66% of organizations indicate that employee turnover is a major concern1, and with good cause. Studies show that turnover can cost a business anywhere between 50%-250% of an employee’s salary to recruit, train and retain a new hire.2 These costs can be difficult to recuperate, especially if the organization isn’t aware of what issues may be contributing to high turnover. Top-performing organizations are willing to invest time not only in locating the right candidates, but ensuring that valuable employees are nurtured throughout their employment lifecycle.
While organizations highly desire locating the right person for the job, employees are equally interested in finding a job that offers best overall value. Essentially the value is defined as overall reward for work performed, personal fulfillment, relationships and growth opportunities. To be more specific, best-in-class organizations lower turn-over by offering value through:
- Compensation: How much is an employee paid for the work that is performed? The market plays into the competitive nature of the compensation, as does the type of work, training/education/experience of the employee and the difficulty of the organization to fill the job.
81% of top-performing companies pay more for competitive jobs. Additionally 35% of leading organizations provide more than the standard 3% raise for top performing talent.3
- Benefits: What non-cash compensation does the employee receive such as health, life or disability insurance, retire plans, worker’s compensation, unemployment benefits? Some of these compensation benefits may be legally required, others may be employer paid or offered as contributions, and yet others may be extended as enrollment opportunities.
Nearly 80% of all companies provide employer paid health benefits. But notably, however, is the recognition of leading companies that these benefits isn’t enough to attract or retain top talent. 44% of top-performing companies now allow for remote work, 37% allow for flextime and 10% allow for a 4 day work week. All of these benefits are now flowing into the importance of the work/family/life balance needs of employees.3
- Fulfillment: How does the company’s vision and mission connect to the employee’s interests? (For example: volunteer opportunities, corporate contributions to charities that matter to the employee.)
While 64% of older workers may be focused on earning potential and career development, 57% of younger workers indicate that they want to make a difference or do something meaningful.4
- Work/Family/Life Balance: What strategies and programs allow the employee a way to balance the demands of a busy life? (For example: paid vacation days, personal time off, health/wellness programs, flexible work schedules, job sharing, etc. Other programs may include onsite child care or breakfast/lunch options, concierge services such as dry cleaning, etc.)
60% of workers feel they are more productive and engaged when they are given more flexible work options. The same study shows that 41% of employees feel their flexibility increases communication, creativity and innovation.5
- Recognition: What reward programs exists for behaviors, attitudes and performance that contribute to the success of the organization and its goals? (For example: awards, parties, appreciation notes, travel or other incentive programs.)
Leading companies, that is the top 20% of organizations, that include a recognition culture have a 31% lower turnover rate.6 Another study by Career Builder, shows that recognition can boost employee retention by 50%. 7
- Performance: How is the employee’s progress tracked, monitored, measured? How is feedback given? How is the employee’s performance benchmarked among peers? What types of incentives or morale boosters are offered to increase motivation and productivity? Employees are looking for more than merely annual reviews and progress reports. They are seeking opportunities to engage in meaningful conversations with leadership and peer groups to improve skills, develop relationships, and create a sense of purpose within the workplace.
Travel incentive programs can increase productivity by 18% and produce a 112% ROI.8 A study by Payscale found that 53% of leading organizations provide performance bonuses and incentives frequently and that 34% do so at least quarterly. 3
- Talent: What opportunities are available to the employee to continue learning and enhancing knowledge while boosting career potential? (For example: tuition reimbursement, internships/apprenticeships, training, coaching, mentoring, etc.) Employees are looking for promotion opportunities, but they are also looking for ways in which they can feel fulfilled within their existing position.
An analysis of three million employee surveys found that the second-most significant driver of employee engagement is career development. 9 59% of top-performing companies use training, development and learning to retain talent.3
The Importance of Benchmarking
Top-performing organizations monitor everything. It’s not just watching wages or compensation plans. These organizations want to know exactly how competitive they are, and how they can improve to always keep their market advantage. Monitoring turnover rates is no exception to the benchmark rule.
Here are a few of the resources that these best-in-class organizations use to determine if they need to adjust their employee engagement and retention strategies:
- The U.S. Department of Labor, Bureau of Labor and Statistics – Job Opening and Labor Turnover Survey (JOLTS)
- LinkedIn’s Talent Survey
- Restaurant and Quick Service Industry
- Retail Industry
- Hospitality and Hotel Industry
- Healthcare Industry
- Customer Service Center Industry
Attracting the right talent is only part of the process in the quest for engaged and productive workers. Retaining and motivating them is absolutely essential for organizations to recuperate on the investment, plan for the future and to use people as the competitive advantage in the marketspace. Knowing the methods that top-performing organizations use to retain key talent as well as how to benchmark employee turnover can be helpful to improve the process of candidate selection.
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