Keeping your employees in a company means offering something that competitors do not offer or offer to a lesser extent. This is based on the same attractiveness factors that promote the recruitment process. In other words, employees usually stay in a company for the same reasons they entered it.
Employee retention is often the other side of the same coin. This is another facet of recruitment. Keeping employees is in a way carrying out a “passive recruitment” that encourages people to pursue their career plan within the same company. Why do employees decide to stay? Essentially, because they find satisfaction and motivation in the physical and social environment that constitutes it. Also because their level of total compensation (which takes into account all the benefits) is satisfactory.
Quebec entrepreneur Serge Beauchemin, well known for his participation in the TV show Les Dragons explains in a 4-minute video How to calculate and act on the retention rate. The speaker and businessman also shows how the retention rate is related to the turnover rate and the cost of replacing an employee. In the case of senior staff, the cost of replacing an officer can be as high as 200% of their annual salary because the hiring time is longer. Calculating the retention rate of employees in your company is useful because it can be compared to that of your industry or the industry as a whole. We can therefore evaluate its performance.
The retention rate is simply calculated as follows. The number of employees at the end of a period is divided by the sum of the number of employees at the beginning of the period and the number of hires. Let’s take the example of a company that has 10 employees at the beginning of a period. It hires 6 employees during the year. At the end of the year, it has 15 employees left.
Either: 15/(10 + 6)
This gives: (15/16) X 100 = 93.75%
Let’s look at the most common factors that increase employee retention. Well identified, these retention factors, all important in their own way, but variable depending on the employee, will help you reduce the inevitable turnover rate associated with a company. They are very similar to pull factors (attracting potential candidates) which can be very useful in attracting the best potential candidates for an executive or other position. These are points that come up in the thread of conversation during a job interview. The difference is that employees are well placed to check if all the attractiveness factors you promised at the time of hiring are respected. Here are some ideas.
How many?
Anyone who quit their job because they didn’t get along with new people in key positions in a company knows that compensation has its limits. Anyone who has ever accepted a salary increase for a position that did not suit him to regret it immediately also knows that money is not the only criterion involved in staying in the same place. This is true at all levels and even for an executive. It is clear that the employer has limited flexibility to influence the personal choices of each of its employees. So what are the other factors?
where?
The geographical location, layout of workspaces and physical facilities of a company are one of the key factors in employee retention. For example, businesses located in the regions are in a different situation than in large centres. Sometimes it serves them, other times it hurts them. They do not have access to the same labour pool as in large cities, but they enjoy several other advantages related to quality of life, mobility, standard of living, etc. The layout of workspaces and facilities have every interest in being optimal. Everyone will understand why by the number of hours we spend there.
When?
Everything related to time has become of paramount importance to everyone, including employees. This time management for oneself or for one’s family contributes positively to the balance, personal well-being and productivity of the employee. Flexibility in work schedules, fair management of overtime where appropriate, annual vacation and parental leave are important criteria for retaining employees. All these factors are related to the productivity of the employee, so it is an investment.
How?
Let’s talk about advancement in the company, an important factor for many employees. You have heard of Peter’s Principle, an empirical law on hierarchical organizations proposed by Laurence J. Peter and Raymond Hull in their book The Peter Principle.
According to this principle, “in a hierarchy, every employee tends to rise to his level of incompetence”, with the result that “over time, any position will be occupied by an employee unable to assume responsibility for it”. Unfortunately, this principle has been verified many times.
A common mistake in companies is to think that the only path to career advancement is a single vertical path, where one climbs the hierarchical ladder. There are different ways to ensure that an employee’s career progresses and that a person is promoted.
For example, Microsoft and Google have created a two-way progression. In this configuration, employees with more technical profiles progress in the company by becoming experts. Others, who are more leaders, progress in the hierarchy of responsible people or team leaders. At each level of this “double track” of advancement, individuals at a given level have the same salary, comparable levels of authority and equivalent responsibilities; but different motivations.
The idea is interesting. For example, as a talented employee with little interest in “holding management positions” acquires expert skills and delivers results, they can move up the ladder and gain promotion, benefits, and authority. without ever becoming responsible for managing a team. On the other hand, he will be able to accompany the less experienced members of his team, becoming a mentor. He will not have to train in human resources to manage teams, or even develop his soft skills to evolve in the world of interpersonal relationships, a universe that does not really interest him
what?
Let’s summarize under this theme “the world of tools”. Technical tools, machines, computers, protective equipment, etc. But also intellectual tools: training, courses, improvements, workshops, etc. Employees must be able to fully express their know-how and feel that they are giving their best in optimal conditions. Working conditions that do not meet the needs of employees are a pitfall to avoid. The development of technical and intellectual skills is an important factor in valuing and retaining employees. They are very proud of their skills. It’s their livelihood.
What for?
What good is this whole range of benefits in your company if you don’t make your mission and goals known? These must be well understood by the whole team. And what’s the point of success if you don’t pass on a reasonable portion of the responsibility for those successes to your employees? Lack of motivation and lack of recognition are important factors in employee demotivation… and departures.
All the retention factors and benefits of working in your company should be communicated in your ads, job descriptions, website, and advertisements. This all forms what is called the culture of your company, its DNA.
Feel free to join us to see how we can find the executive framework you need to embody your company’s culture and improve your retention rate. Contact us today!
Read our next blog: Tips to avoid employee demotivation
