Although a certain level of staff turnover can be healthy for an organisation, the truth is that management is never delighted to see a high-performer leave. The direct and indirect costs of losing such an individual can run into thousands of dollars — and the research underscores this. For example HCI research indicates that, at a minimum, the cost of losing good talent is 1.5 times the employee’s fully loaded salary (pay, benefits, etc.). Furthermore, talent management thought leader Dr. John Sullivan quantified that when a top performer does leave, it costs the organisation £4350 a day to operate without them if they’ve been in a strategic position. There are also other costs related as well, including administration, recruiting a replacement, covering the position, orientation and training costs for the new employee, not to forget the impact on company morale.

Once a skilled employee leaves, there’s no guarantee that a replacement will be easy to find. According to ManpowerGroup’s Global 2012 Talent Shortage Survey, “One in three employers (34 per cent) continues to experience difficulties filling vacancies due to lack of available talent.”

Research by PwC states that, “the UK’s failure to retain talent to the level of other mature economies costs British business around £42 billion per annum” *. Richard Phelps, human resource services partner at PwC, comments: “Companies often vastly underestimate the financial benefits of retaining existing employees.  With many businesses eager to maintain or grow staff levels as the economy starts to recover, it is crucial they consider the full costs of losing staff through resignation.”  

Engage, retain through non-monetary means
While recognising the high costs associated with losing an essential staff members is important, implementing key retention strategies to keep your top talent working for you is even more critical. The question is what will encourage employees to stay and what will entice them to look elsewhere?

Although some believe the impetus for staying or going is driven by compensation or monetary rewards, this is not always the case. Other non-monetary incentives can resonate just as strongly with employees. Some of these incentives include learning and development opportunities, support and recognition, and opportunities for career progression. This is, indeed, good news for companies that can’t afford to hand out generous pay raises and sizeable bonuses.   

If your company’s operating budget won’t allow for additional financial compensation, there are several practices you can adopt to help keep employees satisfied, productive and loyal to your organisation.

Offer career opportunities
Many employees now view their relationship with their employer as a partnership — one in which they expect their organisation to commit to developing and enriching their skills and experiences. More importantly, individuals need to feel that they have a future with an organisation, including a solid career path.

Employee career development can take many forms, including formal courses, more challenging work assignments, stretch goals, and coaching and mentoring programs. The benefits of realistic and carefully thought-out development planning include:

• improved employee morale, engagement,
• productivity and retention
• preservation of organisational memory/knowledge/
• domain expertise
• sustained competitive advantage

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Tip: Recognising that all individuals are unique and have different and ever-changing career aspirations, organisations should encourage ongoing dialogue between managers and employees (not just at annual review time) to revisit career paths, review development plans and track progression.

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Don’t shy away from recognising success
All of us, at some point or another, crave feedback and recognition for a job well done. Regardless of where an employee is in their career lifecycle — new hire, long-time employee or something in between — a few words of appreciation from a manager can go a long way to increase morale. Best of all, many kinds of recognition are free. For example, in addition to verbal recognition, managers can show appreciation through email (and copy upper-level management), thank you cards, and public recognition at formal staff meetings.

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Tip: A note of recognition or appreciation sent via email provides individuals with a written record of feedback, which can be used to guide discussion and support decisions at annual appraisal time. 

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Give employees meaningful feedback on an ongoing basis
Research consistently shows that employees crave meaningful feedback on an ongoing basis. So how do you encourage such dialogue and make it an integral part of your organisation’s work culture? One way is to introduce quarterly employee reviews. Although these meetings won’t typically be as long or detailed as the formal annual performance review discussion, they will provide a structured forum for checking progress and for giving employees the feedback they want.

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Tip:  Feedback from multiple sources provides a broader and more objective view, and helps managers and employees get a more accurate view of performance. A best-practice approach for securing these insights involves gathering 360-degree feedback from peers and other managers — and even external stakeholders such as clients. 

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Summary
While the retention strategies listed in this article are a good place to start, they’re by no means exhaustive. For example, your retention strategies might also include life-style related incentives such as flexible scheduling, telecommuting, compressed work weeks, time off in lieu of overtime, fresh fruit baskets in staff kitchens and other perks your employees find appealing.

What is most important to remember is that some of the most successful retention strategies aren’t just about compensation but rather building an work culture where employees feel they are respected, appreciated and a valuable member of the organisation — today and in the future.

*PwC Saratoga Human Capita Effectiveness Report, 2010.

Sponsored contribution by Sean Conrad / Halogen Software

Sean Conrad is a Senior Analyst with talent management vendor Halogen Software. He regularly writes on employee performance and talent management trends and issues in industry magazines and on the Exploring Talent Management Blog.

Photo credit: Halogen Software