Human Resource Management Please help with my assignment due Wednesday, November 22, 2023

11/21/23, 12:27 AM Managing for Employee Retention

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TOOLKITS

Managing for Employee Retention

Overview (www.shrm.org#overview)

Business Case (www.shrm.org#business-case)

Drivers of Employee Retention and Turnover

(www.shrm.org#drivers)

Key Retention Strategies and Best Practices

(www.shrm.org#strategies)

Implementation (www.shrm.org#implementation)

Overview

Managing for employee retention involves strategic actions to keep employees motivated and focused so they elect to remain

employed and fully productive for the bene�t of the organization. A comprehensive employee retention program can play a vital role in

both attracting and retaining key employees, as well as in reducing turnover and its related costs. All of these contribute to an

organization's productivity and overall business performance. It is more e�cient to retain a quality employee than to recruit, train and

orient a replacement employee of the same quality.

Fairness and transparency are fundamental yet powerful

concepts that can make a lasting impression on employees.

According to SHRM's Employee Job Satisfaction and

Engagement: The Doors of Opportunity are Open research

report, employees identi�ed these �ve factors as the leading

contributors to job satisfaction:

�. Respectful treatment of all employees at all levels.

�. Compensation/pay.

�. Trust between employees and senior management.

�. Job security.

�. Opportunities to use their skills and abilities at work.

Employee job satisfaction and engagement factors are key ingredients of employee retention programs. The importance of addressing

these factors is obvious, but actually doing so takes time and these tasks are often left for another day. However, the payo� of focusing

on employee retention—in terms of increased performance, productivity, employee morale and quality of work, plus a reduction in both

turnover and employee-related problems—is well worth the time and �nancial investment. The bottom line is that by managing for

employee retention, organizations will retain talented and motivated employees who truly want to be a part of the company and who

are focused on contributing to the organization's overall success. See Employee Job Satisfaction and Engagement: The Doors of

Opportunity are Open (www.shrm.org/hr-today/trends-and-forecasting/research-and-surveys/pages/job-satisfaction-and-engagement-

report-revitalizing-changing-workforce.aspx).

Business Case

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A critical issue that organizations face is how to retain the employees they want to keep. Companies must anticipate impending

shortages of overall talent as well as a shortfall of employees with the specialized competencies needed to stay ahead of the

competition. Employers that systematically manage employee retention—both in good times and in bad—will stand a greater chance of

weathering such shortages.

Retention/turnover was the top workforce management challenge cited by 47% of HR professionals in the SHRM/Globoforce survey

Using Recognition and Other Workplace E�orts to Engage Employees (www.shrm.org/hr-today/trends-and-forecasting/research-and-

surveys/Pages/employee-recognition-2018.aspx).

Key reasons a focus on reducing turnover makes sense:

Turnover is costly.

Unwanted turnover a�ects the performance of an organization.

As the availability of skilled employees continues to decrease, it may become increasingly di�cult to retain sought after

employees.

Turnover costs can have a signi�cant negative impact on a company's performance; however, not all turnover is harmful. For example, a

new replacement hire may turn out to be more productive or more skilled than his or her predecessor.

Drivers of Employee Retention and Turnover

Devising e�ective employee retention strategies requires organizations to understand both why employees leave organizations and

why they stay.

WHY EMPLOYEES LEAVE

Employees leave organizations for all sorts of reasons (www.shrm.org/ResourcesAndTools/hr-topics/employee-relations/Pages/Why-

Employees-Quit.aspx)—Some �nd a di�erent job, some go back to school, some follow a spouse who has been transferred to a

di�erent location, some retire, some get angry about a work-related or personal issue and quit on impulse, and some simply decide

they no longer need a job (these categories of departure are referred to as "voluntary turnover"). Still others get �red or laid o� by the

organization (referred to as "involuntary turnover"). See The Real Reason People Quit Their Jobs (www.shrm.org/resourcesandtools/hr-

topics/employee-relations/pages/why-people-really-quit-their-jobs.aspx) and 13 Signs That Someone Is About to Quit, According to

Research (www.shrm.org/resourcesandtools/hr-topics/employee-relations/pages/signs-that-someone-is-about-to-quit.aspx).

