How to retain employees: Everything you need to know to get with the times

Eeny, meeny, miny, moe… engage your employees or watch them go.

Okay, that’s an oversimplification of how things work… but you get the point. You’d never leave employee retention to chance and risk losing your star talent, would you?

With talent shortages, shifting work realities, and new employee mindsets, it’s important to keep up with the times and find fresh new ways to keep employees engaged and on board for good (or at least for a long while). Doing so won’t just make your organization a better place to work, but it’ll also make it run more successfully.

Ready to get started? Read on to understand what employees really want at work and uncover our data-backed employee retention strategies.

Understanding the current labor market trends

The labor market has shifted significantly over the last couple of years with the onset of the pandemic, the introduction of a new working generation, and rapid development across industries. We’ve seen the economy, working norms, and daily life change drastically. And it’s impacting the way the average person views work.

As people leaders, it’s vital to understand what these shifts mean and how they affect the modern workforce. Once you know where things stand, creating strategies that keep people on board and engaged at work becomes more straightforward.

Trend #1: We’re in a period of economic uncertainty

In the last year, talks of a looming recession have been on every economist’s lips. We’ve also seen inflation rapidly increase after a decade of experiencing rates consistently hovering around 1-3% in the United States.

Why does this matter in the labor market? Stressful economic environments and periods of uncertainty make both organizations and employees act in ways they normally wouldn’t. On the organizational front, we’ve seen rapid hiring sprees followed by mass layoffs (especially in the world of tech). On the flip side, employees are seeking new opportunities with better compensation because of rising inflation rates, further contributing to the growing Great Resignation. 

Seriously! Research by the Adecco Group found that nearly half of employees say they’re more likely to look for a new job with a higher salary because of inflation.

Trend #2: Unemployment is low and we’re still in a tight labor market

Put simply, a tight labor market means we’re seeing a bounty of job openings with a limited number of workers to fill those roles. And while many mass layoffs continue to take place, unemployment rates are still low at around 3.5%. 

Because of this, your current talent, especially your star employees, is worth a lot in the labor market. It also means that prioritizing retention will stretch your HR dollar way further than continuously hiring, onboarding, and training new talent.

Trend #3: There is a major skill shortage

Skilled workers are in high demand these days. And despite common misconceptions, ChatGPT and AI aren’t compensating for this shortage. The job openings we mentioned in the previous trend are increasingly hard to fill because there aren’t enough people with the necessary skills to do those jobs.

Technology is showing no signs of slowing down across all industries, so this is especially the case in the fields of data science, artificial intelligence, cloud computing, programming, and cybersecurity. While it’s important to ensure employee engagement across your entire organization, it’s particularly smart to pay attention to the teams whose fields fall under the skill shortage.

Not-so-fun fact: By 2030, the US could experience a talent deficit of over 6 million people. By then, this potential mass skill shortage can lead to a loss of $162 billion in the American tech industry alone.

Trend #4: Flexible work is here to stay

Employees are demanding flexibility more than ever these days. From remote work to jobs in the gig economy, to self-employment, people are finding ways to make work revolve around their lives and not the other way around.

A whopping 52% of employees confirm they’d make the switch to a hybrid or remote job. This is a big consideration as companies continue to dance around their back-to-the-office plans.

If an employer can’t offer accommodate scheduling flexibility, many employees will look elsewhere or even resort to meeting their needs on their own.

Trend #5: A new generation is among us and their needs are unique

By 2025, Gen Z will make up around 27% of the global workforce. A large chunk of these Gen Z workers have already entered the labor force, and many started their careers during a time of crisis. In fact, Gen Z reported the worst work experiences during COVID-19 compared to the rest of the working generations.

Employers must be empathetic toward these young employees and reestablish trust in the workplace more generally. According to Microsoft’s 2022 Work Trend Index Annual Report, their needs are pretty simple: they’re looking for great corporate cultures, mental health benefits, a sense of purpose, flexible hours, positive feedback and recognition, and managers who support their career development.

Gen Z is also the most diverse generation to date, with 47% identifying as BIPOC. This generation will not tolerate overlooked or bare-boned diversity and inclusion programs.

Addressing employee turnover and resignations: Why are employees quitting?

We first heard about the Great Resignation in May 2021. The pandemic changed the reality of work and acted as a catalyst for people to think about and re-prioritize their needs.

As we explored above, flexibility played a huge role in this. People grew accustomed to working remotely and many employees left hustle culture behaviors behind in search of a better work-life balance. But flexibility wasn’t the only cause of employee turnover that led to record-breaking levels of attrition.

Did you know? 50.5 million Americans quit their jobs in 2022, surpassing the previous record set in 2021 by 2.5 million.

