Employee retention is vital to the success of any business. When talented employees leave, it disrupts operations and hurts productivity—seriously affecting the bottom line. That's why proactive retention strategies are key to nurturing an engaged, thriving workforce.

The costs associated with turnover and recruitment are good reasons to invest in employee retention. Replacing talent is expensive when you account for lost productivity and the price of hiring and training new employees. On average, employee turnover can cost Canadian businesses between $41,000 and $100,000 annually.

In this article you'll find five proactive strategies that will help strengthen employee engagement and create an environment where top talent will want to grow with your business.

What is employee retention?

Employee retention refers to how well a company can hold on to its employees, keeping them happy in their current positions. To retain employees means to keep them working within the company. These retention rates are measured for a given period.

A high employee retention rate means your business is doing something right, as it has kept the same employees over time. A low retention rate means a company cannot entice their workers to stay, and therefore much of the workforce has left their positions over time, causing the business to hire replacements.

This rate of retention is an HR key performance indicator that helps businesses measure how well they are doing in enticing employees to stay. HR professionals can use this data to help organizations improve their internal processes and up job satisfaction to keep employees engaged and working for them.

Why is employee retention important?

Businesses need to focus on employee retention rates as it greatly affects the company in numerous ways. Companies can spend thousands of dollars during the hiring and onboarding process. If businesses have a high turnover, that means they are spending a ridiculous amount of money acquiring and training employees throughout a given period. By improving retention, you lower your hiring costs as you won’t need to fill these positions as often.

On top of the high cost of low retention rates, these numbers can turn potential employees off from applying to your business. If many employees leave a company, then there must be something wrong with the place of employment. People don’t just leave a job for no reason. If numerous people have left a company in a short time, it could mean poor management and work culture overall.

On the other hand, if potential candidates see that a business’ current employees have been there for many years, it shows high employee morale and attracts quality talent to your company. Overall, employee retention is a vital metric to look at as it affects a company’s financial standing and its reputation and ability to hire and retain top talent.

Why do employees leave?

There are many reasons why employees leave a secure position for another company, or even for no job at all. If your business possesses a high employee turnover and low retention rate, then one of these may be the cause:

• Lack of credit
• Disrespect
• Not enough instruction or onboarding
• Micromanagement
• Lack of ethics/ integrity
• Work-life imbalance
• Unhealthy work environment
• Unmet development/ career goals

If a business’ workforce is leaving at a high rate, then senior management must hire replacements. this is known as employee attrition. To stop employee attrition and increase workplace retention, you can work backwards from these issues and come up with ways to keep your employees happy within your company.

Best employee retention strategies in 2023

Here are five proactive strategies that will help strengthen employee engagement and create an environment where top talent will want to grow with your business.

Have regular conversations about growth and development

Don't wait for annual reviews to discuss your employees' career aspirations. Regular check-ins show you care about their professional development path. Set aside time for one-on-one meetings to talk about their goals.

Discuss any training programs, mentorships, skills development, or other opportunities available that might help them advance and grow professionally.

Outline clear goals and timelines to help them achieve milestones toward their desired career path. Investing in your people by reimbursing them for training or study as a form of compensation also makes them feel valued and engaged.

Build rapport with employees

This isn't just about being friendly with your staff. Rapport comes from genuinely getting to know your employees as individuals, appreciating their unique contributions, and making them feel like you care about them. It also creates a mentally healthy workplace.

Build rapport by making time for casual one-on-one conversations to find common interests and understand who they are as people. Give personalized recognition and rewards—both publicly and privately—when they achieve milestones or do great work.

Encourage appropriate humour and camaraderie between coworkers to foster a supportive, collaborative work environment. Make employees feel company leadership supports them in reaching their full professional and human potential. This creates a deeper sense of loyalty to their team and your business.

Offer flexible work arrangements

While remote or hybrid schedules appeal to many modern workers—look beyond just telecommuting when considering flexibility. Can employees alter their start and end times to accommodate personal or transportation needs? Are there options for job sharing or extended leave?

The autonomy and work-life balance flexible work arrangements offer will lead to greater employee satisfaction and commitment. Avoid micromanaging your team members' work schedules. Show your people you trust them to manage their own schedules while delivering excellent work.

Provide competitive compensation and benefits

Generous pay and benefits can help attract and retain top performers. Make sure your compensation meets or exceeds industry standards for the role by looking up the average salary for the position in your location.

It's important to provide performance bonuses, retirement matching, extended health and dental coverage, generous vacation time, and gym subsidies. You can also offer other personalized perks that cater to specific needs, like tuition reimbursement.

Investing in compensation, employee incentives and strong benefits packages shows employees you value their hard work—placing your employer brand above the competition.

Create a positive workplace culture

From ensuring diversity, equity, and inclusion to promoting sustainability, social responsibility, health and wellness—your culture influences how employees feel about their work.

Foster connection with team building events, employee resource groups, and partnerships with local charities. Show your commitment to employee mental health by providing counselling services and resources.

Make sure culture and social impact initiatives align authentically with company values. Employees are proud to work for an organization that expresses genuine integrity through its policies and principles.

The future of employee retention

Effective employee retention strategies are becoming even more essential as half of working age Canadians are currently looking for their next career move, according to a poll conducted by recruitment agency Robert Half. This means the success of your business depends on building an engaged, thriving, and loyal workforce now more than ever before.

Proactive retention strategies show employees you value them as professionals and human beings. They are the key to unlocking an employment experience that emphasizes employee engagement and wellbeing. This creates a company culture your top performers will want to stick with for years to come.

Enhance employee retention strategies with smart payroll products

You can easily streamline payroll and HR management with user-friendly payroll software products like QuickBooks Payroll. These tools free you from administrative tasks while allowing more time to manage your business.

Smart payroll tools handle pay and deductions for both benefits and taxes—which can lead to time efficiency, reduce errors, and increase compliance. This gives you more time to develop and implement the modern employment perks workers want.

Improving operational efficiency with effective payroll tools will empower your business and allow you to meet payroll requirements without being a payroll expert.

Learn more about how you can simplify your payroll process with QuickBooks Payroll today. Its robust payroll tools will give you more time to focus on what truly matters—your employees and your business.