2020-06-05 09:00:56Small Business TipsEnglishEmployee Retention: One of the major costs of running a small and medium-sized business involves recruiting and hiring the right talent.https://quickbooks.intuit.com/in/resources/in_qrc/uploads/2020/06/Employee-Retention.pnghttps://quickbooks.intuit.com/in/resources/small-business-tips/employee-retention-strategies/Top Strategies for Retaining Talented Employees %%sep%% %%sitename%%

Employee Retention: Top Strategies for Retaining Talent That Matters

5 min read

In this article, you will learn:

One of the major costs of running a small and medium-sized business involves recruiting and hiring the right talent. Thus, letting go of an employee for another opportunity is something that you would not want as a business owner.

Besides this, the cost of replacing a salaried employee is too high for a small business. As per a study conducted by SHRM, it costs 6-9 months salary on an average each time a business replaces a salaried employee.

Since there are too many challenges involved in letting you highly valued employees take up another job opportunity, employee retention becomes all the more important.

As per Linkedin’s report on employee retention for SMBs, employee retention is ranked as the second most important [priority after the recruitment of highly skilled talent. This clearly indicates that SMBs need to implement a rigorous employee retention program instead of letting the talent walk out of the company’s doors.

This article covers key employee retention strategies that an SMB must implement as a part of its retention program.

Key Employee Retention Strategies

  • Employee Engagement

Another factor that can help in retaining talent pertains to enhancing the engagement of the employees within the organization.

Employees that are highly engaged are satisfied with their work, enjoy their work as well as the organization, regard their own job as important, are proud to be part of the company, and admit that the employer gives importance to the contributions made by them.

A study indicated that highly engaged employees were five times less likely to leave the organization as compared to the ones that were not engaged. Therefore, there are certain things that an organization can do to strengthen employee engagement.

  • Increase autonomy
  • Make job valuable
  • Offer variety in job
  • Provide increased coworker support
  • Communicate clearly information about the job while recruitment and selection to achieve person-job and person-organization fit
  • Hire internally wherever possible, strategically as well as practically
  • Provide orientation that specifies the contribution of various jobs towards achieving the organization’s mission. This would help new employees build relationships with colleagues
  • Offer training for skill development
  • Define challenging goals
  • Provide recognition for the contribution made by the employee and offer positive feedback wherever necessary
  • Give pay as per competency as well as performance
  • Training and Development

Providing training and development opportunities to the employees may discourage them to leave the organization as they feel satisfied that their future growth is taken care of.

People working in certain sectors such as information technology constantly need to work on their skills in order to stay relevant. If they do not get any training and development opportunities to update their skill sets, there is a high probability that they would leave the organization.

However, a downside to the training and development of the employees is that they become vulnerable to employee raiding by competitor firms. This is not a major point of contention as research indicates that employees who receive training are less likely to quit as compared to those who do not receive at all.

But, in case you are concerned that training would make your employees leave the organization, then you can consider giving job-specific training rather than generalized training.

Besides this, you can also think about relating other development opportunities to the underlying job of the employees in order to retain such talent within the organization.

  • Compensation and Rewards

The compensation and rewards that your organization offers to the employees play an important role in employee retention. If an organization fails to offer competitive rewards to its employees, then it may be unable to attract and retain talent.

But, as we saw above, satisfaction in terms of pay is not the only factor that predicts an employee’s decision to stay or quit the organization. Therefore, it is important that an organization makes use of the rewards cautiously in order to retain the employees.

There are certain things an organization can do:

  • When it comes to paying levels, an organization needs to lead the market. This will result in employee satisfaction as well as minimize the vulnerability of the employee to get attracted to other job opportunities.
  • The rewards that an organization offers to the employees must be customized as per their preferences in terms of variable pay, benefits, work arrangements, etc.
  • The organization cam associate certain awards to an employee staying within the organization. For instance, the company can offer retention bonuses or stock options to workers serving the organization for the longest period. Further, the company can also associate a benefit plan payout to the number of years served.

It needs to consider the benefits as well as the disadvantages of providing any sort of compensation or rewards to the employees. This is because employees give importance to not only the integrity of the organization in allocating awards but also the process with the help of which the rewards are given. Therefore, the organization needs to customize the rewards

  • Give Realistic Job Details During Recruitment

As per the research, the recruitment practices adopted by a business have a great impact on employee turnover. The research indicates that the applicants who are presented with realistic attributes of the underlying job during the recruitment process are more likely to stay within the organization as compared to others.

Clear and accurate information about the positive as well as challenging aspects of the job in question, details like performance expectations, and the firm’s performance management processes must be given to the new hires.

Such clear details about the underlying jobs help new employees adjust easily in the new work environment. Besides this, it also helps the organization to reduce the skepticism amongst the newly hired employee regarding the nature of the job and the organization itself.

  • Use Biodata While Selecting New Employees

The way managers undertake the selection process also has an impact on employee turnover and retention. The managers, who scrutinize the biodata of prospective employees thoroughly, are in a state to analyze which employees would stay with an organization and those who would quit.

The indicators that reveal that people would stay with the organization include the period of tenure in their previous jobs, education experiences, various leadership activities undertaken, previous work experiences, etc.

As per research, the biodata questionnaires used by the managers are quite helpful in predicting the status of employee retention. But, such a tool is not used widely within the organizations.

 

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

Related Articles

Accounting Standard 15 (AS 15): Employee Benefits

In this article, you will learn: Applicability of AS 15 Employee Benefits…

Read more

ESI Scheme: Meaning, Benefits and Registration

In this article you will learn: What is ESI Scheme? Applicability of…

Read more

Top Questions To Consider Before You Temporarily Close Your Business?

With COVID-19 posing a challenging environment, many businesses are thinking of ways…

Read more