McKinsey surveyed over 13,000 employees in Australia, Canada, India, Singapore, the United Kingdom, and the United States to dig deeper and fully understand the phenomenon at hand. The study found the most common reasons employees quit or thought about quitting their jobs, including:

• Lack of career development
• Inadequate salary and total compensation
• Uncaring and uninspiring leaders
• Lack of meaningful work
• Unsustainable work expectations

High attrition rates are bad news for businesses around the world. Not only does turnover cost a lot from the get-go, but it also leaves lingering effects that can hurt your company culture, employee morale, and profitability down the line.

The good news is that we now have access to a ton of data to help us understand how people feel at work so that we can build stronger employee retention strategies.

The business impact of high employee retention

If you (or your leaders) are still hesitant on investing in employee retention, remember this: every employee departure equals at least a third of their annual salary in replacement costs. Prioritizing employee retention doesn’t just make sense financially in the short term, though. There is a slew of benefits that come with high retention and engaged workforces.

When employees stay at an organization, they’re more likely to:

• accumulate valuable knowledge about your business and products or services,
• create strong and consistent processes for higher productivity and quality of work,
• build solid, trust-based relationships with your customer base,
• contribute to positive team dynamics,
• and strengthen your employer brand for an easier recruitment process.

Put simply, keeping your employees on board makes your business run smoothly and efficiently. When you work towards building employee retention strategies, you’ll see employee satisfaction, productivity, and happiness soar. Keep it consistent year-round, and strong financial returns are sure to follow suit.

So, how can you make this happen?

13 Employee retention tactics aligned with modern workforce needs

Employee retention can be tackled in more ways than one. We put together the following list of employee retention strategies based on the insights we’ve uncovered from industry research and our latest Officevibe Pulse Survey data.

1. Define a clear and inspiring mission

These days, it’s rare to find people who don’t care about contributing positively to the world — even at work. We’ve gone through a series of very unfortunate events as a collective, but the silver lining is that people are prioritizing what’s really important to them, and that includes working for organizations that do good by society. This is especially true for the hyper-cognitive and purpose-driven Gen Z generation.

 “Their desire to know how their individual contributions and role in the team help support the organization’s mission differentiates them. They make career choices and purchasing choices driven by the impact these make in the world.”

Harvard Business Review

2. Align your strategies to your values

It’s clear that modern employees are value-oriented. They not only care that their organization’s values align with their own, but they also expect companies to act in alignment with those values. Considering that 26% of employees feel their organizations do not make decisions that reflect their values, per Officevibe Pulse Survey data, there is a lot of room for improvement.

👀 Are you hitting the mark on alignment? Learn to spot the signs of a misaligned team and use these 5 tips to ensure alignment and improve performance.

3. Make sure your objectives are challenging, yet realistic

Objective setting is a big part of the alignment puzzle. Challenging company objectives often lead to exciting new projects and help employees grow, pick up new skills, and gain knowledge. But big, hairy, audacious goals can quickly become demotivating when they feel too unattainable.

31% of employees do not feel their organization invests the necessary resources, people, and efforts to measure up to its ambitions.

Officevibe Pulse Survey data, August 2022

It’s okay, and necessary for business success, to think big. But it’s crucial to match your ambitions with the resources needed to make them realistic.

4. Show employees why their work matters

When employees can tie their daily work back to broader company objectives and outcomes, they’re more likely to understand the value they bring. Not only does this boost their confidence, but it also instills a strong sense of purpose, which we’ve already seen is an important need for younger employees.

5. Give employees access to the right tools and technology

Few things are more frustrating than feeling stuck because of a lack of resources. If you aren’t giving your team the tools and technology they need to do their job well and efficiently, you’re putting your company’s success and your employees’ job satisfaction on the line. It’s a zero-sum game. Investing in the essentials is a surefire way to ensure high levels of productivity and engagement.

6. Offer a fair and competitive compensation package

In times of economic uncertainty, compensation matters. And considering that salary is the main reason people look for new jobs, your compensation strategy shouldn’t be neglected. But you don’t have to dish out salaries your company cannot afford to make a difference. What matters most to employees is that they are compensated fairly.

39% of employees do not feel they are paid fairly when taking their responsibilities, skills, and experience into account.

Officevibe Pulse Survey data, August 2022

To keep employees happy, be sure to assess your total compensation package and make sure you’re in line with the rest of the job market.

7. Be transparent about compensation

Transparency is key when it comes to money talk. Officevibe Pulse Survey data revealed that 34% of employees do not trust that they are paid fairly compared to similar roles in other organizations. But is compensation itself truly the issue, or is it perceived unfairness? We looked at our fairness sub-metric in Officevibe and found that the root of the problem was a lack of transparency and communication.

Employees want to understand exactly how compensation is determined and whether it is equitable. So if you have a special formula, a market baseline that you follow, and performance standards, be sure to share them with your team from the start. 

