Having a high turnover rate is not ideal for any business because it wastes resources – time and money would be spent to replace the employee – and suggests to external talent that the company is not a good place to work, among other reasons.
So, why do employees leave?
Besides situations in which employees are fired, leave the company to pursue personal interests, or resign, employees leave for several reasons, some of which are:
1. Being overworked or feeling unsupported by the company
Employees like to feel like the company cares about them, and if they don’t, it could be a solid motive to leave.
In addition, if a company overworks its employees without proportional pay, employees would eventually get tired and start to seek employment in a place that offers better work conditions.
2. Inadequate salary and benefits
No matter how much they love their job, employees have certain salary expectations, and if your company is not meeting those expectations, it is a good enough reason for them to find ‘greener pastures’.
3. The desire for a better work-life balance
Not experiencing the work-life balance they desire is a potential reason for your employees to resign.
4. Slow career progression
High-performing employees want to work in a company that gives room for advancement in their careers. They would naturally seek to leave organisations that do not offer the career development and progression they desire.
5. Good old boredom
If the job doesn’t offer room for growth, stretch projects, a new challenge, or any form of excitement, some employees could get bored and start to find another job that offers the kind of excitement and challenge they want.
6. Unconducive work culture
Suppose an employee gets hired and discovers that the company’s culture does not align with their values or comes in to find a toxic work environment; they might feel the need to leave for somewhere else.
7. Lack of recognition
Employees like to know that they will be recognised and rewarded for the work they do. Employees might feel the need to leave organisations that do not acknowledge their hard work with any form of praise or recognition.
Having a good understanding of the different reasons why employees leave will help you ask new/potential employees the right questions to know if they are a good fit for your company and if they are not the type that would leave in a few months – for any of these reasons.
Importance of employee retention
Employee retention is a company’s ability to keep its employees and reduce turnover through different strategies like compensation, an engaging work environment, and other perks and benefits.
It is normal to have a turnover rate as people leave their jobs for numerous reasons, but a high turnover rate is bad for the company.
Here are some of the most important reasons why a high employee retention rate is favourable to the company.
1. Waste of resources
Hiring and selecting a new employee and then onboarding them to settle into their roles takes up time and financial resources. Unfortunately, whenever an employee leaves, the entire process has to start all over again.
2. Lowers team spirit
It could be significantly more difficult for employees to bond if employees keep leaving. This will make it hard for them to work together, possibly leading to a hostile work environment.
Employee Retention Statistics
Several factors contribute to low employee retention. However, the best way to properly analyse them is to do that with the statistics gathered over the years.
- Generally, 31% of employees quit their jobs on or before six months after their employment. New employees are often not acknowledged for their hard work; they see it as a sign of more unsavoury things to come. So, if they get a better offer within their first few months, they’ll take it.
- 50% of employees, especially the experienced ones, are confident of finding another job as early as six months if they get fired or quit their current one.
- About 25% of employees genuinely believe in their companies’ mission and vision. With that kind of percentage, one can understand why most employees take up a lackadaisical attitude at their workplace. They do not feel connected to the company.
- 65% of employees in the IT department are confident that they can find better positions in better companies, especially now that the IT sector is booming. This could contribute largely to a company’s retention rate.
- These days, it’s rare to see employees fully committed to their companies, and it shows in the statistics. On average, employees will stay at a company for about four years before moving on.
- Due to its money-saving grace, employee retention steadily grows to become many companies’ most important asset. So much so that 87% of human resources experts stipulated that employee retention will be among companies’ highest priorities in the next five years.
Employee Retention Strategies
Employee retention is invaluable to companies. Therefore, clear strategies should be devised to lower turnover and increase employee retention.
1. Set clear company goals
Employees will have a hard time staying in a company that they do not believe in. Setting clear company goals will allow employees to have something to believe in and tailor their actions to fit the company’s end goal.
