5 Best Employee Retention Strategies for Any Company
In the past, employee retention was approached under different frameworks of work motivation such as Vroom’s Expectancy Theory, Herzberg’s Two-Factor Theory or Ouchi’s Theory Z. It was assumed that retention could be explained by the same factors as job satisfaction. In recent years, new theories have focused specifically on employee retention, and more elaborated explanations of employee retention factors have emerged. For example, job embeddedness theory analyses retention and turnover through three dimensions within working environment, namely Links, Fit and Sacrifice. ‘Links’ refer to employee connections to people (e.g. colleagues, customers, etc.) and institutions created at work. ‘Fit’ estimates how well an employee fits into an organisation and the team. ‘Sacrifice’ refers to the perceived psychological and material losses, which occur if an employee leaves the job. To put it shortly, this theory emphasises that retention is influenced by a sum of factors, not all of which are related directly to the job itself. Designing an employee retention strategy, human resource managers should address the influence of multiple factors; otherwise, the turnover rate will not decrease.
The main reason for debates on retention management is finding a balance between wage and non-wage benefits. For example, PwC tackled the turnover of young accountants and auditors by offering them a multiyear-plan for career growth and salary increase. However, this strategy generated a major assessment problem and it could also lead to the loss of less experienced skilled workers who might perceive a seniority bonus as unfair and demotivating. It goes without saying that many companies, due to their size and industrial constraints, simply cannot offer the opportunities for career growth or wage increase. Consider applying the following employee retention strategies in your organisation.
- Contingent Rewards
Contingent reward systems encourage rewarding only those employees who achieve their development goals. The results of the survey in the IT sector showed that wages, promotions and fringe benefits created only a normative commitment, whereas the affective commitment was needed to improve the retention of skilled staff. Contingent rewards, personal relationships with co-workers and managers and horizontal communication supported the affective commitment, which mediated the employee retention in this sector. If your personnel are skilled and ambitious, you can link reward to their achievements, thus increasing their retention level.
- Indexed Wage, Bonuses and Fringe Benefits
On the other hand, it was proved in the study of Nigerian Zenith Bank that the combination of an indexed wage, bonuses and fringe benefits managed to form a successful retention strategy in the financial sector. However, it should be taken into account that the respondents of this survey working for the bank had an above-average financial literacy level and, therefore, they might exaggerate the overall importance of financial incentives. Try to use monetary reward in combination with other motivators to retain your personnel.
- Participative Management and Career Development Opportunities
A comparative study of the strategies for nurse retention was conducted in Belgium and Canada. Mass-surveys were distributed among the local nurses, and then the impact of HR policies on staff turnover was identified. The only common outcome was that a participative management style allowed Canadian and Belgian hospitals to retain qualified nurses. In Belgium, it was found that career opportunities and structured education programmes for nurses contributed to quality staff retention, while the Canadian associates emphasised the importance of nurses’ relationships with supervisors and colleagues. Be more involved as a manager in the problems and joys of your personnel, and they will repay to you with enduring loyalty and commitment.
- Advancement Opportunities and Organisational Prestige
On a sample of more than 24,000 hospitality employees, it was discovered that extrinsic reward, advancement opportunities and organisational prestige contributed to staff retention in the hospitality industry. An interesting observation is that line staff better responded to extrinsic rewards, while prestige and growth opportunities were valued by the managers. To become a sophisticated HR manager, you need to diversify your retention strategies at each organisational level.
- Retention Expectations while Recruitment and Selection
A wise strategy to follow is to be prepared to employee turnover in advance, or at the recruitment and selection stage. The HR managers of your company need to stonily reject those job applicants with low retention expectancy. Several practical tips and tricks suggest giving applicants realistic job previews and hire new employees through referrals, as this recruitment source is associated with higher retention.
Even though you can’t fully eliminate employee turnover, you can still influence the level of your employees’ retention and commitment. Throughout the whole cycle from recruitment and selection to career development and growth, examine motives, show that you care and reward your staff in an appropriate way.
Anna Clarke is the owner of online writing company 15 Writers. She is a successful entrepreneur with over 20 years’ experience in both freelancing and academic writing industries, specialising in Business, Economics, Finance, Marketing and Management.