Generally, an individual will stay with an organization if the pay, working conditions, developmental opportunities, etc., are equal to or

greater than the contributions (e.g., time and e�ort) required of the employee. These judgments are a�ected by both the individual's

desire to leave the organization and the ease with which he or she could depart.

Studies have shown that employees typically follow four primary paths to turnover, each of which has di�erent implications for an

organization:

Employee dissatisfaction. Attack this issue with traditional retention strategies such as monitoring workplace attitudes and

addressing the drivers of turnover.

Better alternatives. Retain employees by ensuring that the organization is competitive in terms of rewards, developmental

opportunities and the quality of the work environment. Be prepared to deal with external o�ers for valued employees.

A planned change. Some employees may have a predetermined plan to quit (e.g., if their spouse becomes pregnant, if they

get a job advancement opportunity, if they are accepted into a degree program). However, increasing rewards tied to tenure or

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in response to employee needs may alter the plans of some employees. For example, if a company is seeing exits based on

family-related plans, more generous parental leave and family-friendly policies may help reduce the impact.

A negative experience. Employees sometimes leave on impulse, without any plan for the future. Generally, this is the result of

a negative response to a speci�c action (e.g., being passed over for a promotion or experiencing di�culties with a supervisor).

Analyze the types and frequencies of work-related issues that are driving employees to leave. Provide training to minimize

prevalent negative interactions (e.g., harassment, bullying, or unfair and inconsistent treatment) and provide support

mechanisms to deal with those problems (e.g., con�ict resolution procedures, alternative work schedules or employee

assistance programs).

Additional predictors of turnover that merit careful attention include:

Organizational commitment and job satisfaction.

Quality of the employee-supervisor relationship.

Role clarity.

Job design.

Workgroup cohesion.

See:

Are Your Workers Bored? Uninspired? They May Be Su�ering a Midcareer Crisis (www.shrm.org/resourcesandtools/hr-topics/employee-

relations/pages/midcareer-crisis-.aspx)

Just Because Your Workers Feel Loyal Doesn't Mean They'll Stay (www.shrm.org/ResourcesAndTools/hr-topics/employee-

relations/Pages/employee-loyalty.aspx)

5 Ways to Stop a Valued Employee from Quitting (www.shrm.org/ResourcesAndTools/hr-topics/employee-relations/Pages/5-Ways-to-

Stop-a-Valued-Employee-from-Quitting.aspx)

Viewpoint: 8 Things Managers Do That Make Employees Quit (www.shrm.org/resourcesandtools/hr-topics/employee-relations/pages/8-

things-managers-do-that-make-employees-quit.aspx)

WHY EMPLOYEES STAY

As important as it is to understand the reasons that drive employees to leave an organization, it is just as important to understand why

valuable employees stay. Studies have suggested that employees become embedded in their jobs and their communities and as they

participate in their professional and community life, they develop a web of connections and relationships, both on and o� the job.

Leaving a job would require severing or rearranging these social and value networks. Thus, the more embedded employees are in an

organization, the more likely they are to stay. Companies can increase employee engagement by providing mentors, designing team-

based projects, fostering team cohesiveness, encouraging employee referrals, and providing clear socialization and communication

about the company's values and culture, as well as o�ering �nancial incentives based on tenure or unique incentives that may not be

common elsewhere.

Employers must be responsive to the wants of employees. Prior to the COVID-19 pandemic, research found that nearly a third of

workers sought out a new job because their current workplace didn't o�er �exible work opportunities. After 2020, many workplaces

have remote work and �exible scheduling options that have been put to the test. Employers can use this new �exibility to their

advantage. See Flexible Work Critical to Retention, Survey Finds (www.shrm.org/resourcesandtools/hr-topics/talent-

acquisition/pages/�exible-work-critical-retention.aspx).

