Learn useful and practical retention strategies that you can start applying today. But first, let's analyze the costs of losing an employee, followed by the reasons why people leave.
A member of your tech team is leaving the company at the end of the month, so you prepare for a Zoom meeting with all your colleagues to say goodbye and wish good luck to your soon to be ex-employee.
What you didn’t know was that not only this developer is leaving the company, but also a UX designer from the Design Team, and also a recruiter from HR. Sure it’s normal for people to leave after a few years and go after new challenges. Especially in big companies, more employees means there’s always someone new and also someone leaving.
Still, what the hell. Three people leaving in a single day?!"
You can’t avoid thinking that maybe a tiny fraction of the reasons why these people are leaving is your fault. Maybe you could have done more to avoid it. But what exactly?!
We get you. We’ve been through it too. It made us rethink our retention strategies. And improve what we do to keep our employees here with us, happy and motivated.
That’s why, in this article we would like to share with you what strategies can you use to improve employee retention. But first, let’s look at the costs of losing an employee, followed by the reasons why people leave.
Seriously, you’re not alone. According to the Bureau of Labor, in November 2019 the average turnover rate of an employee in the USA was 3.7%. But in tech? The percentage is about 10% higher, according to a 2018 Linkedin study.
What’s the real cost of losing an employee?
The Society for Human Resource Management (SHRM) reports that an employee's total substitution expense is six to nine months' salary.
What does this cost include?
Fig 1: Economic Value of an Employee to the Organization over Time (Bersin by Deloitte)
1.Hiring costs - include advertising your job vacancy, interviewing and screening candidates, and finally hiring your new employee. It can be a long and exhausting process, especially considering the shortage of tech talent available in this industry.
This is why a lot of companies don’t hire - they outsource instead!
At KWAN, because of the large experience of our recruiters - specialized in tech talent - our consultants are qualified and experienced in the technologies needed for the projects we have with our clients.
Plus, the cultural fit of the consultants to the project and the company are also considered. And so, by the time our clients are conducting interviews, the process just became much easier.
But most importantly, in the end the perfect match is found!
2.Onboarding costs - this part includes all the time and resources you’re going to spend training your new employee. From teaching them the company values, to letting them take time to become familiar with your company’s codebase and coding style.
Remember that a successful onboarding leads to long-lasting involvement, so don’t try to rush it - or you'll end up going through these steps all over again in just a few months. Just like a hamster on a wheel.
3.Training costs - include all the training you provide to an employee overtime of their contract. According to Bersin by Deloitte, this cost represents about 10-20% of an employee's salary.
To add to these costs, consider two more: the loss in productivity - the new employee will produce less than an existing one for several months to years, and the loss in engagement on current employees, which happens if the turnover is high.
Why do employees leave?
Your company treats people well, so you tell yourself it’s no one’s fault. This younger generation is different. They like to change jobs. It’s just the way they are.
According to a study by Visier, Millennials (the adults between 24 and 40) that account for a very significant part of the workforce nowadays are indeed different from other generations when it comes to working. They do quit more often, in fact twice as much as non-Millennials.
If you consider that plus the fact that in tech there’s plenty of jobs available - in fact the top talent is disputed - if your employees aren’t feeling happy and motivated, why wouldn’t they leave?
So yes, you’re right. Millennials resign more often, but it doesn’t mean there’s nothing you can do to keep them (especially the A-players!).
You don’t know what an A-player is? KWAN’s CEO, Business Mentor and Coach Rui Pedro Alves answers:
An ‘A-Player’ is someone who has outstanding results while at the same time, also has a very high cultural fit in the company” — Rui Pedro Alves.
Employee retention strategies: where to start?
Don’t wait until the next goodbye Zoom call, start applying these strategies as soon as possible.
Retention starts with recruitment
Retention starts from the moment you interview the candidates. Present them with a realistic job preview: what tasks will be part of their daily routine and what tasks will be asked from time to time. Tell them about the culture of your company. Introduce them to their soon-to-be team members - at least the final 2 or 3 candidates.
According to a 2017 study performed by Korn Ferry, the top reason for new hires to leave is that the role was not what they expected.
Extra tip: look for candidates who are more likely to stay!
Start with their resumes. Have they stayed in the company for more than a year? Or do they change jobs frequently? What about extracurricular activities? Are they committed to volunteer or do they practice a team sport since they were in college or even before? That reveals loyalty. It’s an indicator that you can count on these people through the good and the bad times. When things get difficult they don’t leave, they stay and fight next to you.
In order to become better professionals and evolve their careers, employees will value a company that provides them with training. This investment of money and time will also make employees feel valued by the company.
But don’t simply hold periodic workshops or talks, make learning an integrated part of your employees’ tasks.
This quote by Benjamin Franklin illustrates just how important it is to involve your employees and not just show them how to do things.
Tell me and I forget, teach me and I may remember, involve me and I learn”. — Benjamin Franklin
Define a career path
Establish a career path for your employees from the very beginning they start working with you. That includes salary updates and new challenges. By aligning their expectations with what your company is able to offer, you avoid the frustration of waiting for a promotion that might never come.
Offer the right benefits
Benefits can go way beyond health insurance and a free dinner on Christmas and on the company’s birthday. Tech professionals expect benefits like flexible work schedules and the possibility to work remotely.
Conduct “stay” interviews
A ‘stay’ interview is the opposite of an ‘exit interview’, instead of trying to learn why employees are leaving, why don’t you ask about what would make them stay?
Listen to your employees
You can wonder what strategies your employees will value based on your experience and knowledge, and you can even support your convictions with studies about the industry trends. Still, nothing will replace the act of listening to your own tech team - and of course acting upon it.
We saved this strategy for last on purpose. It might seem like the simplest strategy, and the easiest to put into practice, but in order to obtain results, you need to get honest feedback and to make the right questions. And for that you need trust.
Once you have great employee, you have the responsibility of not let them go. Applying employee retention strategies will help ensure they stay, as long as possible, and so you can maximize the investment your company has already made in these person.
And next time someone announces their resignation, and you have another of those goodbye Zoom calls, instead of thinking it’s inevitable, make yourself the question:
How can the retention strategies of my company be improved?”
And again, you’re not alone.
Count on us to help you with that!
By choosing to work with KWAN, we will make sure your tech team gets day to day support, career coaching, and mentoring from a dedicated and experienced team of professionals.
Get in touch so we can start assessing your team’s needs!