Before we dive into how to create an effective employee retention strategy through workforce data and analytics, let’s first get to grips with the current state of staff retention in Australia:
- Job mobility rates across the world are peaking, with those in Australia at the highest since 2012 (ABS).
- 38% of Australian workers considered changing jobs in 2022 (PWC).
- It costs around 33% of a worker’s salary to replace an employee (WorkInstitute).
- The reasons why around 4 out of 5 staff leave an organisation are preventable (WorkInstitute).
- Yet, HR leaders named employee retention one of their top challenges in 2022 (intelliHR).
Essentially what this boils down to, is:
- People are leaving jobs at high rates than normal,
- Turnover is expensive,
- But mostly preventable.
Keep reading to find out how you can prevent regrettable turnover and retain top talent with a data-driven staff retention strategy.
How to create an employee retention strategy
What is employee retention and what are the benefits?
Employee retention is a strategic HR function that refers to efforts and actions to engage and motivate employees to stay with their organisation. Retention benefits both the employee and the organisation on multiple levels:
- Reduce attrition/turnover: Losing staff is costly. Not only in terms of the direct costs of employee turnover (e.g., advertising, recruitment, training) but also the indirect costs like lost productivity, increased stress on remaining staff while hiring and training, and diminished team morale (which often leads to greater turnover). By reducing turnover, you reduce these costs.
- Company culture: Avoiding the disruptions to culture and morale that can occur when good employees leave will help to maintain and strengthen workplace culture.
- Team performance: Teams with high morale and familiarity work more effectively together, building momentum toward achieving organisational goals.
- Productivity and quality of work: Happy and engaged employees produce higher quality work, generate more ideas, work more efficiently, and deliver better customer service.
- Attraction and hiring: Improving your employee retention rate helps retain high performers and attract more, because it builds your company’s reputation as a place where people want to work.
- Preserve company knowledge: When staff leave, they take their intel on the “how”, “what”, “when”, “where” and “why behind processes, tools, documents, and the evolution/history of products and services.
- Reduced absenteeism: Happier staff are healthier staff, leading to fewer sick days.
- HR gets more time back: Think of all the things you could be doing when you don’t have interviews to book, recruiters to liaise with, and contracts to draw up.
- And all of these lead to improved business performance and bottom line.
Retention across the employee lifecycle
A good employee retention strategy covers each stage of the employee lifecycle, from the moment an individual first interacts with your organisation when applying for a job, through to training, performance reviews, and even after they hand in their resignation (more on the offboarding phase later).
Data-driven employee retention
A good employee retention program is data-driven.
First, people data and analytics can be used to identify which employees are leaving, why they’re leaving, and when and where the friction points in the employee journey are that lead to dissatisfaction and disengagement. For example, intelliHR’s survival analytics predicts the likelihood of reaching certain tenure milestones for different employee groups (e.g., roles, seniority, departments).
Second, data should be continually captured and used to measure, monitor and evaluate the various initiatives and components of your employee retention strategy captured used to continually improve.
6 Key elements of your employee retention strategy
80% of employee turnover is due to poor hiring decisions – Harvard Business Review.
From the very first moment a manager comes to HR with a position to fill, you should be putting yourself in potential applicants’ shoes, and thinking about how to optimise their experience for retention. For example:
- How can recruitment and advertising be leveraged to put our best foot forward?
- What’s our employee value proposition? What are employees looking for? Do they align?
- What does the applicant experience look like? Is it warm, welcoming and smooth? Or is it subject to poor communication, inconsistencies, and unnecessary admin?
- Are we hiring based on best fit, or need to fill?
- What’s the experience for those who don’t get an interview or the job? Be sure to communicate swiftly and professionally with them as poor or no communication can be harmful to your organisation’s reputation (and ability to attract good staff!).
Make it data-driven: Evaluate recruitment effectiveness and identify if there is higher turnover from a particular recruitment source with intelliHR’s recruitment analytics.
“Onboarding” doesn’t end after the first week. It spans the time and all the touchpoints from when a new employee first signs the contract, to orientation and training, through to the end of probation. And with research showing that 40% of new employees quit within the first six months, here are some tips to maximise retention throughout the onboarding phase.
- Send a warm welcome email before the new start arrives with information on how to get there, and who will meet them in person (better yet, automate this as part of an onboarding email sequence).
- Leave a handwritten welcome note on their desk for their first day.
- Ensure all of their software, hardware and program access is ready to go (there’s nothing worse than not having a computer on the first day).
- Organise a welcome lunch with the team.
- Create opportunities for social connection after the first couple of weeks.
- Set and track goals for the employee to achieve at 1 week, 30 days, and 90 days.
- Assign a buddy or mentor.
- Check out our new employee onboarding checklist for more ideas.
Make it data-driven: Gather continuous feedback from your new employee on their onboarding experience using check-in surveys, so you can identify and address any potential issues before they snowball. Aggregate data from all new starters’ feedback will help to identify strengths, weaknesses and friction points in your onboarding process.