Employees want to be recognized for their achievements. Respondents to the SHRM/Globoforce survey, Using Recognition and Other

Workplace E�orts to Engage Employees (www.shrm.org/hr-today/trends-and-forecasting/research-and-surveys/Pages/employee-

recognition-2018.aspx), agreed that recognition can help create a positive workplace culture and employee experience, and 68

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percent said their organization's recognition program positively a�ects retention.

Employees who have the opportunity to move around within a company, whether to new jobs in di�erent departments or by

promotions, are more likely to stay with that company. See Study: Internal Mobility Boosts Retention

(www.shrm.org/resourcesandtools/hr-topics/talent-acquisition/pages/internal-mobility-boosts-retention.aspx).

Employee bene�ts also play a role in retention. O�ering a competitive bene�ts package, in addition to competitive pay, reduces the

likelihood an employee will �nd the grass greener elsewhere. See Employees Are More Likely to Stay If They Like Their Health Plan

(www.shrm.org/resourcesandtools/hr-topics/bene�ts/pages/health-bene�ts-foster-retention.aspx).

Key Retention Strategies and Best Practices

Practices that contribute to retention arise in all areas of HR, and all roles within an organization will need to work together to develop

and implement multifaceted retention strategies. Broad-based and targeted strategies, or a combination of both, may be appropriate

depending on the circumstances. See How to Retain Employees During the Great Resignation (www.shrm.org/resourcesandtools/hr-

topics/people-managers/pages/great-resignation-and-retention-.aspx).

EFFECTIVE PRACTICES

E�ective practices in a number of areas can be especially powerful in enabling an organization to achieve its retention goals. These

areas include:

Recruitment. Recruitment practices can strongly in�uence turnover, and considerable research shows that presenting

applicants with a realistic job preview during the recruitment process has a positive e�ect on retention of those new hires.

Socialization. Turnover is often high among new employees. Socialization practices—delivered via a strategic onboarding and

assimilation program—can help new hires become embedded in the company and thus more likely to stay. These practices

include shared and individualized learning experiences, formal and informal activities that help people get to know one

another, and the assignment of more-seasoned employees as role models for new hires.

Training and development. If employees are not given opportunities to continually update their skills, they are more inclined to

leave.

Compensation and rewards. Pay levels and satisfaction are only modest predictors of an employee's decision to leave the

organization; however, a company has three possible strategies:

�. Lead the market with respect to compensation and rewards.

�. Tailor rewards to individual needs in a person-based pay structure.

�. Explicitly link rewards to retention (e.g., tie vacation hours to seniority, o�er retention bonuses or stock options to

longer-term employees, or link de�ned bene�t plan payouts to years of service).

Supervision. Several studies have suggested that fair treatment by a supervisor is the most important determinant of retention.

This would lead a company to focus on supervisory and management development and communication skill-building.

Employee engagement. Engaged employees are satis�ed with their jobs, enjoy their work and the organization, believe that

their job is important, take pride in their company, and believe that their employer values their contributions. One study found

that highly engaged employees were �ve times less likely to quit than employees who were not engaged. See Developing and

Sustaining Employee Engagement. (www.shrm.org/ResourcesAndTools/tools-and-

samples/toolkits/pages/sustainingemployeeengagement.aspx)

SHRM's Better Workplaces on a Budget (www.shrm.org/hr-today/trends-and-forecasting/research-and-surveys/Pages/Better-

Workplaces-on-a-Budget.aspx) report includes �ndings on the leading causes of employee turnover with suggestions for low-cost

solutions.

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BROAD-BASED STRATEGIES

Broad-based strategies are directed at the entire organization or at large subsystems and are intended to address overall retention

rates. Examples include providing across-the-board market-based salary increases, changing the hiring process to incorporate

retention-related criteria and improving the work environment.

