The Ultimate Employee Retention Guide
The UltimateEmployeeRetention GuideLearn more about employee retention at bonus.lyProudly made in Boulder, CO by Bonusly.
Introduction21. W hat Is Employee Turnover and Employee Retention?32. Why Does Employee Retention Matter?93. C auses of Employee Turnover134. E mployee Retention and Turnover Solutions195. E mployee Retention Tools276. E mployee Retention Ideas and Examples33Proudly made in Boulder, CO by Bonusly.1
IntroductionWhat can I expect from this guide?The Ultimate Employee Retention Guide covers the information you need toknow to successfully retain top talent. In turn, you’ll also learn about thefactors that attract new employees and how to provide an excellentemployee experience.After all, you shouldn’t be leaving employee retention up to chance! In thisguide, you’ll discover how to improve your retention rate and increaseemployee engagement.How should I use this guide?We recommend starting with the fundamentals—it’s hard to fix somethingwhen you don’t understand why it matters or what causes it! Otherwise,you’re welcome to jump around to any section of interest to you.Even if you’re well-versed in this topic, it’s a great time to read about thelatest research on employee retention and see if there are any opportunitiesto upgrade your common practices to best practices.Let's get started!Proudly made in Boulder, CO by Bonusly.2
1. What Is Employee Turnover and EmployeeRetention?When we talk about employee turnover, we mean the number of employeeswho leave an organization over a specified timeframe, typically one year. Onthe other hand, employee retention is number of employees an organizationkeeps during a given period.Many companies track turnover closely because it can be a h uge cost toreplace employees . Like customer retention, investment in employeeretention has a higher return than investment in acquisition.Retention is also a key sign of employee sentiment and engagement—it caneven be a competitive advantage! After all, when a company is hemorrhagingemployees, that’s typically a sign of something wrong. Compare this to acompany with a team with a proven history of skills, knowledge, andrelationships built long term within the company.Which company would you rather work for or invest in?That’s what we thought, too. But before we dive deeper into the who, where, and when of turnover andretention, let’s clear up some definitions.Proudly made in Boulder, CO by Bonusly.3
Glossary of termsRetention is the percentage of employees who stay at an organization over aset period. It can also be measured in terms of the average or mediantenure; the number of years that employees remain with an employer.Turnover is the percentage of employees who leave an organization over aset period. It is often reported monthly and annually. You may also hear terms like attrition, churn, or separations for turnover.Attrition can sometimes be used to refer to voluntary turnover, often in thecontext of a hiring freeze where employees leaving through natural attrition arenot replaced in order to reduce the size of the workforce.Voluntary turnover is when the employee decides to end the employmentrelationship—it’s the employee’s choice to leave. Generally, the primary focusof retention efforts is to reduce these resignations.Retirement is technically voluntary turnover, however companies oftenreport retirement rates separately because they are not a focus for reducingturnover. You may also hear terms like quits, exits, departures, or leaves for voluntaryturnover.Involuntary turnover is when the employer decides to end the employmentrelationship—the employee did not choose to leave. This could be forreasons of poor performance or a layoff due to redundancies. You may also hear terms like terminations or discharges for involuntaryturnover.Proudly made in Boulder, CO by Bonusly.4
More recently, employers are paying more attention to the followingquality-of-attrition metrics, which report the attrition rates of “high quality”employees.Healthy turnover i s when ending the employment relationship is best forboth the employee and employer. It could be when a project ends or there isjust a poor fit.In fact, helping employees understand their own strengths, needs, andpreferences—in addition to clear expectations and accountability—can helpthem voluntarily leave when they’re not able to perform optimally or ifthey’re unhappy. An employee consistently performing at a low quality orhaving a toxic attitude impacts the whole team, and letting them go might bebest for the long-term health of your company. You may also hear terms like non-regrettable or functional turnover.Regrettable turnover is when an employer loses an employee important toits business.This generally includes employees identified as high performers or highpotentials. It also relates to how big an impact they make when they leave,typically because they had a lot of intellectual capital, many direct reportswho relied on them, or critical skills that will be difficult to replace.Proudly made in Boulder, CO by Bonusly.5
