Employee retention is an ongoing theme for employers and HR professionals, and for good reason. Recruiting fresh talent is expensive, eating into business profits. It’s more cost-effective to invest in employee retention strategies than it is to attract, onboard and train new starts. High employee turnover rates are a financial risk, and during this blog, we’ll explore all the elements to consider when creating a long-term employee retention strategy.
Are you at high risk of high employee turnover?
We interviewed over 1,000 UK employees and found that almost half would be looking for a new role in 2024. Using our exclusive data, we’ve created a Retention Risk Assessment calculator. Answer just three questions, and we’ll reveal your employer turnover risk. It’s a free test that will only take a few minutes of your time and could save your company a considerable amount. Take our Retention Risk Assessment here.
Employee turnover
64% of employers consider the cost of recruiting fresh skills to be a considerable financial risk over the next two years.
When you use a recruitment agency to find new talent, you can expect to pay between £10,000 and £12,000 in fees each time. Add in the hidden expenses associated with people’s time to support onboarding, equipment and training, and that cost could climb to £20-£30,000 every time you bring someone new into your business. Tom Nash, HR Business Partner, Pluxee UK
In 2023, the overall employee turnover rate in the UK was 13% (Cendex).
SMEs (0 – 49 employees) make up 99.2% of the UK business population (Money).
Let’s see how an annual employee turnover rate of 13% would impact them.
- 13% of 49 employees = 6 employees
- Replacing 6 x employees at £30,000 = £180,000.
£180,000 is a substantial amount to pay to replace employees in 2024 – a year when business costs remain high.
Larger businesses aren’t immune, so let’s apply this equation to them.
- 13% of 249 employees (max employees for medium business) = 32 employees
- Replacing 32 x employees at £30,000 = £960,000.
This presents a potential overhead of nearly one million pounds for replacing employees in one year. Is it any wonder that 64% of employers consider employee turnover a considerable risk?
- 13% is the higher end of the scale, and many businesses have employee retention strategies that will help retain talent. Still, the data that fuels our Retention Risk Assessment shows that almost half of UK employees will seek a new role in 2024.
- 24% of UK businesses dedicate up to 10 hours per week exclusively to scheduling interviews (HR Review).
- In 2023, 77% of employers reported struggling to fill open positions (Omnipresent Group).
Employee retention is essential, and the steps you take to enhance employee engagement and retention in your business will yield a return.
Harnessing the power of your employee retention strategies
When it comes to retaining employees, there’s no one-fits-all solution, nor is there just one area to focus on.
Data-driven decisions are the way forward, especially when your employees are the data source. Discover what matters most… job satisfaction, a clear career path, a positive employee experience, flexible work, employee benefits and more.
Understanding how your employees feel about your business will help you understand your company culture and work environment, allowing you to define what employee retention strategies are most likely to improve your retention rates.
There may be no one-size-fits-all solution, but experience and data tell us specific factors make up effective employee retention strategies.
Creating an enviable company culture
Values matter. Your work environment and company culture all play a role in employee retention. An effective way of improving employee retention is by clearly communicating your values when the employee experience begins – at the recruitment stage. Ensuring new recruits align with your values and mission will help to reduce employee turnover.
A sense of belonging + a shared vision = higher levels of employee engagement and retention!
Social values and social responsibility are essential to employee retention strategies, especially among specific generations.
Millennials will make up 75% of the global workforce by 2025 – next year – and they want their employers to be socially responsible. 93% of employees believe companies must lead with purpose, and 90% of employees who work at companies with a strong sense of purpose say they’re more inspired, motivated, and loyal.
It’s not just Millennials who’re focusing on values. Gen Z is continuing to beat the drum and champion equality and CSR.
64% of young people don’t think the government is doing enough to avoid a climate crisis and expect their employers to act responsibly.
Creating balance… work-life balance
A work-life balance is so essential for employee retention that we’ve dedicated an entire blog to it – The importance of work-life balance & how employers can enhance it.
30% of workers would give up part of their pay for a better work-life balance!
An essential part of employee retention strategies, employees with a good balance between home and work are…
- More efficient, productive, and motivated.
- Healthier, with lower rates of absenteeism.
- Less stressed.
- More creative, inspired, and better problem-solvers.
Flexibility is no longer a nice-to-have; it’s a must-have.
54% of workers worldwide would consider quitting their jobs if they’re not given some form of flexibility in where and when they work.
Higher levels of employee engagement = increased employee retention
Employee engagement and employee retention are intrinsically linked. Engaged employees tend to experience higher levels of job satisfaction, are motivated to succeed and are more loyal to their employers.
