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Understanding how to retain employees is a critical component of managing your team — and your budget. The average cost of hiring a new employee is around $4,000, which means implementing an effective employee retention strategy will not only ensure job satisfaction, it'll also free up more funding for your business.
A2022 study found that 45% of team members are actively looking for a new job or plan to do so in the next year, so finding ways to keep your employees engaged and improve retention rates is more important than ever. But building a long-term strategy can be challenging when there's already so much on your plate.
To help get you started on improving employee retention, we laid out how to calculate your existing retention rate and a few easy, yet meaningful ways to boost the percentage.
See how Harvest helps your team thrive.
How to measure employee retention
A good rule of thumb is to keep your retention rate at 90% or higher, meaning you should aim for an employee turnover rate of 10% or less. To measure your company's retention, subtract the employees who left from the total number of staff you had over a given period. Then divide that number by 100 to get your percentage.
For example, let's say you had 100 team members from August to December. During that time, 12 employees resigned.
(100-12) / 100 = 0.88 or 88%
Your retention rate would be 88% — meaning your turnover rate would be 12%.
Identifying specific issues
There are a few factors that could be impacting your retention rate, so drilling it down further can help you identify the root of the issue.
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Time period: Research shows that 31% of employees leave within the first six months of a new job. If you're experiencing this, your low retention rate could be a result of a poor onboarding process.
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Seasonality: You may also find that employees quit at a higher or lower rate during certain times of the year.
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Seniority: If the majority of employees leaving are senior staff members, it could be an issue with the professional development process of your business.
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Department: Breaking down retention rates by department can provide insight into how different areas of your business are performing.
How to increase employee retention
It's important to note that there will always be a certain level of employee turnover, no matter how great your work environment is. Still, there are many ways to improve the workplace dynamic and make employees feel good about staying on.
Provide growth opportunities
The numbers don't lie: 58% of employees feel career development contributes to job satisfaction, according to a recent study.
A few easy ways to help team members progress in their careers include:
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Funding new qualifications or certifications
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Training team members for higher positions
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Senior staff shadowing opportunities
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Establishing clear goals that move them forward
Establishing career growth opportunities shows your team that you trust in their abilities and want to invest in their future. It also helps prevent stagnation and keeps them from getting bored and looking elsewhere for more stimulating employment.
Communicate clearly
Establishing a company culture that emphasizes clear communication helps employees feel like a part of the team as opposed to another worker carrying out a mission they don't understand. As you plan projects, involve them. Make sure they understand the process and the ultimate goals so they don’t feel like you’re putting unnecessary burdens on them.
And once projects are finished, keep the communication going. Sit down with them to review how the process went, how their performance impacted the goal, and what improvements can be made next time.
An easy way to do this is to use Harvest's visual reports. With detailed project data, you can dive into the details of how each employee spent their time so you can celebrate the wins and empower them with the knowledge they need to grow.
Keep processes consistent
Laying out step-by-step processes for each project establishes expectations for your team and gives them the confidence they need to be set up for success and helps them accomplish their goals. By ensuring that your team is well-organized and focused, they'll feel more supported in their work.
For example, Harvest provides an easy place to track time spent on tasks, gain insights on past projects, and get paid for the work — all in one place. It keeps the workflow consistent and straightforward from start to finish, removing any ambiguity and giving your team less reason to find another job.
Offer a competitive salary
While salary might not be the most important aspect of team retention, it definitely helps support, motivate, and encourage employees to do their best work. Studies show that 40% of employees would put more effort into their job if they felt they were more fairly compensated.
To understand and establish salary trends, you can research pay structures in your industry, set up timelines and benchmarks for pay increases, and regularly evaluate how current salaries compare to the industry standard.
Additionally, communicate to your team how you determine salaries and set benchmarks for pay increases. Doing so shows employees you respect and value them, which in turn motivates them to succeed. When you hire new team members, explain the pay structure as part of the onboarding process so they understand financial opportunities.
Maintain a positive workplace environment
Happy employees are more willing to stay on your team for much longer than if there is potential for a toxic, negative workplace. During your hiring process, make sure the people you're bringing on not only have the right skills for the job but also the right personality and attitude to fit in with the rest of your team.
Another aspect of maintaining positivity is to do your best to keep burnout at bay. It's not always easy to notice when a team member is overwhelmed, but missing the signs and letting the burnout get out of hand can impact their well-being — and prompt them to seek alternative employment.
An easy way to prevent burnout is to utilize a tool like Harvest thatkeeps an eye on it for you.
Harvest takes your time tracking data and turns it into visual reports that give a unique insight into team capacity. You can see who’s overworked at-a-glance, making it easier for you to stop the burnout in its tracks and readjust.
From career development to maintaining positivity, there are many ways to reduce your turnover rate and keep your team happy and engaged. And with help from tools like Harvest that increase transparency and consistency, it’s not as difficult as it may seem to increase retention.