You may also hear terms like unhealthy or dysfunctional turnover.Avoidable turnover is when the reasons an employee left were within anemployer’s control or influence.An unavoidable departure may be an employee moving with their spouse,whereas an avoidable departure could be an employee taking a similar job atanother company because they offer more flexibility in schedule.While all types of turnover have some cost to the company, the critical focusfor retention strategies is to reduce avoidable and regrettable turnover to asclose to zero as possible.Proudly made in Boulder, CO by Bonusly.6
FAQWho is responsible for turnover?Managers tend to have the biggest impact on retention and face the mostimmediate consequences when someone leaves their team.That said, it is often the senior leadership team or HR who is responsible fortracking and reporting turnover. These groups may also work together onwider efforts to reduce turnover.And overall, every member of an organization can influence and benefit fromretaining the people needed to fulfill the organization’s purpose.Where do I find my company’s turnover and associated cost?First, you need company data on headcount and the number of people wholeft the company in a given time period. The general formula is:Employee turnover rate as a percentage (total number of employees wholeft in time period / average number of employees in time period) * 100.If you don’t have access or can’t request this information, then you may needto partner with those who can report and influence this area. For example,you may be a manager speaking to an executive about the value of sharingthe company’s turnover and developing a strategy around it.As a manager, it can be valuable enough to pay attention to the turnover inyour own team, where you have more information and influence. You willalso have more insight into which turnover has been voluntary, regrettable,and avoidable.If you have access to an HR information system (HRIS) or human capitalmanagement (HCM) software, then you may find categories like voluntaryand involuntary turnover are already being tracked.Proudly made in Boulder, CO by Bonusly.7
Or, you may spot an opportunity to leverage technology (and Excelspreadsheets count as technology here, too!) to better track the types ofturnover for better insights and decisions.To find out how much turnover costs your organization each year, try ourCost of Employee Turnover Calculator .When should we pay attention to retention?Retention may not always be the organization’s priority if your best peoplenever leave for unavoidable reasons. Even if this is the case for you, though,retention is a competitive advantage that you will want to monitor andnurture.From the very first employee-employer interaction, likely the job application,you have an opportunity to build a culture of commitment. Every aspect ofthe candidate and employee experience can help you keep the people whomake your organization successful.Why should I care about retention?You’re in luck—our next chapter exclusively covers this question. Read on tofind out!Plus, if you’re looking for a quick way to start improving employeeengagement, we invite you to take a tour of the platform and j oin us for ademo .Proudly made in Boulder, CO by Bonusly.8
2. Why Does Employee Retention Matter?Whatever type of turnover—voluntary or involuntary, regrettable ornot— there is a cost.Any time an employee leaves a vacant role, there is the time, money, andeffort associated with recruiting, hiring, and training a replacement. Theremay also be separation costs like severance pay.According to G allup , replacing an employee generally costs between one-halfto two times their annual salary. Based on Gallup’s finding that 52% ofvoluntary turnover is avoidable and the average voluntary turnover in theU.S., there is a potential savings of over half a trillion dollars every year. In addition, there is the cost of lost productivity while the position is vacant.It can take a year or two for a new hire to equal the productivity of theemployee who left .Furthermore, it can impact the morale and productivity of the team that’sleft, which can lead to lost revenue, less efficiency, and further turnover.Proudly made in Boulder, CO by Bonusly.9
Another cost are the knowledge, skills, and relationships that you lose with adeparting employee. Consider even the amount you directly invested inbuilding that employee’s abilities that you may now have to start fresh with anew employee.You also lose the potential value the employee could have brought to thecompany, particularly as it relates to succession planning. The higher thisloss, the more likely this turnover falls into the regrettable category.And finally, turnover can have a broader impact on the brand. Current andformer employees can be valuable ambassadors for a company, or they canshare their negative experiences with their personal, professional, and onlinenetwork, putting both the employer brand and consumer brand at risk.Want to see actual numbers? To put this in financial terms, try our free Costof Employee Turnover Calculator for an estimate.Retention and engagementThe importance of retention is not just to minimize cost—is also offersopportunity to increase sales and employee morale .Retention on its own is important for the bottom line, on top of which it playsan important role in another key business driver: employee engagement.Just take a look at the following common definitions of employeeengagement: Gallup : “those who are involved in, enthusiastic about and committedto their work and workplace.” Aon : “the level of an employee’s psychological investment in theirorganization.”Proudly made in Boulder, CO by Bonusly.10
