Employee retention is not just an auxiliary concern for business owners—it is a smart business strategy, too. By investing in your employees, you are directly impacting your bottom line and ensuring you have a satisfied workforce, who in turn will do better work. So, how can leaders make sure they are implementing the right kind of benefits to keep their staff around?
Why Employee Retention is Important
Employee turnover is a costly problem for business owners, and can cause irreparable damage to a company’s culture as well. Research indicates that replacing an employee requires the business to invest about 6 to 9 months of their salary into recruiting, hiring, and training—so for someone making $60,000, that’s at least $30,000 a business would have to invest.
Additionally, losing key employees can have a detrimental impact on the overall company culture and decrease productivity. That’s why savvy business owners are getting ahead of the problem by implementing smart retention strategies.
Components of Smart Retention Strategies
Deferred and Cliff Vested
If an employee is waiting on a bonus, a single payout of stock or some other one-time incentive, once the benefit is received, there is no further motivation for them to remain with the company. While time-based incentives can be useful, it is best if they are deferred and cliff vested so the employee continues to be incentivized to stay on for longer periods. They know there is a promise for their employer to pay this incentive in the future, and it’s usually a large amount.
People- and Milestone-Focused
The best retention strategies are ones that recognize your staff as individuals and reward them accordingly. Focusing on benefits related to major life milestones, such as retirement, college funding or debt payoff recognizes the importance of an employee’s entire well-being both at and away from work. Have a conversation with your key people to find out what motivates them and what’s truly important; you now have your employee’s milestone!
Passes the Spouse Test
Benefits and perks that an employee doesn’t understand really don’t feel like perks at all. Make sure that any retention strategy you employ is simple enough that a spouse could understand it—examining things from the perspective of a third-party that is removed from the organization can provide helpful insight into the benefits at hand. The spouse at home would most likely be upset if the employer left, knowing there was such a great reward at the end of the line!
If you would like to learn more about how to retain your employees and set them up on a path of financial success, we can help. Contact us today to learn more.