Employee Retention is one of the keys to running a successful business. It allows for consistency and quality in your product or service by having the same great employees continually doing their best work. It helps the office atmosphere feel more like a team, instead of a revolving door. When you team is able to build a bond in the workplace, they will be happier, more productive, and stay at the position longer themselves.
While employee retention may not seem like something that could potentially be a large problem, according to Fortune, it is one of the biggest worries that employers will encounter. The article cites a study by Future Workplace and Kronos that states that “87% of employers said that improving retention is a critical priority.” It is already something that is on the forefront of the goals of a lot of companies. On the employee side, the article states more people are “interviewing outside of work hours, asking for higher salaries and promotions, and researching pay grades in their industry.” The workplace is getting more and more competitive to find and keep the best employees, and employees are braver, bolder, and increasingly willing to find a new job.
Purely and simply, your employees are not going to stay at your company if they see a better deal for them somewhere else. Some employees may highly value loyalty to your company, or may believe in your product or so much that compensation is not their number one concern, but for the vast majority of people, a job is first and foremost a way to earn money. That is the main reason why employee retention is deeply related to employee compensation.
To break it down further, there are five crucial elements of the compensation management process that directly affect employee retention: offering competitive pay, implementing exclusive benefits, tracking goals and progress, providing learning opportunities, and promoting inside growth. Let’s look closely at each of these components of compensation are connected to employee retention.
Offering Competitive Pay
Offering competitive pay is definitely the most obvious affiliation of compensation and employee retention. When comparing future positions, a high salary is the most glaring and alluring factor of a new compensation package. This Entrepreneur article states four specific strategies that go into a fair and competitive pay: employee skill and experience, supply and demand, geographical location, and worker seniority. It is important to incorporate all four of these concepts into an employee’s salary, and to keep in mind that salaries should differ for job position, difficulty of job, and time already spent with the company. Each of these completely ensures that your workers know that their work is being valued, which, therefore, increases their likelihood of staying with your company for a longer period of time.
Implementing Exclusive Benefits
Not only is a competitive salary important to keeping employees around, but having an inclusive package of exclusive benefits is a crucial component of employee retention through compensation. Employees are likely to look for an all-encompassing compensation package, meaning they will stay with the job that has the most benefits not only the highest salary. Of course, this doesn’t mean that the salary should be low, it should still be competitive with similar positions at other companies, but it does mean that your compensation package should have a range of attractive benefits offered.
The previously mentioned Entrepreneur article names a few of these high-demand benefits: health insurance, life insurance, paid vacations and holidays, and tuition reimbursements. All of these are attractive to employees, especially the more unique options such as life insurance and tuition reimbursements. By providing these exclusive benefits, your employees will feel like they found something at your company that they can’t get anywhere else, keeping them onboard for the long haul.
Tracking Goals and Rewards
Hard work should always leave to rewards, especially in the workplace! It is one of the most sincere ways to let your employees know that you value their work, and the benefits are immense. One way to measure the hard work and eventual rewards is through implementing a goal setting program. By sitting down and establishing exactly what work needs to be done with your employees, you will be guaranteed the work you are looking for. Additionally, employees know what they need to do to make a good impression in the workplace. Goal setting creates concrete steps for both employers and employees to take to increase the quality of the work and the workplace.
The Balance Career’s final tip to retaining great employees is making staff members feel appreciated. They state that verbal affirmations are a great way to do this, but “monetary rewards, bonuses, and gifts make the thank you even more significant.” By incorporating achievement and goal-based bonuses, your employees will know exactly what to do to impress their company and how to get rewarded for it. This is one of the most clear-cut strategies to increasing employee retention through compensation.
Providing Learning Opportunities
A part of compensation you might not have thought about is providing learning opportunities for your employees. This can be done in several ways, and they all lead toward higher rates of employee retention. One way to offer learning opportunities is by incentivizing professional development opportunities. Perhaps that is through a weekend conference on a new development in your field. Another advantageous learning opportunity for employers and employees is by sponsoring postgraduate education courses or even degrees. This is a huge perk to employee because it makes them more knowledgeable in their field, which, in return, makes them better employees for your business!
The aforementioned Forbes article establishes learning opportunities as an important part of employee retention because “new technology, new selling techniques, changes in employment laws, and the huge impact of the internet are all compelling reasons to keep permanent employees in the loop.” They feel like they are learning, growing, and are valued in their position because you as the employer are making an effort to invest in them.
Promoting Inside Growth
As you may have noticed, many of these employee retention strategies also makes for better employees, and with better employees, you can promote them to higher positions. For example, you may sponsor one of your salesman’s master degree in management. Now you have a highly qualified salesperson who has ample knowledge of how to lead a team- who better to hire for your new Manager of Sales!
According to the Fortune article “When employees, especially millennials and Generation Z’s, aren’t able to advance at work, they immediately start searching for other opportunities,” and A study by Cisco and Future Workplace discovered that promoting within your company instead of outside hiring increases engagement, productivity, and teamwork. Employees will feel that they have an opportunity to grow within your company and will be far less likely to search for work elsewhere if they know that you are likely to promote them instead of hiring an outsider.
Offering competitive pay, implementing exclusive benefits, tracking goals and progress, providing learning opportunities, and promoting inside growth all lead to higher retention rates in employees, but actually creating and implementing all of these compensation planning tools can be incredibly difficult. The easiest and most cost-efficient ways to do this is by using compensation planning software, such as the service offered by Harvest HCM. Our company will create a customized compensation management plan using our software that will suit your every need, including progress tracking and total rewards statements. It will completely change the way you manage your compensation and employee retention!