IBM Kenexa : “the extent to which employees are motivated tocontribute to organizational success, and are willing to applydiscretionary effort to accomplishing tasks important to theachievement of organizational goals.” Harvard Business Review : “Employee engagement is when employeeswant to come to work, are capable of doing their jobs, and understandhow their work contributes to the success of the organization.”The most basic requirement for an employee to be invested in anorganization’s success is to contribute to the organization long-term. Fromthere, engagement can grow as we build greater involvement, enthusiasm,and effort.And many research studies have established the importance of employeeengagement: Gallup showed that companies with highly engaged employeesoutperform their peers in terms of customer loyalty (10% increase),productivity (20%), and profitability (21%) Best Buy found that a 0.1% increase in employee engagement at aparticular store was worth 100,000 to the company Our E mployee Engagement Handbook shares how disengagementcosts the U.S. 500 billion in lost productivity every year, along with apractical guide to improve engagementKorn Ferry predicts a global talent shortage over 85.2 million people by 2030.In the U.S. alone, that’s 1.75 trillion in unrealized annual revenue. Retentionand engagement work hand-in-hand to keep the talent you need forbusiness success.When unemployment rates are lower, employees have more options and soturnover tends to raise while overall retention becomes more critical.Regardless of the external environment, regrettable turnover is always aconcern because top talent always has options.Proudly made in Boulder, CO by Bonusly.11
And even when unemployment rates are high and competition for labor islow, it’s plain prudent to prepare for a turn in the market. It will pay off in thelong-run when you retain the people you invested in developing and thoseyou rely on for key skills, knowledge, and relationships.Every industry and job has its unique challenges. Read onward to Chapter 3to find a detailed analysis of the causes of employee turnover.We also invite you to learn more about Bonusly’s employee recognition andrewards platform and join us for a demo to learn more about how you canstart building a recognition-rich organizational culture.Proudly made in Boulder, CO by Bonusly.12
3. Causes of Employee TurnoverTurnover is influenced by many factors that generally come from twodirections: external forces and internal forces. We have a bigger impactfocusing on internal forces within the company’s control.We’ll start with external forces, though, because it helps to be aware of howmuch they contribute to fluctuations so that you can make effective decisionsabout retention. It also helps assess how important turnover is to yourcompany when you see how you stack up against your competitors.Average turnover rateThe U.S. Bureau of Labor Statistics’ Job Openings and Labor Turnover Surveyis based on a monthly survey of approximately 16,000 U.S. businesses. Theyreport the average total turnover rate around 3.5% with voluntary turnoveraround 2% monthly.Proudly made in Boulder, CO by Bonusly.13
As unemployment rates have declined for the past decade, the U.S. has gonefrom over six unemployed people per job opening in 2009 to less than one in2019. That means employees have more options.When there is more confidence in the economy and lower unemployment,voluntary turnover tends to rise and involuntary turnover tends to fall.Mercer ’s annual survey of 150 organizations in the US reported voluntaryturnover at 16% in 2018 - lower than the 26.9% that the federal governmentreported, which may be a reflection on the types of organizations thatparticipate in Mercer’s more in-depth study.Overall, turnover does not vary greatly based on organizational size,although larger organizations can have slightly lower rates. And smallerorganizations tend to feel more of an impact when someone quits.Geographically speaking, the South tends to have the highest quit rates whilethe Northeast has the lowest in the US.The biggest variances by far, though, are seen between industries. Hospitalityand retail have the highest turnover rates while manufacturing and financehave among the lowest in the private sector.Proudly made in Boulder, CO by Bonusly.14
Industry5-Year AverageVoluntary TurnoverHospitality51%Retail35%Professional 21%Real Estate21%Health inance14%Government9%Source: U .S. Bureau of Labor Statistics , 2014-2018When LinkedIn analyzed their half-a-billion users, they found 11% indicatedthey left a company in 2017. This turnover rate is likely lower than thegovernment and Mercer reports because of the types of professionals thatuse the platform and the dependence on an individual updating their profile.Still, LinkedIn showed how turnover reflects current industry trends. Retail isa high turnover industry and now software is too. However, tech employeesusually move to another tech company while retail employees often move toa new industry, likely due to the rise of online shopping.Proudly made in Boulder, CO by Bonusly.15
