The 4 Biggest Employee Retention Problems and How To Solve Them
The last few years have been tough on employers trying to keep great workers on staff. Small businesses have been facing employee retention problems since before the pandemic, but the Great Resignation really showed how much workplaces can struggle without enough labor. From reduced operating hours to long customer wait times to closures, the fallout from such high turnover has been evident in most businesses recently.
Employee turnover is costly, and it’s a problem in organizations all across the world. Each time an employee leaves, they take a significant portion of their knowledge and expertise with them. You can work to compensate for the loss, but you’ll never really get it back in full.
Hiring new, untrained employees to replace more experienced employees is like trying to bail a leaky boat with a drinking glass. It makes a difference, but not enough. You need to stem the flow at the source by solving your biggest employee retention problems at their roots.
Related read: Overcome The Labor Shortage In 2023 And Beyond
Getting to the root of employee retention problems
- Why is employee retention important?
- The cost of employee turnover
- The first step in addressing employee retention problems
- Common employee retention challenges
- Strategies to address employee retention challenges
- The role of employee engagement solutions
Why is employee retention important?
Dealing with employee retention problems is really important because it affects how well your business runs and how successful your business can be. For small businesses that might not have a lot of money or people, keeping good workers saves money, improves customer satisfaction, and makes the team stronger. Plus, when businesses work on fixing employee retention issues, it helps everyone feel good at work, work together better, and the business can keep growing and doing well.
The cost of employee turnover
Let’s talk about why employee turnover can be a real headache for both small businesses and the employees who are left behind. When workers leave a job, it’s not just about saying goodbye to a colleague. There’s a whole bunch of hidden costs that sneak in. For hourly workers, learning the ropes of a new job takes time and effort, which could be spent on doing the actual work. And for small businesses, finding, hiring, and training new employees costs money that could be used for other important stuff. Not to mention the added hours everyone has to work to cover that missing employee, making work a more stressful place to be. That’s why it’s smart for both hourly employees and small businesses to team up against turnover and make sure everyone sticks around for the long haul.
The first step in addressing employee retention problems
Assessing your current situation is one of the most important steps you can take toward improving retention, but it’s one that’s often skipped. Jumping into a solution without knowing the problem isn’t effective, but it’s a common scenario.
Find out where your retention problems actually are, and determine how you’re going to measure the impact of your solutions. Taking an objective look at your organization might feel difficult, but it’s a valuable exercise. Once you’ve determined your problem areas, it’s time to get to work. Retention issues are usually connected, and solving one can help you solve others.
Here are some common reasons employees leave organizations, and some effective ways you can build a stronger organizational culture that doesn’t suffer from them.
Common employee retention challenges
Lack of recognition
Recognition for a job well done is a crucial element of employee engagement and retention. A study by Bersin and Associates found that “Companies that scored in the top 20% for building a ‘recognition-rich culture’ actually had 31% lower voluntary turnover rates.”
Recognizing employee contributions is one of the easiest and most cost-effective ways to improve retention. Despite that, in the same study Bersin and Associates found that only 58% of employees were aware that a recognition program actually existed at their company.
Salary is a big factor in retention, but even well-compensated employees who aren’t recognized for their hard work are much less likely to stick around than those who are.
Struggling with recognition in your workplace? Try one of these 35 ideas that won’t break the bank: 35 Awesome Rewards You Can Offer Your Employees
Lack of mutual trust
Have you ever worked under a manager or an executive team that refused to share information unless it was absolutely necessary? Operating that way displays a lack of trust in staff.
Every working relationship operates on a balance of mutual trust. A lopsided balance of trust is a major factor in employee turnover. A Tolero study found that a lack of trust is the reason 45% of employees quit.
Employers trust their employees to do the job they’ve been given to the best of their abilities. Employees trust their employer to operate under fair, stable, and ethical conditions, while providing the tools they need to do their job effectively.
Information is one of the most important tools you can give your employees. Employees need to feel like they have the appropriate information to make good decisions about their work. It’s not only demoralizing to do your work under a need-to-know basis, it’s inefficient. Employees need access to information to do their best work. Why not give it to them before they’re fed up?
Related read: What Your Employees Really Want From You
Lack of confidence in leadership
Have you ever had a boss who promised something, then failed to deliver? It’s not inspiring. If it happens over and over again, it starts to serve as a visceral reminder that deep down, you’ve made a poor career choice.
A lack of confidence in leadership isn’t impossible to overcome; it just requires some thoughtful action.
You may also enjoy reading: 12 Steps To Increase Employee Loyalty In 2023
Nobody likes to be micromanaged. Everyone knows this, yet leaders continue to look over the shoulders of their crew. Christina Bielaszka explained this tendency artfully in her Harvard Business Review article “Micromanage at Your Peril.”
Micro-manager is a pejorative in most business circles. Becoming one is not a conscious decision a leader makes—most aren’t thinking “I’m going to waste some of my own time, and that of my staff by digging into the minutia of a task I’m compensating an expert to do.”
It just happens sometimes.
The challenge is to recognize it, and do something about it. The biggest obstacle to recognizing micromanagement tendencies is overcoming the stigma attached to micromanagement. That stigma is strong enough that most leaders think “Well, I’m not a micromanager. Nope, not me.” You might be a micromanager, even if you don’t think you are.
It may not be as blatant as the classic ‘standing over someone’s shoulder’ move. It could be an innocent series of comments, intended as well-meaning feedback or a collaborative gesture, but received by employees as micromanagement.
