Article

The jobs market is more competitive than ever before, and it’s presenting huge challenges for businesses.

Not only is it harder to recruit staff, it’s also more difficult to retain them. A combination of talent shortages, the rising cost of living, new and flexible methods of working, and the changing attitudes of younger workers are all combining to form a labour crisis, particularly among small and medium sized businesses.

While there are some areas of employee retention that your business may not be able to compete in, retention doesn’t have to be a particularly expensive or laborious process. By managing your workforce more effectively – and making tactical investments to improve happiness and progression – you can quickly engender loyalty towards your business, and prevent a sudden exodus of talent.

Why employee retention is difficult

The current issues faced by businesses are a culmination of different circumstances, all of which have come together at an inopportune moment. Inevitably, one of these circumstances is the coronavirus pandemic. While most businesses have now recovered from the impact on their bottom line, the environment for employees has changed drastically. Many people’s perspectives have changed, and after two years of lockdowns and halted career progression, a lot of employees are looking for a change of scenery.

The other big issue created by the pandemic is remote working. The ability to work remotely was highly necessary in many industries, and saved many businesses, as well as catapulting some into the 21st century. For all the benefits it has brought, however, it has also massively opened up the labour market. Where jobs were previously tied to offices, many companies are now offering part-time or full-time remote working positions. 

This means that many people who live outside of major cities, for instance, can now work remotely for businesses in those cities, rather than needing to work locally. This is potentially advantageous for businesses, in the sense that you can recruit more widely if you’re comfortable with remote working. But it also means that many businesses in the same sector are now recruiting from the same pool of talent, regardless of where they are based.

Another factor in this is Brexit. While the topic has been done to death, the reality at this point is that hiring employees from abroad can be prohibitively difficult and costly. Not only do fewer people want to come to the UK than before, but businesses need to offer a high enough wage to meet visa requirements, be willing to sponsor the individual, and be able to demonstrate that they searched for local talent first. All of this makes recruitment more time consuming and more expensive, and elevates the existing risks of hiring from abroad.

These problems with recruitment and retention can create something of a vicious cycle. When businesses struggle to recruit employees, the workload on existing employees can increase. Unless this is effectively managed and mitigated, this added pressure on existing employees can cause them to become unhappy, negatively affecting their productivity and making them consider leaving. The business then not only has to replace them, but to suffer the effects of reduced output for the remainder of the time they are working there.

How to improve employee retention

Thankfully, there are steps businesses can take to help retain employees. While some of these are pragmatic – and obvious – they are all fundamentally about improving people’s happiness, ability, and sense of importance and self-worth. In this way, many of them are steps you should be taking even if you don’t currently have a staff retention problem.

1. Conduct regular reviews

Effective performance reviews and appraisals help employees to feel seen and valued, to give them feedback and targets to work towards, areas to improve, and rewards for a job well done. These shouldn’t be so regular that they feel stifling, but at natural points, either annually or after other significant milestones.

Employees who receive reviews (which are conducted in a positive manner) will tend to feel a more tangible sense of progression, and a better sense of their value to the company. They may also expect a wage increase, but this should be mutually agreed and merited. Being proactive about reviews can actually lead to lower wage demands, with employees feeling happier, and thus minded to ask for smaller incremental improvements.

1. Provide a clarity of purpose

Employees need to know that they are working for an ethical company that aligns as much as possible with their beliefs, and has a clear and compelling mission statement. Both in your work and your interactions with employees, you should strive to evidence what it is your business is aiming to achieve, and demonstrate progress towards this. 

You should also ensure all employees have a clear understanding of their own roles and responsibilities, and how these fit into the cohesive whole. Feeling that they are part of something bigger than themselves will make staff feel more included, and part of an ongoing journey towards something more positive and impactful.

1. Show strong leadership

Great leaders not only communicate what needs to be done, but why it needs to be done. By providing the context for your decisions – and clearly communicating a plan and pathway towards success – you can give employees a sense that the company is trending upwards. This clarity of vision not only demonstrates the stability of the business, but helps to convince people that things can only get better.

Employees leave businesses for a number of reasons, and some of these will be personal. In many cases, however, it is a matter of professional ambition, and feeling that they have outgrown the business they work for. If your leadership projects confidence in the growth of the business – and emphasises the importance of your staff in that growth – they are going to want to stay to benefit from that.

1. Manage people effectively

Managers play a crucial role in identifying and mitigating any issues among employees, and making people feel that their work is appreciated. A manager shouldn’t just be there to impose deadlines and ‘crack the whip’, but to provide the structure and support that people need to do their jobs effectively. 

Managerial and leadership training can help to develop key communication skills, and the ability to share your time equally between employees. Managers should ultimately aim to organise and encourage employees in a way that makes their lives easier; the environment should be so conducive to good work, that they feel they may be worse off somewhere else.

1. Foster a positive working environment

Work environments need to be conducive to actual work, not beholden to some utopian ideal. Offices have gone through an era of private cubicles and then open-plan spaces, yet neither has met with obvious success. Individuals will always differ, but for most industries, an ideal workspace should provide some quiet and enclosed spaces while also having colleagues close at hand. In short, people should be trusted to get on with their work, but have the capacity to consult others, and work together to solve problems.

You should also strive to create an environment in which people feel empowered to speak up about any issues, and confident that they will be resolved. This last part is key: it’s one thing to encourage feedback and create strong lines of communication, but employees need the confidence that their thoughts and concerns will be taken seriously and followed up on. There’s nothing worse than a company that pays lip service to issues such as burnout, for example, without addressing the root causes of the issue.

1. Offer sensible perks

Perks are a great sweetener for employees, but they have to provide tangible benefits. Many businesses get perks wrong by aping the sorts of things that Silicon Valley firms offer their employees. But just because a successful business offers something, it doesn’t mean that your employees will value it – or that those successful businesses have even got it right.

Make sure to give people perks they actually want, not things you think they’ll want. A rec room and on-site catering are no good if nobody’s going to use them, so don’t waste money on things without consulting people. If lots of your employees have children, for instance, a creche will be much more useful than an adult ball pit. 

In short, provide perks that add something to people’s lives – and aren’t just there because they’re trendy, aesthetically pleasing, or the done thing for businesses in your sector.

Retaining and recruiting employees isn’t a simple or one-step process. Instead, it’s a matter of making multiple, incremental changes. The thing they all have in common is making employees feel valued, and giving them a sense of belonging. This starts with strong leadership and strong personal relationships – presenting a compelling plan for their future and yours.