When LinkedIn ranked job functions, those with the highest turnover (17%)were marketing and research, followed by media and communication, HR,and support functions (15%). Sales, engineering, and operations also haveabove average turnover (13%), likely a reflection of high demand for theirskills. Meanwhile business development has the highest retention (6%).While turnover trends are valuable, insights into your industry and overalleconomy are likely enough to anticipate when you need to invest more inrecruitment and retention. Besides, long-term investment in retention is themost effective approach regardless of fluctuations in the market.And while it can be helpful to benchmark externally based on industry,function, and region, the most important benchmark is internally based ondepartment, job level, location, and other segments of your organizationover time. So let’s now look inward.Key driversCertain aspects of employee experience tend to be the biggest drivers ofturnover (why employees leave) and retention (why employees stay).Work Institute reports that 77% of voluntary turnover is avoidable. Theyfound the top reason for leaving is career development, followed by work-lifebalance and manager behavior. Compensation, job, and workplace were alsocommon reasons.Based on industry research, the key drivers are consistent: Total rewards Onboarding Leadership Learning and development Growth and advancement Wellness and work-life balanceProudly made in Boulder, CO by Bonusly.16
Total rewardsTotal rewards goes beyond base pay, bonuses, and compensation overall. Itincludes health benefits like insurance and financial benefits like retirementsavings. For many companies, it also includes any gifts or bonuses receiveddue to a recognition program.In sum, t otal rewards encompasses all that an employer offers an employeein exchange for joining, contributing, and staying with the company.RecognitionWhen we talk about total rewards, we should also keep in mind the power ofrecognition. At its core, employee recognition is the open acknowledgmentand expressed appreciation for employees’ contributions to theirorganization.When organizations decentralize employee recognition and empower theirworkers to engage in peer-to-peer and 360-degree recognition (that is, notsolely top-down recognition), they increase the frequency with whichemployees can receive recognition and get a more nuanced understandingof what individuals, teams, and departments consider valuable.OnboardingEmployees tend to be the most positive about their employer before theirfirst day on the job. Onboarding is a way to build on that momentum, but it’soften a place where companies fall short.A BambooHR survey found that 31% of employees have quit a job within thefirst six months and the top reason was a poor onboarding experience,which is generally defined as the first 90 days on the job.Onboarding includes orientation to the workplace and the job, yet it’s somuch more than that. This is the time to integrate the new employee into theteam and culture: the core values underlying everyday behavior.Proudly made in Boulder, CO by Bonusly.17
LeadershipWe know from our own experiences—and r esearch backs it up —how criticalmanagers are to the employee experience. The immediate supervisordirectly influences many key drivers of engagement and retention likedevelopment and recognition. If your manager doesn’t recognize your work,how can you trust them to support your career growth and success?Senior leadership also plays an important role. Executives must clearlyarticulate the company’s vision and values. They’re responsible for thetransparency that makes people feel secure and that t he work they do ismeaningful . Learning and developmentWhen people think about job learning, they think training, and that’s certainlya key part, whether in-class workshops or bite-sized videos on-demand.However, the majority of career development comes from on-the-joblearning. It’s an organic way we share knowledge. Plus it’s often the mosteffective way to learn: in a real environment with a real task.Employees want to strengthen their skill sets to do better in their job, career,and sometimes just for the challenge and stimulation that keeps coming towork every day interesting.Growth and advancementWhile learning and growth are highly related, we separated them becausethey can satisfy different needs and can be accomplished in different ways.Nobody wants to feel stuck. No matter how much education you provide,many people are not satisfied unless they can move to progressively morechallenging jobs. And simply changing someone’s title from junior to seniorhardly makes them feel more confident and capable.Proudly made in Boulder, CO by Bonusly.18
