In late 2012, the Australian Human Resources Institute (AHRI) found that the average turnover rate at Australian organizations has returned to the “best-practice” level of 13%. This percentage is seen as desirable because it is large enough to encourage innovation and allow for fresh ideas at a company, but it is not so large that it becomes costly. High turnover rates, aside from being financially prohibitive, have a negative effect on employee morale and can inhibit productivity and performance. Studies have shown that companies with high retention rates also enjoy higher profitability and customer satisfaction.
Companies with effective retention strategies start with the employee recruitment process, including the employer brand, interview styles and questions. Providing a clear picture of the culture, advancement opportunities, and performance expectations will help new hires determine whether the company is a good fit for them, and vice-versa. Honestly explaining the positives and negatives of a role will allow you to attract the “right people,” who will be successful in the role and as a result be more likely to stay.
While compensation is an important factor in an employee’s decision to stay, it won’t make up for a poor work environment. Promote a healthy work-life balance with perks such as flextime and telecommuting options - Intrepid Travel offers employees discounts on trips to help create a passion for travel. Firms like Filtered Media offer flexible working arrangements in order to show employees that they are trusted and valued - which in turn makes employees happier and more productive.
It’s also important to foster professional development and promote from within wherever possible. Companies like Google offer tuition reimbursement, so employees can gain the necessary credentials to advance their careers. Providing a clear path of advancement within the company will help employees see a future for themselves there. Employees also value opportunities to collaborate with senior staff members, and the ability to step out of their comfort zones to make important decisions and come up with solutions to problems on their own.
Ultimately, the key to maintaining a high retention rate is to develop an end-to-end strategy that starts with recruitment and inspires employees to build a future with the company. Attracting the right candidates - and keeping them challenged and engaged - requires a lot of time and effort on behalf of you, the employer, but the reward is a lower turnover rate and a more connected, higher calibre workforce.