For SaaS companies, understanding how to utilize effective employee retention strategies to reduce employee turnover and retain key employees is equally as important as understanding how to reduce customer churn and retain large clients.
Acquiring a new customer is on average five times as expensive as it is to retain an existing customer, and similarly, acquiring and training new employees is significantly more expensive than it is to retain existing employees, especially those with key roles within the company.
After investing time, effort, and money into seeking out and onboarding your new hires, it’s important that they don’t leave you for the competition. In this article, we discuss six effective employee retention strategies to reduce employee turnover within your company.
How do you reduce employee turnover?
There’s no singular way to ensure your employees stick around, which is why learning a variety of effective employee retention strategies is the first logical step for any company exploring how to reduce employee turnover and retain its key members in the long term.
When it comes to taking full advantage of the most effective employee retention strategies, Josh Sweeney, Founder of EpicCulture states:
“I think if you know what motivates them and are able to act on that knowledge, you have the ability to solve many downstream issues.”
A recent study showed that the average employee turnover in the United States alone was at a record high of 19.3%. In dollar terms, this is something that companies need to think seriously about so they can avoid the losses associated with a high turnover rate.
6 Effective Employee Retention Strategies
In order for employee retention strategies to be effective, you not only need to understand what causes employees to leave, but more importantly you need the ability to critically analyze your own company, identify potential areas of weakness, and the willingness to proactively strengthen those areas.
Below are six effective employee retention strategies you need to consider as you explore how to reduce employee turnover and retain key employees within your company. Use these six employee retention strategies to evaluate the current state of your company and consider what specific actions you can take in each of these areas to start reducing employee turnover.
1. Hire the right employees
Employee retention begins from the moment you say “You’re hired!”
You should have a thorough hiring process for screening and interviewing new candidates.
This ensures your prospective employees understand your company goals, team mentality, culture, and expectations. It also gives them an opportunity to meet other team members and to internalize their thoughts on points such as:
Can they see themselves fitting into your existing team?
Can they see themselves contributing to and helping to grow your business?
Will they feel heard and valued in your company?
Do their core values align with yours?
Do they understand the importance their role will have in your business?
“Retention is about cultivating an environment where people can do their best work. This means a healthy dose of ownership and autonomy, hiring people that make their teammates better, and giving everyone opportunities to advance in their craft. As a company we also want Help Scout to represent values that our teammates are proud to be a part of.” – Nick Francis, CEO of Help Scout
Hiring the wrong employee is costly in terms of time and dollars for any company. Ill-fitting employees are more likely to leave an organization after a short period of time, and they will have to be replaced by new employees as you continually hire new ones, which isn’t good for your bottom line – or the morale of other team members. If you can consistently hire the right employees from the start, you will almost certainly reduce employee turnover in the process.
2. Transparent communication
Fostering healthy, transparent communication in your company is vital to ensure your employees feel heard and happy. It’s not enough to ensure your doors are open for your team, you need to think about how to actively open those doors and invite your people inside.
Taking a proactive approach to internal communications ensures your employees have the chance to air any concerns, requests, or questions that they might have at any time. This can help break down organizational silos in the workplace and avoid any employee problems festering in the background until it’s too late to address them.
Regular meetings and reviews provide opportunities to set goals for teams and individuals, get feedback, counter any issues, and most importantly celebrate the successes and achievements of your company. Companies that take steps to proactively build a work environment that encourages open, honest, and healthy communication often discover doing so reduces their employee turnover as well.
3. Incentives and benefits
Incentives (not to be confused with bribery) continue to be an effective method of retaining employees. Work perks, travel, retreats, performance bonuses, equity compensation, and other company benefits can ensure employees fall in love with your company over the long term.
While it might seem like an extra expense for some businesses, the benefits of retaining key employees far outweigh the cost of spending that little bit more of the annual budget to keep them around. You don’t have to spend thousands – even tiny perks are better than none at all.
Giving your employees the chance to learn and grow alongside your company helps them to feel valued and respected. Building in opportunities for ongoing training, and providing the tools and equipment for employees to perform at their peak can also go a long way towards reducing employee turnover.
4. Encouragement and recognition
Lack of encouragement and recognition can cause employees to feel disheartened and frustrated in their roles. It’s important to celebrate wins and achievements on a regular basis – not only for individual employees but for your team as a whole.
Stagnation in the workplace is also a driving factor behind employee turnover. Nobody wants to feel stuck or bored in their jobs – and we’ve all been there at some point. Encouraging your employees to engage in multiple tasks, even if those tasks are outside their own team or core roles, can add some much-needed variety to a workday and ultimately reduce employee turnover.
Allowing employees to operate with a degree of autonomy instead of a strict list of what they can and can’t do, works towards increasing trust and engagement with your company, leading to a greater sense of job fulfillment.
Collaborations with other team members and other departments can also help your employees feel like they are learning and contributing to the growth and success of your company, meaning they achieve more and drive greater results.
5. Remote working
Remote work isn’t a trend. It’s a growing phenomenon, and it’s here to stay. If you’re a company that’s resisting this trend, it could be working against you in terms of employee retention.
Buffer’s latest State of Remote Work study revealed that 99% of employees value flexible schedules and want to work remotely (at least some of the time) for the rest of their career.
A further 60% of employees said that if they could, they would leave their current job for a full-time remote position at the same pay rate. If you’re a company that’s stubbornly tied to conventional ways of working, these are sobering statistics.
Remote employees bring with them their own set of challenges – in particular, creating trust and social connections across borders. You need to ensure your employees are doing the work you’re paying them for, and implementing processes so that people don’t feel isolated from the rest of the team. Building a healthy work culture is essential.
6. Building a strong company culture
Zack Onisko, CEO of Dribbble, has achieved a zero percent employee attrition rate for the company, despite the added challenges of growing a fully remote team. Building a strong, inclusive company culture that promotes team building is at the heart of this success.
When you’re working remotely, it’s even more important that your employees remain productive and motivated. Creating a solid work culture that fosters employee happiness, and helps people stay connected and focused on company goals, wherever they are on the globe, is a top priority.
Kristen Durham, VP & Chief of Staff at Zendesk, notes that:
“It’s a given that you have to offer competitive compensation that reflects market trends and an individual’s contributions to the company. When you take money off the table, though, it’s a strong culture that attracts great people and keeps them engaged and contributing over many years. For us, especially because of the types of products we create, that culture is rooted in serving the customer and everyone rallying around what we can do to make him or her successful.”
Building a unique, engaging, and inclusive work environment that employees can’t find anywhere else goes a long way towards reducing employee turnover and ensuring they don’t find themselves leaving for greener pastures.
Retaining Valuable Employees Long-Term
To future-proof your company from high employee turnover, you need to take advantage of robust employee retention strategies that accurately reflect the inherent value of long term employees, especially those in key roles within the company.
Understanding how to reduce employee turnover requires taking proactive steps to ensure employee needs are met or exceeded over the long term. While employee needs and must-haves are evolving fast, the need to feel motivated, satisfied, and valued within a company are and always will be crucial basic requirements for all employees.
For your company to succeed, grow, and retain its key team members in the long term, you need to put effective employee retention strategies in place to ensure they stay as enthusiastic about their role as they were the day you made the hire.