Wellness and work-life balanceWe define wellness as a holistic way to look at employee health, that includesboth physical and mental health .Work-life balance is a way to support employee wellness, and an increasinglymore common method is flexible work arrangements. Research from OwlLabs and TINYpulse showed companies that support remote work have 25%less turnover .Now that you know the factors that cause turnover, what can you do to fix it?Keep reading to find out.Want a head start? C heck out Bonusly’s employee recognition and rewardsplatform for a turnkey employee engagement booster by r equesting a demo .Proudly made in Boulder, CO by Bonusly.19
4. Employee Retention and TurnoverSolutionsTo solve employee turnover, we look at employee retention best practicesand organization-specific strategies.Current best practice is to improve the employee experience in order toincrease employee engagement and retention—and all the other great thingsthat come with them, like improved business performance.The CMO of People maps the employee experience from the employee’sperspective instead of HR’s perspective. This small shift can help focus effortson a great experience instead of an efficient process.Even before someone is hired, they can begin to experience the passion ofthe leadership, the camaraderie of the workplace, and the inspiration of theorganization’s purpose.An employee value proposition (EVP) articulates what a person gains byworking for you. Defining and communicating your EVP improves bothrecruitment and retention.Gartner reports that organizations that effectively deliver on their EVP candecrease turnover by nearly 70%. They identify five key categories of a strongEVP: Rewards includes compensation, health benefits, and recognitionawards Work includes person-job fit and work-life balance Opportunity includes career and development opportunities People includes coworkers, managers, and senior leaders Organization includes product quality and social responsibilityProudly made in Boulder, CO by Bonusly.20
Starting day one, you will want your employees to experience the EVPthroughout their time with your company. These are all opportunities toengage and retain your talent - or not.That said, when it comes to turnover in your unique organization, a generalbest practice may not be the answer. The solution depends on the problem.Your retention efforts will be more effective (and cost-effective) if they aretailored to the critical people at risk of leaving. Based on who these criticalpeople are and the reasons they are at risk of leaving, consider the followingstrategies to reduce employee turnover.Total rewardsCompensation has less to do with retention than most people believe.However, it is a major factor in deciding between job offers.If an employee is recruited by another company that offers higher pay, thatcould be a key reason they leave. The same goes for benefits andperks—vacation time may not be why employees stay, but it could be whysome leave.Proudly made in Boulder, CO by Bonusly.21
Therefore, regularly benchmark your total rewards against your competitionfor talent. Also, listen to employee feedback on what they value. That said,avoid competing on pay and giving employees every perk they ask for. It’sunsustainable, with diminishing returns .What you can do is make sure that your employees are recognized for thehard work they do. Everybody prefers to be appreciated in a specific way,which is why we recommend checking out our study with SurveyMonkeyabout the five languages of appreciation. Rewards isn’t just about monetaryamounts—it’s also about building trust, making others feel seen, andproviding a positive employee experience.OnboardingMany people quit because t he job wasn’t what they expected . Before hiringsomeone, ensure you are providing them realistic previews of the job andwork environment.Then, use your first impression wisely. Essentially, you want to affirm theirdecision to join the company. Make their first day special , make them feelwelcome!Next, set them up for success. People quit when they feel neglected,overwhelmed, under-qualified, or under-trained.Be extra clear with new hires about the role and expectations. Ensure theyhave enough access to their supervisor when they have questions. No matterhow brilliant they are, everyone has a learning curve in the beginning.Finally, socialization into the culture is the biggest missed opportunity inonboarding. Incorporate culture into your onboarding program. Integrateformal and informal opportunities to build connections with co-workers. Abuddy or mentor program is a common approach that gives the employeeProudly made in Boulder, CO by Bonusly.22
