A Fresh Approach to Employee Retention
As of this writing, the national unemployment rate is standing around 4-5%, very nearly full employment by the Fed’s definition. Some skill jobs are going unfilled. Yet employee turnover remains high. According to the SHRM Human Capital Benchmarking Report the turnover rate runs between 13-14%. Multiple studies exist showing the real cost of employee turnover in lost experience and the expense of hiring, onboarding and training new people. It’s no real surprise, then, that a recent study showed that responding employers felt that employee retention was a critical concern. This begs the question, if it’s that important to employers, why isn’t the employee retention rate going up?
The biggest reason is a stagnation in wage increases, or salary raises. Raises for “good performers” have averaged 4-5%, while even bad performers get 1-2%. With cost of living increases, real increase in net income is 1-2% for people who are working hard. That’s no increase at all for many. Indeed, in many venues millennial workers are urged to change jobs every 18 months, as increases from a job change average over 10%. Four job changes in five years can net a 50% increase! Given these numbers, employee retention is a difficult assignment even for better-paying companies.
So the solution to employee retention is to raise wages across the board for the best performers, right? If we presume that not all companies are greedy and insensitive, then we have to believe that there are other good reasons for not doing exactly that. The first is simple economics; wages/salaries are generally a company’s biggest expense (unless a company has major capital equipment expenses). A wage increase would most certainly result in a price increase for a company’s products or services, with a corresponding loss of business/revenue. This simple model is complicated by the fact that many business leaders remember the crash of 2008 very well, and few have faith in the strength and endurance of the current recovery. This creates an ingrained reluctance to raise expenses at the promise of increased revenue. Employee retention is difficult to focus on when economic disaster is a constant fear.
To our problem, how else can we reduce turnover? According to a recent study by Glassdoor, employees value corporate culture highly as well as opportunity for advancement. Salary concerns became less important as salaries increased. One of the simplest things that leadership can do to positively influence culture is to offer targeted training for all employees. Today the most effective way to offer a variety of training opportunities to employees at every level is to employ comprehensive skills-focused training. Online training is:
- Available to employees 24/7
- Able to offer a wide variety of training opportunities
- Less expensive overall than “live” trainings
- Generally more interactive than simple video training
- Often a SaaS service, so it poses no extra burden on corporate resources other than network bandwidth
When a company invests in employees regularly, employees feel valued. Skills-focused training is an excellent opportunity for Leaders to do exactly that.
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