting overseas talent is even more of a challenge, resulting in what is being called a ‘candidates’ market’.

Businesses must also deal with the ‘great resignation’; a term that is used to describe record numbers of people leaving their employment following the COVID-19 pandemic.

With all these challenges, it is forcing employers to think about their employee retention strategies. HI employee retention leads to a highly motivated and engaged workforce, which ultimately leads to business success. An effective employee retention strategy must also bear in mind the financial squeeze that many employers (and employees) are facing because of the pandemic. This is coupled with increases in tax arising from changes to the National Insurance rules, increases to the National Minimum Wage and inflation, which increases costs (including the cost of living) and can therefore decrease both business turnover and the disposable income of staff. 

In this article, we consider why employee retention is key to success and look at a wide range of free and inexpensive ways in which all employers can use to improve their employee retention rates.

You can also watch our recent webinar on this topic On Demand.

Employee retention = success

First of all, we need to consider employee retention.  Why take employee retention seriously?  How beneficial is it really for an SME? Does having good employee retention really equal business success?  These are all valid questions. 

So why take employee retention seriously?

Firstly, employee retention avoids the costs associated with somebody leaving.  Costs which are both direct and indirect.  Not only does the business have to deal with the administration of processing the resignation, but there are recruitment and training costs too.  There can also be costs incurred when cover is required during a period where there is a vacancy and upon hiring, there are costs associated to their induction period too.

Secondly, it brings stability, which is vital especially at a time when the UK is experiencing the many significant challenges described previously.

Thirdly, employee retention builds business specific knowledge, expertise and experience that pertains only to your business, making your long serving employees a crucial and valuable asset, specific to your business.

How beneficial is it really for an SME?

According to Indeed, one of the UK’s top online recruitment advertisers, the benefits of employee retention include:

·                Increased loyalty

·                Decreased hiring costs

·                Highly skilled workforce

·                Improved customer relations

·                Positive customer relations

·                Better brand reputation

·                Deeper connections among staff

·                More competitive staff

·                Consistent processes and systems

·                Fewer transitions between employees and employment gaps

How can employee retention be improved?

According to a global survey in 2021 by Deloitte, they found that employee intentions to remain with their employer increase when their employer addresses their need.  This may be through:

·                Greater flexibility

·                Treating people fairly and with respect

·                Caring for and looking after their wellbeing

·                Facilitating career development and growth

·                Open and transparent communication allowing employees to have a voice through appropriate consultation groups or bodies

Furthermore, according to Forbes, they believe that for a business to respond to the ‘great resignation’, it needs to understand how it can meet the needs of the workforce and take measures to adapt.  It suggests:

·                Re-thinking traditional work structures

·                Digitally empowering and supporting the workforce

·                Skills and outcomes will supersede roles and job functions

·                Rethinking leadership

·                Attracting and retaining a diverse workforce

What is right for my business?

You can only improve employee retention if you address the needs of your employees.  So how can you be sure that what you are offering or plan to offer, is right for your employees and therefore the business?

Exit interviews

Exit interviews are an effective tool which can provide useful feedback and highlight areas for action to improve company culture, the working environment and your internal systems and procedures.  All of which can contribute to employee retention by improving the motivation and morale of those who remain.

Exit interviews are informal discussions with an employee who has resigned from your employment and by asking appropriate questions, you can obtain feedback on areas such as: 

1. how the job and business differed from the employee's initial expectations
2. the training offered
3. the extent to which the employee felt part of the business
4. the treatment received from their manager
5. how well informed they were about what was going on within the business
6. the degree to which they felt appreciated and valued
7. any adjustments that may need to be made to the job description since the employee took on the role.

Employee surveys

Whilst exit interviews will provide you with some useful data on those who are leaving, it is invariably too late to retain someone once at the stage of handing in their notice.  It is a good idea therefore to conduct employee satisfaction surveys on a regular basis.

By doing so, these surveys will give you information on the opinions of your entire workforce including what they are satisfied with and dissatisfied with, what encourages them to stay and what they feel would make employees more likely to remain with you.

Surveys can be conducted at a frequency that is right for your business, so this could be monthly, quarterly, or even annually.  Consider however the current challenges that businesses face and the important need to be able to readily adapt.  It may be more helpful therefore, to run these more frequently such as quarterly, given the changing environment we are operating in now.

Recruitment feedback

Similarly, feedback can be obtained as part of the recruitment process.  So, this would focus more about what attracted the applicant to consider applying for a role within your business. 

This is important because it gives you a sense of what people are looking for from employment at any given time and provides your business with a sense of whether you can compete with competitors and other businesses in the local area and be relevant in your offering. 

What you don’t want, is for your employees to be attracted to another business simply because they are able to provide benefits that are more relevant and appealing to them.

Further HR Guidance

·         Webinar Recording: you can watch the HR Solutions webinar and download the webinar slides, at https://www.hrsolutions-uk.com/resources/videos-webinars-archive/

·       HR Knowledge Base: as part of your PRCA membership you can get access to the HR Knowledge Base, which is the go-to resource for thousands of business owners and managers across the UK.  The HR Knowledge Base includes HR documents, templates, legal updates, news and hot topic articles as well as access to free webinars and HR seminars.  To find out more call 0844 324 5840 or visit www.hrsolutions-uk.com/members-prca.