A collaborative environment is a beautiful thing to have, but it’s imperative to understand the difference between collaboration and micromanaging. A key indicator is the frequency and direction of the collaboration you’re participating in.
Take a look at your workplace objectively, and see if you recognize any of the telltale signs of micromanagement. If you do, think about how you can alter that approach to favor autonomy.
Strategies to address employee retention challenges
Build a genuine culture of recognition
Not all forms of recognition are created equal, and although tenure-based recognition programs are prevalent, they aren’t often as impactful as others. In a tenure-based system, employees are recognized for the amount of time they’ve stuck around, rather than the actual contributions they’ve made to the organization. Although tenure-based systems fail to effectively recognize employee contributions, about 87% of recognition systems are based on tenure.
So how do you improve on the tenure-based model? There are a few simple guidelines for employee recognition you can follow to help maximize the impact of employee recognition.
Start by providing recognition for employee contributions in a format that is frequent, specific, visible to others, and tied to the goals and culture of your organization.
Frequent and timely recognition ensures that contributions are recognized in the moment, when it has the greatest potential for positive impact. As time passes, the window for recognition to be as impactful as possible closes.
Specificity is another key element of effective recognition. Instead of recognizing that an employee is “good,” or has done a “good job,” let them know exactly what they did that was good, and why it was good. This provides an example to repeat, and when it’s made visible, other staff members are given a model to emulate.
It’s also valuable to show employees how their contributions, and the contributions of their colleagues, align with the company’s goals and culture. This helps the entire team see the greater purpose behind the work they’re doing, and how each of their contributions, no matter how small, helps drive the team, and the company forward.
Embrace transparency to avoid lack of mutual trust
The natural cure to a lack of mutual trust is an increased focus on transparency. There are countless ways an organization can work to improve in this area.
The first, and perhaps easiest step to take doesn’t require a formal process, just a simple change of perspective. Default to a policy of transparency. Instead of asking “is it absolutely necessary to share this with the team,” ask “is it absolutely necessary to keep it from them.” It’s that simple.
You might be surprised by how many things are being kept under wraps with little or no good reason, how much the balance of mutual trust improves, and how many great ideas and initiatives spring from the newly available information.
Solve lack of confidence in leadership
Don’t over-promise, and take swift, meaningful action. It’s that simple. Don’t make promises to your staff that you’re not certain you can keep. “We’ll get to work on that,” is only valuable if there’s a viable solution in sight that you’re planning on taking meaningful steps towards in the near term.
It’s also important to let employees see the action you’re taking, and this is where transparency can be an invaluable asset.
For example: Your company is scaling quickly. You survey your team and find a resounding sentiment that the office is too crowded. Don’t promise a bigger office is coming until you’re ready to move in. Think instead about ways you can take immediate, meaningful action toward solving the problem with creative solutions that are within your means.
If it’s feasible, you could offer some employees the opportunity to work from home. Some employees prefer to work from home, and some feel more productive at their office, but nearly all value the autonomy to make those decisions.
Measure the success of that program. Survey the team to find out if they’re satisfied with your treatment of the situation. It might be a home run, or it could require some more creative thought—the important part is knowing objectively which it is.
Embrace autonomy to avoid micromanagement
Embracing autonomy is the easiest way to combat micromanagement and give employees the room they need to do their best work. This increased autonomy can take many forms. It doesn’t mean you need to completely flatten your organizational hierarchy, or eliminate management positions.
It can be as simple as inspiring a sense of ownership, or ‘foundership.’ Google’s head of HR, Laszlo Bock, refers to this strategy in his recent book Work Rules:
“It is within anyone’s grasp to be the founder and culture-creator of their own team, whether you are the first employee or joining a company that has existed for decades.”
This ownership of work inspires a greater sense of purpose, and a seismic shift in the perceptions of an employee’s responsibilities. It’s a much better feeling to accept accountability than to be held to it.
Inspiring and supporting employee autonomy carries countless benefits, and it’s not challenging to get started. Once again, it’s mostly a perspective shift. Give employees the room, the freedom, and the leverage they need to do their best work.
It can be something as basic as office hours that allow outdoors enthusiasts to show up early to work and recharge by hiking in the afternoon, or allowing parents to pick up their kids from daycare. These are just examples, and might not apply to your situation, but the philosophy of employee autonomy and ownership is translatable into any industry, from software engineering, to auto manufacturing, to service and hospitality.
Giving your employees autonomy helps them develop and helps your business grow. Find out more in this article: The Complete Guide To Employee Development
The role of employee engagement solutions
You can enhance the overall employee experience, especially in shift-based workplaces, by offering flexible employee scheduling through tools like When I Work. By providing transparent and easily accessible schedules, the software empowers employees with greater control over their work-life balance, leading to increased job satisfaction and reduced burnout. This proactive approach not only boosts retention rates, but also cultivates a sense of trust and respect between management and staff to foster a better work environment.
Through efficient scheduling and communication features, When I Work actively helps increase retention rates, engagement levels, and productivity within shift-based workplaces. By minimizing scheduling conflicts and ensuring adequate staffing, the software lets employees avoid the frustration and stress caused by understaffed shifts. The seamless communication platform enables smoother team interactions and quick updates, promoting collaboration and a strong sense of belonging among employees. These factors collectively contribute to a positive work culture that resonates with employees, strengthening their commitment to the organization and its growth.