Image: feedback form from intelliHR’s onboarding check-in survey
- 5 ways great onboarding can improve employee retention
- The real cost of losing new employees
- 5 Ways to use HR analytics to identify employees at risk of leaving
Performance enablement and career development are critical components of keeping staff engaged and motivated. In particular, the high-performing staff that you most likely want to hang onto need short, medium and long-term goals to work towards, opportunities for feedback and growth, and a clear direction for future progression.
Here are some ways to improve retention through a focus on performance and development.
- Set and track individual and team goals.
- Link individual goals to company goals (so employees can see how their contribution counts).
- Provide frequent, timely and constructive feedback.
- Mentorship and coaching programs.
- Regular 1:1 check-ins.
- Learning and professional development opportunities.
- Career development conversations with a focus on employee career goals.
- Carve out projects and opportunities for staff to upskill, cross-skill, and push themselves.
- Promote from within.
- Pay rises and bonuses.
Make it data-driven:
- Conduct a skills analysis or training needs analysis to identify skills deficits and areas for improvement and training across teams.
- Use employee performance reports to remove bias from performance reviews, promotions and pay rises. For example, intelliHR’s performance reports summarise an employee’s achievements, goals, feedback and more across their entire tenure.
- Monitor goal completion rates to identify employees who might be at risk of leaving. If they are falling short, it might indicate disengagement.
- Measure the normalized impact of a pay rise to understand how a pay rise might feel to an employee. e.g. A 10% pay rise might sound great on paper, but may not mean much to an employee if it’s their first raise in 10 years. See how to do this in intelliHR.
Company culture encompasses the shared values, norms, behaviours and ways in which employees interact with and relate to each other and their organisation. Good company culture can be a key element in attracting new employees, and equally, poor company culture is often cited as a reason for leaving. Here are some tips for cultivating a culture that makes staff feel like part of a family.
- Promote diversity and inclusion.
- Communicate and act in alignment with company values, mission and goals.
- Increase transparency of decision-making and communication.
- Cultivate opportunities for staff to connect and socialise.
- Build psychological safety and belonging (O.C Tanner found that a sense of belonging increased employee retention by 43%, increasing their estimated tenure by 84%).
- Conduct regular eNPS surveys (if an employee doesn’t feel like they belong, they’re hardly going to recommend your company as a good place to work).
- Invite and act on feedback.
- Empower staff to bring ideas to the table and participate in decision-making.
- Empower leaders to reward, recognise and support staff as needed.
- Promote and enact healthy attitudes and behaviours from the top.
- Provide opportunities for continual learning and development.
- Offer competitive perks and benefits, including wellbeing.
Make it data-driven:
- Use sentiment analysis to track culture and monitor shifts in mood based on language used in survey responses and pinpoint where issues are occurring.
- Measure leadership effectiveness through 360-degree feedback
- Measure diversity and employee attrition based on elements like gender with intelliHR’s analytics.
“Engaged employees are more likely to stay with their organisation, reducing overall turnover and the costs associated with it. They feel a stronger bond to their organisation’s mission and purpose, making them more effective brand ambassadors. They build stronger relationships with customers, helping their company increase sales and profitability.” Gallup’s State of the American Workplace report
By investing in all of the aforementioned activities – recruitment, onboarding, performance and development, and culture – you’ll be well on the way to increasing employee engagement and retention. To take it one step further, here are our tips for making your engagement strategy data-driven and measurable.
Make it data-driven:
- Schedule regular pulse surveys to collect feedback on employee satisfaction, wellbeing and performance. This can help inform high-level HR strategy as well as more meaningful manager-employee 1:1 conversations.
- Monitor goals and performance and give rewards and recognition accordingly and generously.
- Monitor task completion rates to identify staff who may be disengaged and at risk of leaving.
All too often, companies don’t do a good job of offboarding, as they see it as an ineffective use of resources and are preoccupied with replacing the role. But the way an exiting employee is treated in their final weeks can have a profound impact on the remaining staff and their likelihood of staying, as well as the reputation of your company (remember how we said before that improved retention leads to improved attraction and hiring? It all connects!).
Giving exiting employees a positive experience when they leave shows respect and appreciation for their contribution to the company, and doesn’t burn bridges if you ever want to hire them back!
- Announce the leaving employee’s resignation swiftly and graciously to the team and company. Note a couple of their key achievements and wish them well in their future endeavours.
- Don’t overload them with work to get done before they go.
- Get everyone to sign a card and, if appropriate, organise a gift.
- Organise a going away lunch or social activity (can be done virtually!).
- Ask for feedback! Both on a personal level from the manager, and in offboarding interviews – this is one of the most underrated inputs of an employee retention strategy.
Make it data-driven:
If you’re consistently gathering data from offboarding surveys, then you can use an employee retention software like intelliHR to analyse trends across your organisation and answer questions like:
- What common reasons do employees cite for leaving?
- Are there teams/departments/managers that have higher attrition rates?
- When in their tenure are most people leaving? 12 months? 5 years?
- Read more on How to extract value from offboarding and exit interviews.