Employee Retention: What It Entails In The Modern Business World

The trend towards employees flitting from one job to another caught many industries, sectors, and businesses worldwide off guard and does not look set to change anytime soon. As the younger generations move in to replace those who retire, they bring their values and concepts with them, and these only sometimes align with the most efficient, cost-effective ways to do business as their employer.

Whether your business is in stocks and shares, manufacturing clothing, or selling life insurance in Australia, retaining your employees is crucial to your success and minimising ongoing costs.

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Employee retention rates

According to the US Bureau of Labor Statistics, the following industries have the best retention rates:

• Government — 91.4% 
• Finance and insurance — 75.4%
• Manufacturing — 71.4%
• Wholesale trade — 70.4%
• Education — 70.2%

The following have the worst retention rates:

• Arts, entertainment, and recreation — 20.5%
• Leisure and hospitality — 21%
• Accommodation and food services — 21.1%
• Construction — 35%
• Professional/business services — 36.5%

Owners and managers operating in industries with poor retention rates must do everything possible to reverse the trend in their sphere of influence. However, that does not mean those in the more stable industries can rest on their laurels. Something can always be done to ensure those rates do not drop and set an example for others in the industry. 

Employee recognition and rewarding achievement

Statistics show that employers who acknowledge their employees’ actions and reward them accordingly are significantly more likely to retain those people for a more extended period. And those moments of recognition should not stop there. Even the smallest gestures receive exponentially stronger positive responses, and all business owners and managers would do well to take note and recognise the following:

• Professional or personal achievements
• Learned behaviours and training completion 
• Anniversaries and emotional moments
• Significant life milestones

The amount of effort required to track and acknowledge these moments is trifling compared with the sense of goodwill that can be garnered. Some other critical factors that affect employee retention include:

• Added extras, benefits, and bonuses
• Respect and courtesy in the workplace
• A healthy work/life balance
• Respectful, productive working relationships
• The company ethos and responsible practices
• Effective internal power structures 

Positive aspects of consistent employee recognition 

Performance-based praise, recognition, and reward lead to:

• Boosted morale
• Increased effort, productivity, and profits
• Promotes positive working relationships
• Improved engagement
• Loyalty

Stress in the workplace

According to the American Psychiatric Association, the most common cause of stress people experience is the workplace. Employers must find ways to relieve that stress to increase satisfaction and productivity. Aside from employee recognition, this can be done in several other ways, including creating pleasant working environments and fostering team spirit and a sense of empathy through the various hierarchies inherent in most businesses. 

Practical methods of employee recognition

There is no perfect way to recognise employees for their efforts that apply uniformly in every situation. However, there are many to choose from, and you should be able to discern which are most appropriate in your circumstances. They include:

• Recognition meetings — Regular meetings to recognise individual and team achievements are a superb way to motivate and encourage staff. These meetings represent the perfect moment to mention anniversaries and other milestones you should have carefully recorded. If necessary, delegate tracking these events to a trusted employee and distribute gifts as you see fit. 
• Peer-to-peer recognition — As an additional benefit of regular meetings, it may be possible to have colleagues praise and recognise each others’ achievements, building strong working relationships and trust.
• Set goals and reward those who meet them — Goal achievement programs might offer incentives such as prizes, bonuses, or other innovative ideas. These need not be expensive items or significant rewards. Something as simple as rewarding an achievement with an extra hour at lunch can work wonders for morale. Allow individuals and teams to set goals and tailor the scheme to suit your business model. 
• Group thanks — When projects are completed successfully, or other milestones are reached, thank the whole group and show appreciation. Pizza and cake never fail to go down well…
• Cards or emails expressing — Be specific regarding any achievements when possible, demonstrating your engagement with and personalising the recognition.
• Give positive feedback immediately — Verbal, targeted praise effectively creates a supportive environment when grand gestures are inappropriate. Recognition of effort months after the fact loses significance and creates a disconnect between the achievement and the response. 
• Temper your responses — Excessive displays of appreciation can sometimes create bitterness among others and seem insincere. It is a tightrope requiring careful balance based on your knowledge of the individuals involved and your broader company ethos. 

Conclusion

In order to meet the needs of a changing workforce, businesses must work hard to create a supportive, respectful atmosphere that recognises and rewards effort. The bottom line is that if you treat your employees as valuable, respected members of a highly motivated, driven team, the chances of their reciprocation are significantly increased. 

Spend time and effort creating a system that facilitates rewarding your employees. It will pay for itself many times over in the pervading atmosphere of being ‘in it together’ and knowing there is a point to working harder and going the extra distance to get the right results.