Attracting top talent is a challenge for companies – but retaining it is the real art: What do organizations need to know to prevent employee turnover?
For talented applicants, today’s job market is wider open than ever before. The demand for highly-qualified staff is greater than the supply, putting highly-skilled workers in the privileged position of being able to be selective when it comes to choosing their employers. What does this mean for companies? If companies want to keep their employees from moving to more attractive employers – or to nip any such idea in the bud – they are going to need to invest money and effort into building employee loyalty.
In this article, we will introduce you to three employee retention strategies and use best practices examples to show you the types of measures that companies like Google and Zalando are undertaking to hold on to their employees.
The Better the Selection, the Easier the Retention
Employee retention doesn’t just begin on the employee’s first day. Even during the selection process, the foundation is already being laid for a long-term relationship between the company and its employees. One of HR’s most important tasks is to identify those candidates whose profiles line up as seamlessly as possible with the corporate profile.
Applicants who appear to be highly talented, but who have unrealistic expectations, are going to prove difficult for the company to retain. Once it has been determined that an applicant’s qualifications will be of benefit to the company, it is then critical to consider whether or not that applicant will be able to find personal fulfilment and satisfaction within the company.
Tip: Compare applicants’ expectations with your company’s Employer Value Proposition. This will allow you, even during the application process, to assess whether or not an applicant is likely to make a long-term commitment to the company.
Employee Satisfaction: The Key to Retention
Sociologists Timothy Butler and James Waldrop have identified three key factors that determine employee satisfaction: skills, values, and interests.
In order to gain a sense of satisfaction from their work, employees must possess the skills and abilities necessary to carrying out their tasks. Feelings of incompetence quickly lead to thoughts of job changes. The company’s value and reward systems must be consistent with employees’ expectations and must also be perceived as being fair. Monetary incentives, creation of a positive working environment, or recognition and promotion are three fundamentally different models for rewarding employees – and there is much potential for conflict between them.
Since our personal interests are so firmly rooted in our personalities, daily tasks, too, should overlap to the greatest degree possible with personal interests, creating a natural ‘fun factor’ in the workplace. Surveys have shown that salary considerations are a surprisingly low motivating factor for employees to change employers, meaning that soft factors, collectively termed ‘satisfaction’, are dramatically more important.
If the factors mentioned above can be provided for, this will establish a solid basis for employee loyalty, which can then be further enhanced by targeted measures.
Specific Measures for General Employee Retention
In general, any accommodation on the part of the employer can be interpreted as an employee retention measure. This begins with flexible work models, such as working from home, part-time work, or the option of a sabbatical year. Many companies now also provide their employees with office amenities such as water, fruit, and coffee. Employers can score points with their employees here as well if they offer a large selection of quality products (especially when it comes to coffee). In addition, companies are also offering activities such as team events and company sports, or special employee rates for gym membership, travel allowances, and other small financial incentives.
The more individualized these measures are to the interests of employees, the stronger all employees will sense that they are appreciated. The best and most well-known example of a company that has instituted a broad range of employee satisfaction measures is Google. The offices at this Internet giant are more like an amusement park – anyone leaving this company will also have to leave behind this prized working atmosphere, making the decision all the more difficult.
More Ideas for Employee Retention Measures:
- Fixed training budget for each employee
- Training programs
- Regular feedback from management
- Assigning responsibility for projects/teams
- Flexible working hours
- Part-time work
- Work from home
- Assistance with child care
- Christmas/holiday bonus
- Travel allowance as a non-taxable non-cash benefit
- Transparency, communication, respect, appreciation
- Team events
- Modern, fully-equipped offices where employees are able to work efficiently
- Employee surveys
- A spirit of cooperation
- A culture of constructive feedback
- Complimentary snacks, such as fruit, coffee, or cereal
- Employee discount for lunches, e.g. at the company cafeteria
Measure 1: Promote a Culture of Feedback – Important for Both Sides
One frequently-underestimated employee retention measure is the creation of a vibrant feedback culture: Once a key performer has, unbeknownst to management, already decided to leave, it is usually too late for the company to turn things around. We can look to Zalando for an example of why measures like employee surveys and exit interviews should play an essential role in retention strategies.
