Employee Engagement

Employee Retention Strategies in a Tight Labor Market

By Jana Reserva

Sep. 2, 2022

Summary:

  • Effective employee retention strategies are crucial in today’s labor market when there are more available jobs than job seekers.

  • Flexibility is a primary factor for retaining current employees, but it can mean differently for employees depending on the industry and roles.

  • Technology plays a vital role in gathering data and feedback that can help measure employee satisfaction and spot potential issues that trigger employees to quit.


Retaining top talent is increasingly challenging these days. The labor market has a high worker demand, yet fewer employees can fill those positions.

“When we try to measure what a tight labor market is, we traditionally look at the number of vacancies, the number of employees looking for work, and we divide that by the number of unemployed people. Traditionally, the ratio is below 1, which means that there’s more than one job per person that’s sort of looking. What we have seen recently is that number is way up around 2, and that seems really high,” says Jack Light, Labor Economics Ph.D. Candidate at the University of Chicago. 

The pandemic also paved way for remote work to increase, which opened the door for employees to explore new opportunities. But for companies, this means tighter competition for talent. “There’s been a huge rise in remote roles. Suddenly you’re competing (for talent) not just in your local area, you’re competing with anyone in the US, for example,” explains Jack.

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With more jobs and a smaller talent pool, how do you retain top talent and increase your chances of attracting new employees? There are several ways to boost employee retention, but what’s challenging is implementing one that makes the most sense for your organization and people. Here’s how you can determine which areas to focus on to reduce employee turnover and ensure that your top talent stays.

How to determine the best employee retention strategy

The first step is finding out what causes attrition. According to a study, 3 in 4 employees who quit could have been retained by the employer, and most of the reasons are preventable such as job characteristics, work environment, career development, and work-life balance. These areas are well within the leadership’s control, and they can quickly improve these conditions by implementing changes and using the right tools.  

It’s always easy to assume that compensation is the main motivation for employees to stay in a company. However, that’s not always the case. What’s valuable to your team is not always as apparent as you think. Beyond a competitive salary and benefits package, below are other areas that can be equally valuable to employees.

  • Fulfillment or finding purpose in a role
  • Job satisfaction
  • Workplace culture
  • Relationships with bosses and colleagues
  • Company values
  • Processes such as onboarding
  • Flexibility

Once you understand what your employees value most, you’d be more equipped to make changes and create programs that can compel them to stay. 

Effective employee retention strategies that work

While trying to improve retention seems daunting, you don’t necessarily have to go in blind. Instead, you can take a closer look at certain details and metrics to devise specific steps that make the most sense for your teams and will likely reduce turnover rates. Some can be implemented immediately, while others can be useful for long-term plans and strategies. Let’s look at some of them and how you can tailor them around your business. 

Establish a feedback system

There are two sides to feedback that are crucial to employee retention. The first is feedback from employers about job performance. The second is feedback coming from employees regarding operations, policies, and colleagues. 

Both are important and should be gathered and addressed promptly.

Employees value feedback that’s immediate and clear. It helps them improve their work and shows how valuable their contribution is to the organization. 

Meanwhile, encouraging employees to provide feedback about the company and their tasks greatly helps with retention too. When employees are comfortable enough to share their thoughts on what works and what needs improvement, you’ll have a goldmine of insights on how to keep your best talent.

“The goal of gathering employee feedback is to try and surface low-hanging fruits that you can be actioning on that you may not otherwise be aware of,” says Light. “So it might actually turn out that a lot of your employees are struggling to get to work, for example, because there’s a bus route that’s been canceled. Or maybe you have a particular manager who many people are struggling to work with. Those are the sorts of things that are valuable from the perspective of an employee but can be quite difficult to find out.” 

That’s why having a healthy company culture that embraces feedback is crucial. And it shouldn’t stop at gathering employee sentiments. Another equally important part of the equation is the mechanism to act on them.

“If you don’t do anything with that data and that feedback, you’re probably going to get less and less of it as time goes on,” says Beau Grzanich, Business Consultant at Workforce.com. Transparency is key here. You need to inform your employees about the actions you’ve taken based on feedback they provided. Doing so will incentivize people to provide more information that can drive more results and benefits in terms of employee retention. 

The frequency of feedback is also important. Typically, companies do it regularly, quarterly, semi-annually, or annually. While this provides some structure, feedback tends to be more effective when it’s more fluid and immediate. Moreover, it doesn’t always have to be in a formal setting. It can be casual during quick catch-ups or can be done through automated tools like Workforce.com’s Shift Feedback and Rating feature

Equip managers

People leave managers, not companies. This is a popular phrase regarding employee engagement and retention, and for good reason. Data from Gallup shows that it takes more than a 20% pay raise to lure employees away from managers who engage them, while it takes almost nothing to poach disengaged employees.

Empower your managers to engage their teams effectively. One way to do this is to take off admin and repetitive tasks off their plate. Implementing the right technology can significantly help managers to work smarter and spend less time on tasks like scheduling, time tracking, labor forecasting, and payroll. As a result, they focus more on coaching their employees, understanding potential issues, and addressing them.

Offer flexibility

Employees tend to stay with a company that offers flexibility. But before you think about implementing policies around it, you first need to understand what flexibility actually means for your employees. 

Typically, people view flexibility as being able to control their work arrangements. This means having the option to work outside of the typical office setting and set hours, or being able to attend to important matters that typically warrant PTO or waiting until the weekend.