8. Provide opportunities for growth and professional development

Career growth is of utmost importance for young, modern employees. So much so that many of them are likely to change jobs ten times between the ages of 18 and 34 in search of professional development. If you want to ensure high retention, you must support your team internally with career planning, skills mapping, and training and development.

Setting SMART performance goals helps employees reach their full potential, while also getting your company closer to its objectives. Support your team with these 8 practical performance goal-setting examples.

9. Encourage employees to recognize each other

Employees are more likely to stay in an organization where they feel valued and celebrated. And people aren’t just looking to be recognized by their managers or superiors; they want their peers to do it too. Peer-to-peer recognition programs strengthen work relationships and team dynamics. A kind kudos or note of appreciation also sprinkles a little joy into a person’s day.

🎉 Use these 6 ideas to help boost peer recognition within your team.

10. Invest in employee health and wellness

The great reprioritization highlighted that health and wellness are non-negotiable for today’s employees. But Officevibe data shows that most companies are still falling behind, and it’s likely impacting their retention rates:

• 29% of employees do not feel their organization offers the support they need to deal with work-related stress.
• 24% of employees do not feel their organization cares about their mental well-being.

Collecting feedback on employee well-being and investing in health and wellness programs are the first steps to showing employees your organization truly cares.

11. Pay attention to workloads and energy levels

Many employees are disengaged and choose to leave because of high-stress levels at work and unmanageable workloads.

23% of employees are not able to maintain a good level of energy at work and 34% feel negatively about their level of work related stress.

Officevibe Pulse Survey data, August 2022

As an employer, it’s crucial to keep track of employee energy levels and make sure no one is taking on more than they have the mental bandwidth for. You can help by prioritizing projects, encouraging flexible work, and making sure employees take time off throughout the year.

Notice someone struggling at work? Discuss work-related stress and find solutions together before it’s too late.

12. Don’t let diversity, equity, and inclusion fall behind

To achieve true belonging and psychological safety within an organization, everyone should feel seen, supported, and heard. Workplace diversity, equity, and inclusion, or DEI for short, should be top of mind at every employee touch point and stage in the employee experience journey. All employees deserve equal opportunities. If they don’t feel accounted for and respected, modern employees won’t shy away from seeking a new job.

47% of Gen Z employees identify as BIPOC, compared to 39% of millenials, making it the most diverse generation in the job market to date.

Great Place to Work

What’s the current reality of different demographics within your organization? Send a diversity, equity, and inclusion poll using these 21 DEI survey questions to find out.

13. Prioritize culture contribution over culture fit

The idea of hiring for culture fit is passé. This mindset encourages uniformity, ignores DEI best practices, and often leads to echo chambers in the workplace. A better way to tackle company culture and make your workplace better for all is to hire people who will contribute positively to your organizational culture, instead of fitting into a predetermined mold. During the hiring process, ask yourself:

• Does this person bring a new perspective to the table?
• Do they have skills, hard and soft, that can complement the rest of the team?
• Are their values in line with the organization’s values?

When you take a human-generated approach to culture, you’ll see your team thrive and become the best version of itself.

How to build your employee retention strategy

If you’re starting from scratch, you can’t go wrong with building the first iteration of your retention strategy with a mix of the tactics above. However, it’s important to keep in mind that no single retention strategy will work for every company. The best way to boost retention is to tailor your efforts to your own people and their needs.

Here’s how you can figure out what’s most important to them (and what will make them stay in their jobs): 

• One-on-one meetings give you insights on the individual level and can help you understand what makes each person on your team tick.
• Regular pulse surveys take the guessing game out of receiving feedback. They provide employees with prompts they wouldn’t have otherwise thought about and they ensure you have a consistent and measurable bank of feedback at all times.
• Anonymous feedback tools give employees the opportunity to share thoughts, feelings, suggestions, and concerns openly and honestly, without fear of repercussion. They help managers focus on the message, rather than the messenger.
• Onboarding surveys allow new hires to share feedback specific to their first few months on the job. They help HR and managers improve employee retention from the start by nailing the onboarding process.
• Stay interviews uncover how employees feel in their current roles, what’s keeping them engaged, and what can boost their job satisfaction.
• Exit interviews are the last resort to collect feedback on how to boost employee retention in the long run. During these meetings, a departing employee can give you concrete insights into what led them to look for greener pastures.

Unlock your unique retention strategies with an employee engagement solution

Congrats! You just read everything you need to know to get started with your employee retention game plan. You have a better understanding of the current global context, you know why people are leaving their jobs, you can outline the business impact of employee retention, and you even have some employee retention strategy ideas to get the ball rolling.

If you want to solidify your employee retention strategies, the next step is to find the right employee feedback and engagement tools to help customize your plan according to your business’s needs.

Officevibe’s employee engagement solution can help get you there by taking the guessing game out with actionable insights on where your team is and where you want it to be.

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