7 ways to improve employee retention
It’s crucial for any company to retain their staff members, ensuring that the most talented employees stay for the long term, as opposed to moving on.
Why retention is important
This isn’t just about being kind to employees. Keeping your employees for a longer period can help reduce the costs associated with staff turnover. These include hiring costs, training and onboarding, and productivity loss. According to research from Oxford Economics and Unum, employee turnover costs in excess of £30,000 per employee. Unless businesses have an effective strategy to reduce turnover, the company may experience profitability issues.
In addition, research shows that high turnover can result in decreased morale, recruiting difficulties, and increased downtime. Employers that focus on employee retention will create more productive teams and a positive workplace culture.
At RM2 we provide business owners with legal advice on employee ownership and employee share schemes. Employee share schemes are an excellent way to improve employee retention. In this article, we’ll explore how these schemes can help employers, along with other valuable ideas to increase staff retention.
How can employers improve employee retention?
1. Invest in employee training
If you’d like to improve employee retention, one very good approach is to invest in employee training. Your staff members will want to develop in their careers, and unless they are presented with opportunities to do so, they may start to look for a new role elsewhere.
Whether it involves sponsoring your employees to take external educational courses, or providing in-house workshops, offering employee training can help improve staff retention, and increase staff engagement.
2. Offer employee benefits and perks
One of the most effective ways to improve employee retention is to offer employee benefits and perks. According to research, 75% of employees are more likely to stay with their employer because of their employee benefits package, and 69% of employees would choose one job over another if it offered better benefits.
There’s no one size fits all when it comes to benefits offered – after all, a younger single employee is likely to have a different focus from an employee approaching retirement age, or one with significant caring responsibilities. So it makes sense to flex the benefits offered, if you can. That said, some of the most sought after benefits include:
- Financial wellbeing programmes
- Wellness programs
- Health insurance and life insurance
- Pension plans
- Staff discounts
3. Employee share schemes
An employee share scheme gives your employees the opportunity to own shares in the company and can be a great way to increase employee retention.
Typically, a share scheme can deliver rewards to employees that will be subject to them staying with the company for a certain period of time, meaning that sticking with the company is a key focus for participants. Schemes can also include additional conditions to ensure that strong performance is rewarded.
In addition to aiding retention, there are other benefits that may attach to employee share schemes, including:
Tax efficiency: Employee share schemes will often include beneficial income tax treatment for employees, as well as national insurance savings for employers and employees. Share plans can often be more tax efficient than a straightforward cash bonus scheme.
Improve productivity: Some studies have shown that opting for employee ownership can help to boost productivity within a company. If employees “think like owners”, this is likely to improve dedication to the business, with employees feeling a stronger connection to the company and its success.
Align shareholder and staff interests: Employee share schemes are a great way to align employee interests and shareholder values, encouraging everyone to work towards common goals.
Exit planning: Business owners can sell shares to their employees as part of employee ownership schemes. Employee ownership can also be set up as part of a business exit planning strategy if the owner is looking to move on. This option affords the owner the opportunity to retain an interest in the business and keep a few shares if they’d like to.
4. Focus on employee recognition
Sometimes, it’s important just to say thank you to employees! But there are many ways to do that – whether it’s a gift voucher, a Christmas hamper, a team day out, or a thank you bonus payment.
Building a culture that’s centred around employee recognition is an excellent way to improve employee engagement and retention.
There are plenty of employee recognition software tools which employers can use to focus on recognition and boost morale.
5. Improve your company culture
Employees are more likely to leave a company if they are unsatisfied with the company culture. If you’re looking to retain the best talent, you must build a positive company culture and your culture should reflect the type of hires you’re looking for. There are plenty of ways that businesses can improve their company culture, including:
- Create company values as a team.
- Celebrate the achievements of your team, (both at work and outside of work).
- Remove rigid hierarchies where possible.
- Focus on progressive leadership styles (as opposed to micro-managing).
- Build an inclusive environment.
- Empower your staff to give back (charity work, or eco-friendly initiatives etc.)
6. Offer flexibility
The pandemic has made working from home a much more realistic opportunity for many employees, and tied to this is an increased interest in flexible working schedules generally.
Offering flexible working can help attract high-calibre members of staff and keep them happy at the company – in fact, in some situations, the ability to flex hours and work remotely is increasingly seen as a “must-have” by many employees.
There are plenty of ways that employers can offer flexibility, including:
- Allow employees to work flexible hours.
- Offer remote working opportunities.
- Permit staff members to fit their work around family commitments.
- Increase the opportunity for part-time working.
Some companies have seen that introducing flexible working approaches have not just resulted in a positive impact on employee well being, but have also seen a significant improvement in customer service and employee retention.
7. Employee bonuses
Don’t underestimate the attraction of the traditional cash bonus, particularly at the moment when the cost of living crisis is really biting for many employees. A number of companies have offered cost of living cash payments and bonuses recently and some employees would rather have cash in their pockets than other offerings like Christmas parties.
Bonus schemes, like employee share schemes, can be tied to performance conditions, including the requirement for participants to stay in employment for set periods of time, so can be a good retention tool if they’re structured in the right way.
Increasing staff retention
As you can see, employers who are looking to improve employee retention have many options at their disposal. Businesses seeking to retain the best staff should offer employee benefits and perks, flexibility and career development opportunities. It’s also important that business owners strive to build a positive company culture.
At RM2, we focus strongly on employee share schemes and employee ownership arrangements to help improve staff motivation and retention. Such schemes provide staff members with a financial incentive and encourage employees to feel more connected to the company, which boosts productivity and morale in the long term.
If you’d like to speak to one of our advisers about the best share plan to help you with staff retention, contact us on enquiries@rm2.co.uk to arrange a no-cost, no commitment call with one of our advisors.