By regularly soliciting employee feedback, companies can take action to counteract brewing problems early on, while at the same time displaying an appreciative interest in the well-being of their employees, which, in turn, has a positive impact on employee satisfaction and loyalty. Interviews with employees who are considering leaving the company are also valuable – they can offer insight into problems within the company and provide information about enticements being offered by competitors.
Tip: A casual conversation over lunch is much more relaxed than an official feedback session. Ask your employees to share with you their feelings about how things are going: Are they satisfied with their responsibilities and the working environment? Are there changes they would like to see made? What tasks could they imagine taking on in the future, and in which direction do they want their careers to develop? Management, too, should be encouraged to engage in casual conversation with their employees.
Measure 2: Selective Employee Retention Measures Rather than One-Size-Fits-All
Employee retention measures cost money. It is a good idea to have a number of different basic strategies for showing employee appreciation, but companies should also consider which specific employees are deserving of even greater investment. Top performers with long years of service, rising talent, or key executives are – in purely economic terms – ‘more valuable’ than minimally-qualified, relatively unmotivated employees.
The MTU Aero Engines GmbH company provides a clear example of just what selective employee retention measures might look like. There, with an eye to the types of jobs and employees that may, in the future, be in short supply, they created a profile for a ‘bottleneck employee’, and have subsequently developed individually-tailored programs to promote talented junior staff members and ensure long-term loyalty.
Measure 3: Vision-Based Employee Development
The example above shows that companies that explicitly wish to retain specific employees are going to have to ask themselves a variety of questions. For example:
- Which employees are contributing most to the company’s success?
- Which employees are going to play an important role in the future?
- Where are there bottlenecks in the company?
Building loyalty only in today’s high performers, however, doesn’t go far enough. Employee retention also falls within the domain of strategic corporate development, meaning that companies must consider this a part of their corporate vision.
Employee Retention Measures Promote Motivation
Equating employee retention only with the prevention of turnover is to overlook an important component of this concept. Employees who, in a positive sense, feel bound to their companies, almost always display a higher degree of motivation than those who are prepared to change employers. Employee retention measures can therefore also be considered a basis for employee engagement. They not only prevent wear-and-tear on the staff – they lay the groundwork for growth and success that would otherwise not be possible.
Employee Loyalty: Beneficial for the Employer Brand
Investment in employee retention pays off in a number of ways. It helps companies to retain and motivate valuable employees, while at the same time enhancing the employer brand. This makes retention management an essential component of the employer branding strategy.
Satisfied employees who feel a deep commitment to the company and are well-integrated within the company network are far more likely to act as positive multipliers, automatically attracting, from within their own networks, new talent. These employees represent both valuable long-term resources and effective public testimonials to your company.
What Are Other Companies Doing?
Fonepit AG: Within the Berlin “AndroidPit” community, group lunches, parties, and sports activities are a part of the weekly routine. In addition, employees who meet or even exceed their targets receive incentives, including vouchers for such things as free lunches or even Majorca vacations.
Travelbird: This online travel deal agency has more than tripled in growth in a very short period of time, making employee training and career opportunities major topics! There, in addition to providing employees with a company restaurant and offering regular massages, an in-house academy provides training for employees – whether in leadership skills, sales, technology, or creation. The aim is to have every employee placed in their optimal position within the company.
Personio: At Personio, it’s not just our growth that is rapid – so are our commutes. At the time of hire, each employee is given an environmentally-friendly Uno scooter – or, alternatively, an allowance for public transportation. And, to ensure that our growth curve will continue to rise, each employee is given an annual training budget of € 1,500.
How Performance Management Can Enhance Employee Loyalty:
If you want to make employee retention an integral aspect of your daily responsibilities, you are going to need a plan – a plan that will be satisfactory to employees and management alike. This is where performance management comes in. It ensures that your company’s performance evaluations are being conducted properly.