Good employees are hard to find. And keeping hold of them is also an art in itself. It does not take a shortage of skilled employees or an employees’ market for a company to know that employee retention pays off. The best talents in the market are always heavily contested.
What is employee retention? What are the different types of employee retention?
In his book of the same name, management consultant Gunther Wolf defines the concept as follows:
“Employee retention refers to the degree of solidarity between the employee on the one hand and the organization as a whole on the other.”
A bond is generally good when a close relationship exists between two or more parties. There are therefore always at least two parties involved in a bond. And it must be based on reciprocity.
When it comes to employee retention, employees are always on one side and the “organization as a whole” (the company) is on the other. This other side is usually represented by the management team. This is also referred to as management retention.
Company retention, team retention and task retention also exist in addition to management retention. It is a matter of personality which of these four types of retention is most important to employees and which motivates them the most.
While some people consider the satisfaction of or with their manager or the image of their company to be of greatest importance, others are more concerned with the team or the fulfillment of their allocated tasks. In this analysis, employee retention always stems from a combination of the four types of retention.
In addition to this model, which helps us to place the concept of retention in a practical framework, there is another well-established approach that also divides employee retention into four categories:
1. Perspective loyalty (this includes possibilities for promotion and further training, among other things)
2. Emotional loyalty (this includes appreciation and relationships, among other things)
3. Normative loyalty (this includes shared corporate values and visions, among other things)
4. Rational loyalty (this includes remuneration and retirement provisions, among other things)
Why is employee retention so important?
The fact is, it costs less to keep existing talented employees than to find new ones. It also takes a little time before new employees start working productively. If a company constantly has to train new people, in many cases it may not even get past the first productivity hurdle.
This is precisely where employee retention comes in: new and existing workers are retained in the company for as long as possible by strengthening their loyalty to the company.
And the stronger the relationship between employees and the company, the
➜ lower the fluctuation rates
➜ lower the recruiting and onboarding costs
➜ lower the absenteeism rates
➜ higher the productivity
➜ better the corporate culture
➜ higher the employee satisfaction
➜ greater the corporate success
➜ better the employer branding
This list (which is probably not complete) shows how important employee retention is and the potential consequences of a lack of retention (keyword: "Quiet Quitting”). Therefore, it pays to invest specifically in employee retention.
What influences employee retention?
The two most important factors influencing employee retention are:
1. Recruiting, i.e. selecting the right talents
2. Employee satisfaction as a long-term basis for a successful relationship
The first point shows that employee retention does not begin on the first day of work. To ensure employee retention, you need to already pick the right people when hiring. In more specific terms, this means aligning the expectations of both sides, i.e. the company as well as the potential employees.
A practical example is given below:
After the first rounds of recruitment for a particular job, applicant A and applicant B remain. They both have the specialist knowledge required for the job. They both have relevant experience. They both appear to be highly motivated, but there is a slight difference: The salary expectations of applicant A are well above budget and she would prefer to work from home than in an office with a dog.
If we only have limited leeway with our budget and two office dogs are regularly welcomed happily in the office, we already have two expectations that we probably cannot fulfill, which would not be beneficial for the bond.
The example shows that, if expectations are already managed during the selection of new colleagues, good conditions are created for employee satisfaction, which creates a better basis for successful employee retention.
Which brings us to the second influencing factor: employee satisfaction.
Why does nothing work without employee retention?
There can simply be no employee retention without satisfied employees. Employee satisfaction is the basis on which employees develop retention for their company in the first place.
Satisfied employees...
… feel challenged in a good way by the tasks assigned to them.
... are interested in what they are doing.
... have what it takes to do their job well.
... identify with the company and its values.
... like their workplace and are happy to go to work.
... feel adequately informed and valued.
... feel comfortable in their working environment.
... know what is expected of them and enjoy completing tasks and solving problems.
The following aspects, therefore, have an influence on employee satisfaction:
- The activity and tasks
- The working conditions
- The salary
- Job security
- The company culture
- The management style
- Expectations
- Freedom and creative leeway
- Further development and training
Since employee satisfaction is the cornerstone of employee retention, actions to enhance employee retention are always aimed towards employee satisfaction as well.
What measures can be used to promote employee retention? The 6 pillar model
The 6 pillar model, which divides measures into six areas, was created to provide a framework for the many different activities involved in strengthening employee retention:
1. Work organization and environment
2. Health, sport and leisure
3. Personnel development
4. Employer branding
5. Corporate culture and communication
6. Perks and benefits
1st pillar: Work organization and environment
Are your employees happy to come to work? Do they feel comfortable in the office, on the shop floor, in the warehouse, behind the counter?
