What Do Effective Retention Strategies Look Like?
“Retaining employees is more cost-effective than recruiting.” A message we consistently see, and rightly so. Hiring takes time and puts a dent in organisations’ bank balances, whilst the cost of attrition includes productivity loss, knowledge loss, and employee burnout. But this is nothing new.
What is more surprising, however, is that investment in retention strategies may not be common practice. Yes, retaining employees can be cost-effective. But like anything, it requires attention and investment.
So, what are the factors that should be considered in 2024 and beyond to create a retention strategy that creates competitive advantage?
Address Your Fundamental Retention Issues
Organisations should begin building a retention strategy by asking themselves what employees value most. Why do some employees leave? Why do others stay? Only by addressing these questions will the retention strategy be effective.
Fancy perks and nice-to-haves form the basis of many retention strategies across the UK, despite our research suggesting these are at the bottom of employees’ priority lists. And in light of changes to what workers value most in a post-pandemic world, nice-to-haves simply don’t cut it. Let’s say, for example, talented employees are choosing to move on since they’ve come to realise the importance of time with their children and wish to have more of this during the week. Which approach to solving this retention issue is likely to be effective? Free pizza each week, or the option for hybrid working?
Career Development Opportunities: Availability and Suitability
Even with today’s challenging economic times, it is widely seen that competitive pay is no longer the aspect of work employees value most. McKinsey & Company found frontline employees hold opportunities for job growth and promotion in higher esteem than pay alone. And a similar story is seen across a range of sectors, with indications, for example, that clear development plans are key to retaining professional services staff in higher education. Employees are desiring roles that allow them to build new skills as well as utilise their existing skills.
But it’s important for organisations to facilitate this through approaches suitable to their unique context and culture. Their budget allocated to staff retention, prioritisation of potentially conflicting business logics (such as commerce and staff well-being), and availability of promoted positions for employees to move into, are all key in devising development opportunities that are bought into by employees and work for employers.
Flexible Working
The option for a more flexible working life accelerated during the Covid-19 pandemic and looks to be here to stay. At least that’s what will happen if the employee population get their way. The CIPD found 71% of workers view a flexible working pattern as important when considering a role.
Love it or hate it, flexible working has become an expectation following the pandemic. Being forced to work from home made people recognise the autonomy that comes with remote work, which is now valued far more than perks such as the games areas and unlimited cold brew that were designed to create a ‘unique’ office culture. Add into the mix how a global pandemic has led to employees realising the value of their well-being, and you get an idea of why employees now see flexible working as a necessary choice. And with so many organisations offering hybrid or remote roles, employees are willing to jump ship if their employer isn’t adapting in line with the market. Within a 12-month period from 2022-23, 2 million UK employees left a job due to a lack of flexibility.
Communication of Retention Strategies
With the greatest will in the world, a retention strategy won’t be effective unless employees know and understand it.
Let’s refer back to the implementation of development opportunities as an example. An organisation might have conceptualised well thought out career pathways that will benefit employer and employee alike. But if they’re not introduced to employees early and effectively then employees won’t know these pathways exist, and talented individuals will decide to move to an organisation that allows them to clearly see how they can develop and progress.
In line with this, Ghani et al. (2022) indicate not providing proper guidelines around career growth or succession planning programmes leads to a high turnover rate. So striving to retain talent isn’t something to be kept quiet or communicated only among management teams. It’s something organisations should make clear to everyone. After all, such transparency around development creates motivation and trust in workers.
Summary – Investment Is Needed to Gain a Return
Yes, retaining talent can be more cost-effective than hiring talent. But to get a superior return on investment, something has to be invested in the first place. Building and implementing an effective retention strategy takes thought, focus, and sometimes financial input. However, by taking the time to consider and discuss the key factors, organisations won’t only save time and money. They’ll also reap the long-term benefits of a loyal and connected workforce (yes, that’s still possible in our increasingly online world), a people-first culture, and the job-specific knowledge, skills, and experience that employees build over years of continued service.
Our unique set of skills and experience at Caffeine allow us to specialise in helping clients identify what their employees value most, and to incorporate this into the creation of an effective Employee Value Proposition (EVP) that retains their best talent (as well as attracting further talent). If you would like to have an informal chat about how you can best retain your talent and keep individuals from moving to competitors, get in touch here.