Employee retention strategies must include ways to increase employee engagement.
Not sure how engaged your employees are? Pulse surveys are a great place to start. Once you understand employee engagement within your organisation, you can take steps to improve it.
It’s worth noting that you may find unengaged and disengaged employees within your workforce – and there is a difference between them.
- An unengaged employee may never have been engaged and simply show up to do their job without a sense of loyalty.
- A disengaged employee was once engaged with your business but has since lost their sense of connection.
The common aspect they share is that they’re harder to retain, and let’s not forget that retention is the new recruitment.
- Incorporating employee engagement and retention strategies is more cost-effective than recruiting new employees. Take a few minutes to discover how to reengage the disengaged employee here.
- Rewards and recognition play an essential role in keeping employees engaged, and we have a collection of blogs on the subject here.
68% of UK employees are considering quitting their jobs if they do not receive a year-end bonus this January (HR Review).
Your people expect you’ll reward them for their efforts, but many businesses have struggled to issue bonuses in the current economic climate. Whilst this appears to be a dealbreaker for 68% of UK employees, most will understand that there are wider financial constraints if communicated effectively.
Communication is essential, but so too is consistent reward.
One-off bonuses aren’t always cost-effective, but they’re not the only way to enhance employee engagement and show your people you recognise and value their worth.
Reward with purpose and support with meaning to build lasting connections with your employees!
Our eVoucher solutions are an inclusive and affordable way to reward and celebrate your employees. Use them to acknowledge high performance, milestones, or just because!
- Inclusive – with over 150 high street and high-end brands to spend with.
- Cost-effective – we only bill you for eVoucher Cheques when your employees redeem them.
- Eco-friendly – digitally delivered, there’s no need for paper or plastic!
Mapping career paths
87% of millennials prioritise development and career progression opportunities and 89% believe it’s essential to be constantly learning.
Job satisfaction impacts employee retention, and employees want an employer with whom they can develop and grow.
Development opportunities play a fundamental role in motivating employees, and we’ve dedicated a blog to the topic – How Maslow’s Hierarchy of Needs can transform your employee engagement strategy.
Learning from exit interviews
People will leave even when you implement the most robust and impactful employee retention strategies.
It’s not always personal. Lives change, and people may take you by surprise, deciding to embark on a new adventure or pursue a new direction entirely.
What’s important is understanding why your employees are moving on and whether it’s due to matters within your organisation that you should improve. Ensure your exit interviews allow for honest and constructive feedback to enable you to gather the most valuable data.
The role of benefits in your employee retention strategies
We can’t discuss employee retention without delving into the role of employee benefits since 71% of employees consider their current benefits when considering whether to stay with or leave a business.
An attractive and supportive employee benefits package = increased employee retention
In our Employee Benefits and Wellbeing Strategy Guide, we delve into all things employee benefits – their role in enhancing employee wellbeing, reducing absenteeism, boosting employee retention, and enhancing talent acquisition.
There’s no one-size-fits-all when it comes to employee benefits. They require strategic thinking and must include financial, mental, and physical wellbeing solutions.
As you’ll discover when you take our free Retention Risk Assessment, 36.93% of our employee respondents said better financial benefits would persuade them to stay with their current employer.
Enhanced financial wellbeing benefits = increased employee retention
We provide the solutions you need to enhance financial wellbeing within your organisation, including…
- Employee Discounts Platform – up to 20% discounts with the brands your employees love.
- Pluxee Card – up to 15% cashback on everyday essentials.
- Education and tracking tools – help employees budget.
- Debt and loan consolidation – making tough times more manageable.
- Green Car Scheme – tax and NIC savings for employer and employee.
- SmartPay – helping employees avoid credit cards and loans through salary deduct.
Burnout and excess stress increase absenteeism and employee turnover. Here are a few ways we can help you enhance employee mental health…
- Employee Assistance Programme – access to counsellors and support 24/7, 365 days a year.
- Mental Wellbeing App – crisis support at the touch of a button.
- Annual Leave Purchase – promoting a healthy work-life balance and reducing your wage bill.
Helping to keep employees healthier for longer with…
- Cycle to Work – encouraging a healthier commute and tax and NIC savings for employer and employee.
- Gym & Fitness Discounts – making exercise affordable.
- Online GP – a digital health platform that helps employees get medical help faster.
Increase employee retention to open up a world of opportunities!
We agree that there’s a lot involved in retaining employees and that employee retention strategies must include multiple elements to be effective.
Another element of your success is having a trusted partner by your side who understands your business needs and will work with you to achieve them. Arrange a call with our employee engagement consultants today to enhance employee engagement in your business.
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