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Practical Employee Retention Strategies for Employers on a Budget

By Employers Council Staff posted 02-16-2023 01:38 PM

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Employee retention is top of mind for business leaders and human resources professionals tasked with strategies to keep people. A 2022 Paycor survey of more than 5,600 business owners, managers, chief executives, and individual contributors found that the top priority of those surveyed was employee retention at 20%, beating out recruiting at 14% and company culture at 12%.

The tight labor market continues, presumably with no end in sight, with 62% of respondents saying that the talent shortage is long-term or permanent. Paycor, a provider of human capital management software, found that as many as 25% of individual contributors and 30% of managers are looking for new jobs.

Typical retention strategies may include enhanced benefits packages, workplace perks like gym memberships or free meals, or educational benefits such as tuition reimbursement. However, many of these are cost-prohibitive for employers, especially smaller companies and nonprofits.

For employees and job candidates, a top priority is increased compensation. Given inflation and stagnant wages, that may not be surprising, but it is difficult for many employers to meet these expectations.

In his book Drive, Daniel Pink offers research-based insight into what motivates employees. Pink states that money isn’t the motivator that employers might imagine it is. His recommendation is to pay people enough to take money off the table and meet their needs and then focus on three other demonstrated motivators: autonomy, mastery, and purpose. According to the Paycor survey, money can attract candidates, but culture is what makes people stay.

In the Paycor survey report, Lori Wisper, managing director of HR consulting company Willis Towers Watson, states, “The employee experience is going to win the day…You’ve got to pay well, but you also have to provide a holistic, great employee experience.” Pay matters, but what keeps people is much more than a bigger raise.

What can employers on a budget do to retain their employees? Here are some strategies:

Employers can start with open, transparent communication. Burying the issue of pay will frustrate employees. If it’s the elephant in the room, consider talking about it. Discuss what the employer can and can’t do. Managers should feel empowered and equipped to talk with employees about the company’s pay philosophy and total rewards strategy.

Speaking of total rewards, provide employees with an annual statement that shows the value of benefits alongside base pay. For example, if the employer pays the full premium for employee-only health insurance, ensure employees understand the dollars-and-cents value.

Avoid assuming what benefits are important to employees. Ask regularly about what matters most. Their needs may be different from the traditional plans that are offered. For example, robust mental health options may be more desired than other coverages. Employee input can lead to creative, cost-effective benefits options.

Flexibility and time off continue to be high on employees’ lists of what attracts them to organizations. Employers can consider unlimited/flexible time off plans or even increasing accrual or grants of vacation or PTO. Learn more about setting up and managing flexible PTO plans in this Employers Council whitepaper.

Provide employees with a clear map for their professional development. Managers can talk with employees about where they feel proficient, skills they would like to build, and the roles they want to take on in the future. Managers can create opportunities for employees to move their careers forward, through on-the-job training, cross-functional projects, job shadowing, and mentorship.

Ensure there is a continuous dialogue that allows employees to share what’s going well and what isn’t and allows the employer to respond. Involve employees in co-designing solutions to not only business problems but to what the employer can do to make it a great place to work.

Employers Council provides extensive survey data to guide employers in being competitive in attracting and retaining talent. Members can find out more about how to access and participate in surveys on our website. If you have any questions, contact our Member Experience Team.