“An important thing to remember is that flexibility is often quite loosely defined. It’s much harder if you’ve got regular opening hours or you’re a retail store, and there are fixed tasks that need to be done and planned in advance,” explains Light. If that’s the case, how do you create a certain level of flexibility for hourly workers? 

Light says that offering a certain level of predictability is important for hourly workers. This means providing their schedules ahead of time, so they can plan their activities outside of work accordingly. In fact, data shows that employees who get their schedules a couple of days before their shift are more likely to quit compared to staff who receive their schedule at least 10 days in advance.

Create programs and perks that are valuable to your employees

Competitive benefits and perks can compel employees to stay with you. But again, the key here is to know what types of benefits they find valuable. Game rooms, free meals, and company-sponsored gym memberships are all nice to have, but those perks are not always strong enough reasons for employees to not look at job opportunities outside. 

Get to know your employees to understand what matters to them. Consider that you have employees who are probably in different life stages. Looking at your workforce’s demographics is a good first step to determining what programs you can devise that will make the most impact. 

For instance, how do you devise retention programs for millennials—a generation that’s known for being highly disengaged at work? According to Gallup’s study, a majority of millennial workers say that opportunities to learn and grow are extremely important to them when applying for a job. If you want to retain or attract this group, make sure that you provide them with plenty of opportunities to learn new skills – think of training programs, conferences, and other growth opportunities.

Whether it’s additional time off benefits, family activities, upskilling, professional development opportunities, or employee recognition programs, make sure that your benefits package includes items that make the most sense for your operations and where your employees are—both in tenure and life in general.  

While it’s not easy to figure this out, you can always do a drill down on data and employee feedback to determine the specific types of programs you can implement within the organization.  

Enrich your onboarding process

Convincing and attracting new hires is just half of the battle. The other half is making sure they stay. Employee onboarding sets the tone for a new hire, and you need to make it count to retain them. According to Gallup, 70% of employees who had exceptional onboarding experiences say that they have “the best possible job”. 

Employee onboarding is a crucial process where companies must deliver on what’s promised during the hiring process and integrate new hires into the role and organization. Successful onboarding is not attained overnight. It is a process that can last up until a new hire’s first year with the company. 

Here are some of the ways to make employee onboarding successful:

  • First, create a clear and intuitive onboarding roadmap. Define where you want your new hires to be at specific time frames, whether monthly or quarterly or what makes sense for your organization. Gather feedback about the process and iterate your roadmap and programs as you go along.
  • Incorporate onboarding programs that will allow employees to build initial rapport and cultivate healthy working relationships with other team members. It’s vital for new hires to feel included and part of a group.
  • Equip new hires with mentorship and training. New employees become more productive faster when they have the tools to learn and carry out their responsibilities.
  • Provide clarity when it comes to expectations and goals. Employees, especially new hires, become more efficient when they clearly understand their roles, career paths, and how they directly contribute to the organization’s overall success.
  • Use technology to organize onboarding files, keep track of employee details, and streamline new hire paperwork. This frees up more time for more critical parts of onboarding. Besides, no new hire would want to deal with a pile of documents to sign and information overload on their first day of work. 

Maximize the offboarding process to benchmark market trends

On the other end of the employee life cycle, you must also pay attention to your offboarding process. While it is the stage wherein an employee will transition out of the company, it can still help with your employee retention strategy

That being said, you also need to ensure that employees leaving the company will have a smooth exit. So maximize exit interviews and use them to gather feedback on what you can improve on and things that departing employees think will make current staff stay. Use this opportunity to understand their motivation for leaving. Is it career advancement, a more competitive salary, or burnout?

On the other hand, you can also use the exit interview to gain insight into their new job and what other companies are doing to attract and retain employees. Inquire about what compelled them to move. Is it a generous sign-on bonus, more comprehensive learning and development, or company culture

Exit interviews, in particular, are beneficial for benchmarking where people are going and what the wages are and working conditions are gonna be like in the firms that they’re moving to,” says Light. 

With this information, you can create benchmarks on how the market is, compare it to where you stand, and strengthen your programs and processes accordingly.

Technology and employee retention

The most effective employee retention strategy is not one-size-fits-all. What works for your organization may not be effective for others and vice versa. That’s why data and feedback are crucial in strengthening your programs for retaining your employees. 

“Something that’s particularly interesting at the moment is that the data is getting increasingly available in real-time and this concept of continuously listening,” remarks Light.

For instance, when you notice that an employee comes in late more often, the right tool can provide you with that information and even be powerful enough to ask your employee what’s happening. 

“Moving from the sort of survey done at fixed points in time to more proactively identifying when you need to be stepping in and checking in if everything is okay is super exciting,” says Light. 

Furthermore, technology significantly contributes to employee experience. It helps organizations streamline administrative processes so that managers can focus more on being on the ground with their teams and coaching their staff. It also helps employees perform their tasks better and more efficiently, allowing more opportunities for innovation or other time for training and development. 

Workforce.com is a platform that not just helps with every area of workforce management but with employee retention too. It provides efficiencies around demand-based employee scheduling, time and attendance, and labor forecasting. At the same time, it also helps improve the employee experience by providing staff with a straightforward way of clocking in, accessing their schedules, and filing leaves. Furthermore, it has real-time insights, shift rating and feedback, and an in-depth reporting functionality that can provide managers with actionable insights on key metrics. 

Book a call today if you want to know how Workforce.com can improve your workforce management and employee retention. 

Jana Reserva is a content manager for Workforce.com.

About Workforce.com

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