“Our belief is that if you get the culture right, most of the other stuff, like great customer service or building a great long-term brand or empowering passionate employees and customers, will happen on its own.” – Tony Hsieh
Not only is retention a foundation for customer growth, but retention of employees itself has become the defining determinative factor for overall company growth.
Join us as we dive deep into the final core HR best practices of our Small Business HR Benchmark Report as we examine the last steps of the employee lifecycle, Employee Retention, and Post-Employment. Just as the employee journey begins before an employee is hired with the best recruiting practices, it also spans beyond that employee leaving the company.
Employee retention is an art form that requires dedication, ongoing support processes, and commitment. After going through the process of hiring and developing an employee, the worst thing a company can do is let great talent slip through the cracks by not actively working to retain them. If top talent and strong employees are leaving your company, a detrimental domino effect can come into play, leading to a larger employee exodus. Another reason to double down on retention, with recognition programs and new career growth opportunities, is that it is a money saver and growth opportunity generator. Having to repeatedly recruit, hire, develop, and train a new hire can hurt a company’s bottom line as, when an employee leaves, it costs an organization two and a half times their salary to replace them.
However, even with great retention practices, turnover at times is inevitable. Sometimes life happens, and an employee has to move or leave a job for various personal reasons, and it is in this scenario where fast-growth companies truly lead the pack. Our study concluded that fast-growth companies consistently demonstrate best HR practices throughout an employee’s entire lifecycle, and because of this, they can count on employees to leave with a good taste in their mouths and serve as positive ambassadors for the company, even after their final day on the job.
Ways to Focus on Retention
So what are the specific things fast-growing businesses are doing to retain employees and ensure positive post-employment relations? Let’s explore.
It’s one thing to hire a great employee but another to retain them. Our HR Benchmark report found that eight in ten fast-growth companies utilize the power of surveys to keep their finger on the pulse of employee satisfaction within their organizations. Engaged employees are often happy ones, but employers should never just assume satisfaction; they should sit down and ask.
Employee surveys are an incredible tool for retention when used correctly, and in order to be effective, it’s important for companies not to shy away from asking hard questions. Sure, not all feedback will be positive, but even negative feedback is valuable. Often, it’s the most valuable. Employers will see patterns in their survey data that will give insight into how they can adjust to improve. It’s also crucial to remember that it’s not about collecting the data; it’s about taking action based on what’s done with it. Employers must digest the survey data, and if they want to maintain strong morale and employee trust, transparently communicate how they will implement changes or new programs based on the shared feedback.
Where do you see yourself in five years? This is a question many employers ask in the interview process. However, many do not provide employees with what that career path could look like within their company. When asked, we found that 75% of fast-growth companies provide career path coaching for employees compared to only 44% of down-year companies providing similar career planning tools. So, what is career pathing? Simply put, having and presenting employees with a number of defined career paths within a company matters, from linear promotions to what it could look like to move across departments. Movement and growth are incredibly important to strong employees, so presenting them with career pathing helps them align with a greater purpose and provides a defined, transparent understanding of all the potential avenues to success within a company.
An “Employee of the Month” award is not just an award you see in movies. Having an engaging employee recognition program is vital for company growth and culture. Among the companies we surveyed that identify as fast-growing businesses, nearly 20% are more likely to have an employee recognition program than those with a flat or down year. As an employer, company morale and culture should be an intentional thread woven through everything you do, and a great way to achieve this is by making sure that you both show and tell your employees when they are doing a great job. Whether it’s awarding a stand-out employee with an extra day off, a special coffee cart once a month, or their picture on a wall, employees who feel supported and see are often more engaged. That engagement almost always leads to company growth and success.
We’ve all heard of an “exit interview,” but our research has found that 64% of fast-growth companies conduct “stay interviews.”
What is a stay interview? It’s regular and intentional conversations between employees and supervisors to discuss how employees are feeling about the company. These conversations, as with employee surveys, shouldn’t shy away from difficult questions but should instead dive into topics like what an employee likes about an organization, their suggestions for change, and how they feel about their career path at the company. These regular check-ins are important for employers to get a true sense of where an employee stands and also, like employee surveys, must be acted upon in order to support the retention of employees.
Sure, department teams and groups may meet and regularly connect, but many times employees can feel disconnected from the overall company. Another tool that drives employee retention is company-wide meetings. Our small business HR benchmark report found that fast-growing businesses are 20% more likely to conduct company-wide meetings than shrinking businesses. Regular company-wide meetings offer transparency and a clear line of communication that employees crave. By utilizing these meetings to help employees feel engaged and informed, companies are taking another active and necessary step to retain top performers.
Getting Post Employment Right
Employees leave companies for several reasons, from a simple relocation to a wrong fit or a toxic manager. However, even after they clock out on their last day, the sentiment and word-of-mouth experience they take with them can still affect the company for months and years to come. So, what can a company do to navigate this process? Succession Plans, Exit Interviews, and Termination Letters.
As we’ve said, turnover within a company is inevitable. And whether it be for a good or bad reason, it’s critical that employers realize that turnover comes with the territory and to prepare for it. By crafting succession plans, 31% of fast-growth companies stand out from their down-growth contemporaries. Particularly with executive or leadership positions within a company, succession plans are critical. By taking a step back and creating a plan of who will absorb what responsibilities in the event of a departure, you are able to capitalize on the institutional knowledge your current employees possess and leverage potential career advancement opportunities to gain trust and boost morale. It also allows you time to identify and address any skills gaps that employees within a succession plan may have before they step into a new role or take on new responsibilities.
While conducting an exit interview may seem like just a box check, we believe that it is actually an incredibly useful tool to inform company practices and that it can sometimes even help retain talent. When conducting exit interviews, our survey found a 20% spread between the fast-growth businesses that do so and down-growth businesses that do not. This tool helps employers assess why employees are leaving and allows them to track patterns within that data to make organizational changes as a means to reduce turnover. Additionally, we’ve found that by having a transparent and open conversation with existing employees, employers have sometimes been able to work with them on an arrangement that allows them to stay at the company, like switching managers or working remotely.
Our data shows that fast-growth companies are 20% more likely to provide exiting employees with a termination letter than businesses with a down year. This may seem like a no-brainer, but termination letters are not legally required in a number of states. However, from a compliance perspective, sharing a termination letter is always best practice. As a way to show employee support up to the very last minute and mitigate any risk of a disgruntled former employee speaking poorly of the organization, it’s also important to provide the exiting employee with factual and clear details on various programs and post-employment details you anticipate they may have questions about like rolling over 401k plans, extending healthcare and final pay date. It is equally important to ensure compliance here to avoid lawsuits and legal fees that can cause major financial hardships for growing businesses.
As we round out our look at the eight best practices of HR, it’s easy to see why fast-growth companies excel in each and every category.
How You Do Anything – is How You Do Everything
And again, those companies that view and operationalize employee-centric HR fundamentals as a strategic asset core to their culture and growth strategy experience stronger growth results versus those that approach HR as a transactional and compliance-driven model.
All of these best practices are part of a whole that, when implemented consistently, almost always leads to happier employees and company success. From recruitment to retention and post-employment, leading with an employee-first approach makes all the difference.
To learn more about employee retention and post-employment best practices, along with the fuller best HR practices report and findings, watch the Webinar.