Employee retention is a hot topic in HR circles right now.
Gone are the days when employees would stay with a single company throughout their entire career. In fact, job hopping every few years is now seen as the norm, rather than the exception. For example, our research into employee satisfaction – carried out earlier this year – discovered that 45% of employees in the UK and Ireland were actively looking to leave their current role.
Indeed, that stat seems to correlate with wider industry-based research. For instance, Gen Z employees, who now make up 20% of the total UK workforce, are the most likely demographic to change jobs, with 53% of 18-24-year-olds having switched companies in the past two years alone.
Retaining Millennials isn’t much easier, either. It’s estimated they change jobs on average once every 2-3 years, and will even have 4 completely different careers throughout their lifetime!
Clearly, it’s becoming harder for organisations to retain their best and brightest talent, and this comes against a backdrop of a shrinking workforce and a cooling labour market. It would certainly explain why a recent report by Gallacher found that employee retention is the number one priority for both operations teams (51%) and HR (66%) this year.
So, what can HR teams do to increase their chances of retaining the employees they need to support ongoing success?
Employee retention: focusing on fairness and compensation
One area of engagement that HR teams must focus on – as part of any wider talent retention strategy – is fairness and compensation. This is because a key part of job satisfaction is that feeling of being fairly compensated and valued by your employer. This is where the symbiotic relationship between performance reviews and fair compensation come into play.
Regular performance reviews provide the avenue for managers to offer constructive feedback, acknowledge the achievements of employees, and set goals that motivate individuals to excel. When employees know what’s expected of them, can see their efforts are acknowledged and their personal development supported, a sense of loyalty and commitment to the employer usually follows.
However, although a strong performance and recognition-based culture is important, simply recognising achievement alone is not enough. Employees need to feel their dedication is reflected in their compensation.
Fair pay reviews, conducted in tandem with effective performance reviews, demonstrate an organisation’s commitment to recognising the value each employee brings to the table. When employees feel fairly compensated for their hard work and dedication, their motivation to stay and contribute more skyrockets.
With all that in mind, let’s look at the core elements required for more joined-up performance and pay reviews that will support successful employee retention strategies.
Ensure regular performance check-ins take place
Although annual performance reviews are still popular with many employers, regular 1-1 performance check-ins allow provide ongoing feedback throughout the year. This allows employees to make necessary adjustments and improvements in real-time and helps prevent any nasty surprises during any potential pay reviews.
Of course, line managers may find it difficult to make the time for regular performance check-ins – especially if they manage larger teams. Luckily, HRIS platforms with integrated performance management software can do much to overcome many of the administerial challenges associated with continuous performance reviews. They can also make check-ins an integral part of your organisation’s approach to performance management.
Systems like Cezanne HR, for example, provide a quick and easy way to record conversations, achievements and agreed goals or outcomes. This makes it much easier to ensure everyone is aligned and aware of progress against goals, targets or objectives. It also makes check-ins more effective with configurable appraisal forms, check-in templates and even a peer-to-peer recognition platform, Kudos.
When you’re able to both quickly and accurately record information about the true performance of your employees, you’ll be able to use the data you collect to make better-informed decisions – especially when it comes to designing effective compensation and reward strategies.
Set SMART goals and track progress
Along with facilitating regular performance check ins, you should also encourage your line managers to set their employees SMART (Specific, Measurable, Achievable, Relevant, Time-bound) objectives, and then track their progress against them. This will also give you accurate information you can use when designing your own compensation strategy.
Setting employees SMART objectives is crucial as they align individual employee performance with organisational goals. Additionally, having clear and measurable objectives also link to your company’s compensation strategy by creating tangible, measurable results to refer to. This promotes fairness, transparency, and provides a stronger incentive for employees to contribute effectively to the company’s key objectives.
Conduct salary benchmarking and analysis
Even if you have a brilliantly structured, transparent and fair way of measuring performance in your business, employees won’t stick around if they believe they’re not being paid a fair market rate for their efforts. This is where salary benchmarking and analysis comes in.
Investigating and benchmarking the compensation and benefits packages offered by your competitors and companies in similar industries is crucial. You should also consider pay range comparisons based on role level, geography, industry and your organisation’s own compa ratio metrics.
Doing all that will help you in offering fair pay for your employees and ensure you’re not paying unsustainable or unattractive levels of pay. It can also help boost levels of retention as your staff will know they’re also receiving a fair deal for their own in-demand skills and talents.
Consider people-centric planning
Your line managers will play a critical role in any performance and pay review strategy you decide to implement. After all, they’re close to their teams and will have a good understanding of company budgets. This means they’re perfectly placed to evaluate their employee’s performances and offer valuable insights on how to distribute potential pay rise budgets or bonus allocations – alongside your benchmarking data and pay compa ratios, of course…
Having a digital approach to compensation planning can be hugely beneficial with this side of your planning. For example, Cezanne HR’s Compensation Planning module provides that all-important people-centric approach and empowers your line managers to be the centre of your fair compensation plan. It also offers staggered approvals and oversight from HR, ensuring everyone is aware of what’s required of them, and what needs to be done.
What form will recognition take in your business?
Alongside fair and consistent compensation, recognition is also a critical part of any employee retention strategy. Recognition helps employees see their company values their contributions to the successes of both their teams and the wider organisation – all good for healthy levels of retention.
But, what form should recognition take in your business: peer-to-peer? Or something more formal? Also, what kind of rewards will you offer? Experiential or cash bonuses? And most importantly, what should employees be recognised for? All these questions will need to be answered!
Remember: to ensure recognition supports improved retention, regular acknowledgment and appreciation of employees’ efforts and achievements must take place – they shouldn’t just be left to annual performance reviews. And, aligning recognition with your company’s values and goals can support its culture, whist offering personalised and meaningful rewards will help foster motivation and engagement.
Conduct exit interviews
Last – but by no means least – remember to conduct exit interviews with staff who have decided to leave your organisation. The exit interview is the perfect time and place to discover the real reasons people decide to take their valuable skills and experience elsewhere. Plus, your leaver’s answers can help you gain a deeper understanding as to what employees feel is going right and wrong with performance management in your business, as well as their views on pay and compensation.
To learn more about the questions you should ask during an exit interview, just follow this link.