2. Acknowledge and reward hard-working employees
Employers need to start acknowledging employees and praising them for their hard work. Rewarding productive employees with bonuses will go a long way to show them that they are valued members of the company.
3. Assign new responsibilities to employees
One of the things that spur employees to leave their jobs is boredom and a lack of fulfilment. This can be tackled by requesting more from your employees, like placing new sets of responsibilities and tasks on them with a promise of an attractive reward at the end of it.
This will keep them interested and challenge them in interesting ways. In addition, this will also show that you trust them enough to let them express their leadership qualities.
4. Create a positive work culture
One of the most attractive qualities a company can have is its work culture. A company that promotes its employees’ support, empowerment, and welfare tend to have a very high employee retention rate.
The more emotionally invested employees are in a company, the less likely they are to leave that company. An example of attractive work culture is the “remote work” option. There is a 25% decrease in turnover rate in companies that give their employees this option.
Using Interviews to Improve Employee Retention
1. Hiring interviews
The first interview is the best time to select the perfect candidate. Not just for the role in terms of skills, but also for their values and how well it aligns with the company’s.
Besides asking questions that test for their technical suitability for the role, be sure to ask questions that give you insight to the candidate’s personality and values.
Ask open-ended questions that allows the candidate express themselves. All of this helps to give you more context to the person beyond what their resume could say.
If you end up being stuck between a few choices, you might want to hire the person who has the needed skills and the values and attitudes needed to thrive at your company. You don’t want to hire ‘the best person for the role’, only to find out six weeks later that they can’t work in a team or that they have a poor sense of responsibility.
Sample interview questions
- What is your vision for your career? Do you think it aligns with that of this company?
- Do you think this role offers you the potential for professional and personal growth? How?
- Are you a team player?
- From your work previous experience, give an example of how you took the initiative to achieve great results.
- What are your long term career goals? How does that tie into the job you’ll be doing here?
- What factors will help make your job more enjoyable for you?
- What factors can make this job unpleasant for you?
- What are your reasons for leaving your former job?
- What did you like/hate the most at your previous job?
How they answer these questions will tell you whether they are a good fit for your company. If your company can’t give them the things they want, or if there is a clash in values and expectations, there is a high probability that they will leave sooner than the organisation would like.
2. Exit interviews
Asking exiting employees why they have chosen to resign and about their experiences while they worked at the company can provide insight into how current employees’ work experience is like, and things that can be done to improve the work
This may provide insight into how the remaining employees perceive the management and what can be done to change the company’s image and improve the employer-employee relationship.
- Can you describe the company’s culture?
- What part of the company’s culture didn’t work for you?
- What could we have done to prolong your stay with us?
- What caused you to start seeking a new job?
- If you could change one thing about the company or the job you did here, what would you change?
- Did you feel like you were seen here and that your work was given its due recognition?
- Did you have any problem with how you were managed?
- Would you recommend this company to a friend seeking a new job
The information gathered from exit interviews can also be used to modify entry interview questions to improve employee retention.
3. Stay interviews
While hiring interviews are the norm, and exit interviews are seeing increased adoption, stay interviews have not caught on at many companies.
The objective of stay interviews is to find out why current employees are staying on at the organisation and what systems can be improved or put in place to retain the current workforce. This sounds similar to what is done at exit interviews, but the timing is everything – at exit interviews, it’s already too late to make changes that will make the employee in question stay.
Stay interviews can be conducted as one-on-one meetings with the employee and their line manager, or with the employee and HR. Be sure to keep things relaxed so the employee feels comfortable to actually say what’s on their mind.
Stay interviews can also be conducted by distributing regular pulse surveys to employees that could be anonymously answered or not.
At the end of the day, asking the right questions, being open about the company’s expectations, and a commitment to improving the employee experience will go a long way in hiring the right person for a role and also in ensuring that they do not exit prematurely.
With SeamlessHRMS, your organisation can automate all of the processes surrounding your employees’ lifecycle – from the recruitment process all the way to when they exit the company.