The data needed to help a company determine which broad-based strategies to implement typically come from three places:

Retention research can shed valuable light on the primary drivers of turnover. Attendance at conferences and membership in

professional associations such as SHRM can provide access to the latest research on turnover and retention.

E�ective practices encompass the strategies that other organizations are using and are �nding e�ective or ine�ective.

Benchmarking surveys can provide information about how a company compares to competitors on issues such as pay,

bene�ts, bonus plans and the like.

See:

What bene�ts can employers o�er to improve employee retention? (www.shrm.org/resourcesandtools/tools-and-samples/hr-

qa/pages/bene�ts-to-improve-employee-retention.aspx)

More-Authentic Workplaces Lead to Better Retention, Productivity (www.shrm.org/resourcesandtools/hr-topics/employee-

relations/pages/more-authentic-workplaces-lead-to-better-retention-productivity.aspx)

10 Ways Technology Can Improve Employee Retention (www.shrm.org/ResourcesAndTools/hr-topics/technology/Pages/10-Ways-

Technology-Can-Improve-Employee-Retention.aspx)

TARGETED STRATEGIES

Targeted strategies are based on data from several key sources, including organizational exit interviews, post-exit interviews, stay

interviews (www.shrm.org/resourcesandtools/hr-topics/employee-relations/pages/stay-interview-how-to.aspx), employee focus groups,

predictive turnover studies (www.shrm.org/resourcesandtools/hr-topics/technology/pages/dangers-using-predictive-analytics-

employee-�ight-risk.aspx) and other qualitative studies. This information can lead an organization to determine more speci�cally where

a problem exists and to develop highly relevant and linked strategies to address the issue. For example, if female professionals are

departing the organization in signi�cant numbers, a company could review common reasons that women give for leaving a company

and develop strategies to speci�cally deal with this group of employees. See Treat 'Vent Letters' Like Exit Interviews

(www.shrm.org/resourcesandtools/legal-and-compliance/employment-law/pages/vent-letters.aspx) and The Power of Stay Interviews for Engagement and Retention (https://store.shrm.org/The-Power-of-Stay-Interviews).

Implementation

People managers are key in the e�ective and e�cient administration of an employee retention strategy. Having a management team

that is educated about employee motivation, retention strategies, benchmarking and best-practices is critical to the success of the

program.

LAYING THE GROUNDWORK

The following steps taken together can yield the information that an organization needs to determine the extent of its problem and to

help shape the retention strategies that are implemented in response.

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Determine whether turnover is a problem. This step can be accomplished through turnover analysis, benchmarking and a

needs assessment (both external and internal).

Establish a plan of action. After reviewing the turnover analysis, benchmarking data and needs assessment, create a plan to

improve retention. Identify broad-based or targeted strategies (or a combination) for implementation.

Implement a retention plan. Execute the strategies that have been identi�ed as appropriate for the speci�c problem.

Evaluate the results. After implementing the plan, evaluate the results to assess the impact relative to the cost.

BENCHMARKING

Establishing appropriate benchmarks—both external and internal—is a key �rst step in preparing to implement an employee retention

strategy.

External benchmarking. Is a 15 percent annual turnover rate too high? This question is impossible to answer in isolation.

Benchmarking and a needs assessment can provide valuable information for determining whether turnover is a problem for an

organization. Through external benchmarking, a company compares its turnover rates against industry and competitor rates.

These data represent annual and monthly quit rates as a percentage of total employment for all non-farm employment across

the United States, broken down by industry, geographic location, sector, etc. See Department of Labor, Bureau of Labor

Statistics—Job Openings and Labor Turnover Survey (http://www.bls.gov/jlt/).

Internal benchmarking. With this form of benchmarking, an organization tracks its turnover rate across time. If the rate

increases, overall or among particular groups, this can be a red �ag that a problem may exist. See Turnover Cost Calculation

Spreadsheet (www.shrm.org/resourcesandtools/tools-and-samples/hr-forms/pages/turnover-cost-calculation-

spreadsheet.aspx).

