One of the highest impacting, yet mostly overlooked aspect of business is staff retention. With the number of job postings significantly fewer than the number of active jobseekers nowadays, it’s always easy to say that “there are other people who’d like to have that job” or “give the job to someone who wants it” every time an employee quits.
Moreover, the “If I’m unhappy, then it’s always better to leave” mindset on the part of the employee isn’t helping the cause of talent retention either.
There have been recent studies that utilize employee analytics and these have delved into why people leave their jobs. The results all point to one thing: people leave jobs because of how they are managed; both personally (by their managers) or by process (by the company’s culture or processes).
The results weren’t really that surprising, but do serve as validation that it’s not about how hard the job is or how high the pay is. Employee retention or attrition depends more on the company’s management and working environment. Having known this, we now want to measure how attrition affects the business and what can be done to avoid it.
We will look at what employee analytics metrics to focus on and also use as gauges for effective employee retention strategies. What’s more, we will also discuss some tips that will help improve employee retention and make workers in your organization, generally, happier and want to stay longer.
Talent Metrics that Matter
What gets measured, gets managed.
Basing hiring and retention strategies on “educated guesses” is like throwing darts at a board while blindfolded. First, you never get to see what numbers to aim at. Second, you also never get to adjust each shot to get much closer to the target.
Getting familiar with the numbers you should aim for is a must and should also be included in any HR data analytics study for your company. This holds most especially true if you want to know how your company is doing in terms of retention/attrition. Not only that, these key metrics can also be considered as valid bases for any employee retention strategy.
Below are five talent retention metrics that matter when it comes to staff attrition and hiring replacements. These aspects of employee analytics work out how much a company spends on employee churn and hiring, and also how effective your recruitment process is.
1. Cost per Hire
Cost per hire (or CPH) is an aspect of employee analytics that measures the associated costs of sourcing, recruiting, and staffing. The importance of this metric determines how much your company spends to find someone to fill an open post in the organization. CPH is computed by getting the total cost and dividing it by the total number of hires in a recruitment campaign.
2. Hiring Sources
Not all sources of hires are equal. There are channels with high turnouts and there are funnels where there are almost none. There are sources that are inexpensive and there are ones that cost a ton. The biggest concern regarding employee analytics on hiring sources is finding out what channels produce the best quality (not only the highest number) of hires with the lowest possible cost.
3. Cost of Turnover
Probably the most telling of the key metrics, the employee turnover cost is the total amount an organization invests in an employee in terms of (but are not limited to) recruiting, training, issued equipment, salaries, productivity, etc., that get lost when said employee decides to leave your company. The usual assumption is that businesses take on the cost of around six to nine months of the person’s salary.
The most important consideration is how that employee’s departure will affect business performance. High performers, of course, have a higher cost of employee turnover due to disruptions in operations, opportunity costs (i.e. loss of potential sales or clients), and loss of morale.
4. Workforce Turnover Rate
Another vital part of talent analytics is turnover rate. It is the ratio of how many employees leave the company compared to the total number of employees in a year. The acceptable turnover rate is different for each industry; but to compute for it, you get the total number of employees who left and divide it by the total number of employees during a year.
You then multiply the result by one hundred. This will represent the percentage of your workforce who leave. The exact opposite of turnover rate is called ‘employee retention rate.’
5. Yield Ratios
Yield ratios tell you how accurate and precise your hiring strategies are, as they represent the total number of hires from a total number of applicants / prospects at every stage of the recruiting process.
Accurate job descriptions garner a higher number of targeted qualified applicants for a post. Precise hiring processes ensure that only quality prospects go through each stage; therefore ultimately resulting to a highly-qualified hire who has the right competencies for the job.
Why are these five important?
These are the five most important aspects of employee analytics in terms of hiring and turnover. Put these five in check and you can definitely say that, aside from getting the best hires using the most efficient hiring process, your employee retention plan is also proving effective.
Good numbers represent that you recruit and retain the best people. Results that go over industry thresholds signify that you might need to enforce interventions that focus on talent retention.
5 Talent Retention Strategies
Knowing how well your business performs in retaining employees through workforce analytics is crucial. We’ve established that losing talent not only wastes valuable company resources, it also affects business performance, employee morale, and disrupts operations. The logical choice, therefore, is to retain, rather than replace an employee.
Here are five employee retention ideas that might help you improve your organization’s workforce retention:
1. Provide a benefits package that is not only competitive, but also fits your employee’s needs
This is one of the cardinal rules of workforce hiring and retention. Better pay equates to higher retention, thus resulting in happier and more motivated employees. Do take note that compensation is just a part of the equation, and not the be-all, end-all of employee retention. As mentioned above, management also plays a big role in the retention of employees.
2. Provide small perks for both work-related and non-work related activities
Doing the small things has a big impact in making people feel appreciated. Providing small perks like company contests, performance incentives, and employee recognition events can help keep workers motivated and feel rewarded. Moreover, other fun events that take the lethargy off work like team building events, outreach programs, sports activities, and such, make the employees feel that they are part of ‘something bigger’ – a community that cares.
3. Be proactive by conducting ‘stay interviews’
Exit interviews are reactive. Conducting these interviews means that it’s already too late for both the company and the employee. ‘Stay interviews’, however, are a more proactive way of getting information on what might make an employee leave (or stay) in your company. Aside from the usual interviews, these can also be done through surveys and focus group discussions (FGD).
4. Make employee development a priority
Nothing motivates employees more than knowing that there is a career for them in your company. An organization that fosters employee development promotes from within, whenever possible. This makes more sense from a financial standpoint too. Just an FYI – hiring externally costs sixty percent more than getting an internal hire to fill a vacant post.
5. Create open lines of communication between the employees and management
Employee analytics show that the way a company manages their employees can be the biggest cause of attrition or retention of staff. The best way to capitalize on this fact is to create open lines of communication between employees and management.
To start off, setting proper expectations for hires on what’s expected of them can prove to be helpful. Another strategy is to get managers more involved and have them spend more time developing and coaching employees. Furthermore, allocate resources to ensure that your business’ mission and vision get communicated across the board and each employee’s role in the big picture is clear.
Communication, of course, goes both ways. Setting up an open-door policy and enabling channels for an employee to be able to voice their concerns are both effective strategies. Additionally, getting regular feedback on how well a manager or the company is treating employees also helps as it shows genuine concern about the employee’s well-being – as long as there’s action on the company’s side, of course.
Culture is the Key
At the end of the day, the key to retaining your workforce is fostering a culture that shows genuine care for your employees. Not only will retaining your employees save your company money, but it will also keep everyone motivated and performing. However, it’s always easier said than done. In order for this type of culture to succeed, it has to be embodied by each person – from the staff to the management.
If you are in doubt, take a quick look at your organization’s employee analytics and pay special attention to your attrition and hiring metrics. Are you hiring the right employees and retaining them? These numbers won’t lie, and you can use them to find out where you are in terms of your retention goals and if you’re embodying the right type of culture and management that’s conducive to attracting and retaining the best employees.