Five examples of actions that can be taken so that you can answer “Yes” to these questions:
★ Arrange your break room so that it is attractive and comfortable.
★ Modernize the workplaces and equip them with everything necessary. An ergonomic chair is a real benefit in the office, and a modern POS system at the sales counter is a great asset. If in doubt, simply ask your employees.
★ Support your employees with mobility solutions such as tickets for public transport or shuttle services from stations.
★ Create a better work-life balance for your employees with hybrid working models.
★ Ask your employees regularly how you can make their life simpler.
2nd pillar: Health, sport and leisure
How well do your employees manage to find a balance between tension and relaxation? How well do they look after their own health?
Four examples of actions that can be taken so that you can answer “Yes” to these questions:
★ Offer effective programs for physical AND mental health.
★ Organize outdoor team events to create a balance and to help with team building.
★ Invite nutritional and health experts to your company and organize a health day or related event.
★ Offer solutions for managing day-to-day stress and make sure that your employees’ workspaces are ergonomic.
3rd pillar: Personnel development
Can your employees develop individually? Do you support them in this? Do they see perspectives at your company?
Five examples of actions that can be taken so that you can answer “Yes” to these questions:
★ Check whether a management position can be filled internally before looking elsewhere. Promotions can be a great motivator.
★ Provide training and development budgets for your employees. A fixed training budget per worker can be helpful here.
★ Work actively on the leadership skills of your management teams (e.g. by appointing a professional coach to support them).
★ Make your employees’ day-to-day activities more interesting with job rotations and encourage a broader sharing of knowledge.
★ Specifically promote and challenge talented new (management) staff as part of a high-potential program.
4th pillar: Employer branding
Do potential new and existing employees find your company attractive? Are your employees proud of working with you? Do they enjoy telling other people about it?
Five examples of actions that can be taken so that you can answer “Yes” to these questions:
★ Define the values upheld by your company and describe how they can and should be experienced day to day. Set a good example together with the management.
★ Take part in career fairs to position yourself as an attractive employer in the market.
★ Organize an open office day or allow students to take a look behind the scenes, for example, as part of a tour of the company.
★ Be active in professional networks and on review sites. Take any feedback that you receive there (and elsewhere) seriously.
★ Consider a referral program for your employees, rewarding referrals that actually result in employment, making them more attractive.
5th pillar: Company culture and communication
Do your employees consider themselves to be part of the bigger picture? Do they identify with your company and its values? Are they involved in your team and are they happy to take their own initiative?
Five examples of actions that can be taken so that you can answer “Yes” to these questions:
★ Make sure that there is positive, constructive cooperation in the team, including and in particular with managers.
★ Promote constructive conflict management. Conflicts cannot be avoided but the way they are dealt with determines whether they are perceived positively or negatively.
★ Get involved outside the company as well. Sponsor local clubs or give your employees an extra day off to take part in charitable activities in the area.
★ “Do good and talk about it” - take this age-old saying to heart and tell your employees and customers about your successes, on social media, on the Intranet, in the employee magazine and on your website. Make sure that they are proud of you as an employer or partner.
★ Promote transparency in your communication in general and talk as openly as possible about difficult issues.
6th pillar: Perks and other benefits
Do your employees receive benefits because they work with you? Can all your employees find the right benefits for them? Do they actually know about the benefits?
Five examples of actions that can be taken so that you can answer “Yes” to these questions:
★ Allow your employees to have time for themselves, for example in the form of training, mental health and social impact days.
★ Grant them free access to offers that also support their development outside of work.
★ Cover the costs of your employees’ personal phone and Internet, particularly when they also work from home.
★ Contribute to the cost of daily meals or cook together in the office if the budget is tight.
★ Negotiate special discounts with businesses such as gyms, and with swimming pools, spas, hotel associations, car dealers, mobile phone providers, etc.
If you are still not sure where to start, we recommend that you consult our Guide “Five steps to better employee retention” (german).
We have summarized some more ideas for improving mental well-being within your company in our Guide “Thirty-one activities for enhancing mental well-being within the company” (german) and have divided them up according to the investment required.
Conclusion
Happy employees make for happy customers. Therefore, companies today simply cannot ignore issues such as employee satisfaction and retention. Happy, satisfied, loyal employees add value to a company regardless of whether there is a shortage of skilled employees. It is always worth making the investment.
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