DEALING WITH COMMON PROBLEMS

As with all strategic initiatives, there are some common problems associated with employee retention programs. These include:

Lack of top management support. If senior management does not send a message to managers and supervisors emphasizing

that employees are critical to the company's long-term success, supervisory employees are unlikely to focus on people-related

issues. Unless senior management actively participates in the retention process and takes primary responsibility for it,

managers and employees will remain unsure of the true value of employees, both to senior management and to the

organization.

Perception of the program as time-consuming "busywork." Similarly, without an organizational commitment to the initiative

and a clear understanding of how it is strategically contributing to the organization's successful long-term performance,

managers may view a focus on people as, at best, "nice" or "just busywork" and, at worst, a huge waste of time that takes them

away from the more important demands of their "real job."

COSTS AND RETURN ON INVESTMENT

Because there are so many di�erent actions a company can take to improve its employee retention rate, it is not feasible to quantify

the "typical" costs—hard and soft—of designing and implementing a program. However, an organization should still try to budget its

own initiative carefully.

The payback in �nancial terms can be estimated by reviewing a number of metrics, including turnover data, promotions/transfers from

within versus outside recruiting, number of grievances �led, absenteeism, discrimination complaints, etc. See To Have and to Hold

(www.shrm.org/hr-today/news/all-things-work/pages/to-have-and-to-hold.aspx).

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AUDITING AND EVALUATING

Any initiative or program—especially one designed to retain an organization's key talent—needs to be continuously evaluated to

determine if it is e�ective and to identify opportunities for improving it. An e�ective way to determine whether the employee retention

program is working is to conduct an independent audit of the way the program is a�ecting various groups of employees. For example,

are certain types of employees (e.g., low-skilled, highly skilled, technical, professional, managerial, executive or those with varying

degrees of tenure) leaving the organization at more signi�cant levels than others? If so, that group can be targeted for speci�c

interventions.

One way to audit retention initiatives in addition to continuing to review turnover rates and exit interview results is to conduct stay

interviews (www.shrm.org/ResourcesAndTools/tools-and-samples/hr-forms/Pages/stayinterviewquestions.aspx) of current employees.

Stay interviews help employers ascertain why good employees stay and what might make them leave. It is highly recommended that

managers themselves conduct these meetings, after proper training, as they have the most direct relationships with employees.

GLOBAL APPROACHES AND PERSPECTIVES

In an increasingly globalized economy, retention of quality employees is a global issue.

Increases in cultural di�erences within the workforce raise critical issues for employers. Employee retention e�orts have proved very

di�cult to implement in some parts of the world due to di�ering expectations for pay, work assignments, bene�ts and the like. If a

company is global in scope or simply has a highly diverse employee population, both cultural and national di�erences must be taken

into account at the outset of the development of any new HR-related program, including employee retention strategies. See English

Classes Help Retain Immigrant Workers (www.shrm.org/hr-today/news/all-things-work/pages/english-classes-help-retain-immigrant-

workers.aspx).

Employees on foreign assignments face a number of issues that domestic employees do not, and the retention of international

assignees poses a signi�cant challenge to employers. Poor repatriation planning by employers is often cited as a cause of high

turnover of employees returning from foreign assignments. Employers must make e�orts to keep in touch with expatriates to minimize

employees' feelings of isolation and disconnectedness from the home organization. In addition, reverse culture shock can be an

unexpected aspect of repatriation. Often, returning expats need a crash course on how to live in their homeland again, and employer

support is critical for their retention. See HR Best Practices Can Lead to a Better Expat Experience

(www.shrm.org/ResourcesAndTools/hr-topics/global-hr/Pages/HR-Best-Practices-Can-Lead-to-Better-Expat-Experience.aspx).

Frequently Asked Questions:

What is employee retention management?

What are the 5 leading factors for job satisfaction?

Why is employee retention important?

What is the cost of employee turnover?

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What drives employees to leave an organization?

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