someone to go to with the less technical, more “how do you use the espressomachine?” kind of guidance.For more tips on effective onboarding, check out our webinar: EmployeeAppreciation Starts with Onboarding .LeadershipThere’s no denying how important managers are. Supervisors play a key rolein most retention drivers. That’s why enabling leaders to be their best is soimportant.New managers need training, coaching, and support. They need theinformation and tools to lead their teams. For more details, read oursummary of a s trong leadership toolkit .Apart from the role they play in retaining employees, it is critical to retainleaders! Don’t assume that just because they’re higher up in the careerladder, that they need less appreciation for their hard work. A good place tostart is by recognizing your leaders .Plus, don’t forget about your most senior leaders. PwC’s S trategy& reportedturnover among CEOs at the world’s largest companies at 17.5% in 2018, arecord high in 19 years. These senior leaders can leave huge informationgaps in their wake if they leave, so don’t just assume they’re here to stay.Most of the time a CEO leaves, it’s a planned succession. However, successorCEOs tend to deliver lower performance and shorter tenures. Which makes itall the more important to retain, engage, and prepare the people in yoursuccession pipeline.Learning and developmentWe love the quote from Peter Baeklund :“A CFO asks a CEO: What happens if we invest in developing our people andthen they leave us?Proudly made in Boulder, CO by Bonusly.23
The CEO responds: What happens if we don’t and they stay?”Development shouldn’t stop after an employee is trained to meet theexpectations of the role. When you provide your people with the time,encouragement, and access to learning, then you are helping them to feelvalued and that the company cares about their personal success. Bonuspoints if these employees are continually recognized for their ambition.Based on the budget and function, this could be in the form of an onlinelearning platform, conferences, job shadowing, mentorship, and peer-to-peerknowledge sharing.Development should also be the focus of your performance managementprogram. (By the way, we have a c omplete guide on that, too.)RecognitionTo provide the feedback that employees want, combine performancedevelopment with recognition. J osh Bersin reports that the top 20% of“recognition-rich” companies have 31% lower voluntary turnover rates.When employees feel under appreciated, Robert Half found two thirds ofemployees would leave their jobs. Gallup found they were twice as likely toquit within a year.Moral of the story: when you recognize and appreciate your employees,they’re more likely to stick around—and be more engaged, productive teammembers as well. Find information and benefits about effective recognitionin T he Guide to Modern Employee Recognition .Proudly made in Boulder, CO by Bonusly.24
Growth and advancementGrowth encompasses the opportunity to contribute more, whether it’s apromotion or greater participation in decision making. Without changingjobs, employees can find growth through greater meaning in the work andgreater contribution to the organizational purpose.In a survey of over 2,000 professionals, over 90% would trade pay formeaning . On average, they would be willing to earn 23% less in their lifetime.They would even learn less just for a manager who cared about them havingmeaningful work.When employees have meaning, they are more productive and take less timeoff. The study estimates this generates an additional 9,078 per worker forthe company, every year. Furthermore, turnover risk reduces by 24% whenshared purpose is combined with social support .Any job has room for creativity and meaning. Focusing on the people that theemployee helps. Create a shared purpose with the team. Consider j obcrafting , which allows employees to redesign or reframe their job.In addition, look for ways to facilitate internal mobility. This could be assimple as ensuring employees are aware of job openings. This can beProudly made in Boulder, CO by Bonusly.25
supported by encouraging one-on-one discussions with managers aboutdeveloping skills for future jobs.Wellness and work-life balanceInvesting in wellness shows that t
What can I expect from this guide? The Ultimate Employee Retention Guide covers the information you need to know to successfully retain top talent. In turn, you'll also learn about the factors that attract new employees and how to provide an excellent employee experience. After all, you shouldn't be leaving employee retention up to chance!
̶The leading indicator of employee engagement is based on the quality of the relationship between employee and supervisor Empower your managers! ̶Help them understand the impact on the organization ̶Share important changes, plan options, tasks, and deadlines ̶Provide key messages and talking points ̶Prepare them to answer employee questions
May 02, 2018 · D. Program Evaluation ͟The organization has provided a description of the framework for how each program will be evaluated. The framework should include all the elements below: ͟The evaluation methods are cost-effective for the organization ͟Quantitative and qualitative data is being collected (at Basics tier, data collection must have begun)
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Concept of Employee Retention: Employee Retention means many things to many people in each organisation. There is no single definition of Employee Retention(Bhatia, 2011, p. 299). Some views mentioned by J. Leslie Mekeown are "Employee Retention means stopping people from leaving the Organization." "Employee Retention is all about keeping .
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