Employee retention: Why it is so important and how to achieve it!

Mitarbeiterbindung wird immer wichtiger

For many HR managers, employee retention is one of their key areas of activity. But how can qualified employees be retained in the company in the long term?

For many HR managers, employee retention is one of their key areas of activity. But how can qualified employees be retained in the company in the long term? We show which forms of employee retention are common and which measures lead to success today.

The most important things about employee retention at a glance:

  • By definition, employee retention management is about increasing internal employer attractiveness and making employees feel connected to the company.
  • Staff retention is an effective measure against waves of resignations, for reducing absenteeism and for maintaining know-how in the company.
  • There are emotional and rational forms of employee retention, although a combination of the two is often successful.

That’s why employee retention is a top priority

Mitarbeiterbindung als Maßnahme gegen die Kündigungswelle
Employee retention is an effective measure against waves of resignations. (Image source: https://www.freepik.com/free-photo/view-unrecognizable-businessman-leaving-office-after-losing-his-job_26346316.htm by Drazen Zigic)

According to various experts, the Corona pandemic has changed the working world and the mindset of many employees - and this has also led to an increase in the number of layoffs. The reasons include:

  1. Many employees – driven by experiences with remote work and the like – would long for a breath of fresh air in their professional lives.
  2. According to the specialists, the economy would slowly recover and companies would be motivated to look for talent to advance their business.
  3. Added to this are all the planned job changes that were postponed because of Corona and could now be put into action.

If these predictions come true, the issue of employee retention will become a particularly high priority for many companies and a key competitive factor.

Definition: What is employee retention?

Simply put, employee retention is about retaining employees using appropriate tools.

This area of responsibility is assigned to human resources and is also known as retention management. Retention means “keeping” or “binding”.

The focus is on internal employer attractiveness, which is achieved through internal Employer
Branding
can be increased. Employees should feel connected to the company, enjoy coming to work and feel so comfortable that they do not even consider changing jobs.

Objectives of retention management

Why should you retain employees long-term? Successful retention management offers numerous advantages:

Was sind die Ziele von Mitarbeiterbindung?
One of the goals is to reduce employee turnover (Source: fizkes – Shutterstock.com)
  • Lower staff turnover
  • Preservation of know-how and quality assurance
  • Improving the working environment
  • Reduction of absenteeism
  • Less recruitment effort and associated cost savings
  • Increase customer loyalty through unchanged contact persons

Not only the company benefits from employee retention, but also the employees. Employees spend a lot of time at work, and if they feel well looked after and part of the company, this has a positive impact that extends into their private lives.

Different models for employee retention

There are different ways to retain employees. The main distinction is between an emotional and a rational approach. Both can be successful in their own way, and a combination of the two models is also possible.

Emotional employee loyalty – meaningful alignment of activities

Many employees long for meaningful work. Purpose-driven recruiting By designing work in such a way that it is perceived as motivating and meaningful, companies can retain the appropriate specialists. In addition, as part of emotional employee loyalty, attention should be paid during the recruiting process to ensuring that the candidate's values and goals match those of the organization.

Rational employee retention – creating external incentives

The rational approach is about retaining employees through material incentives. For example, through a salary increase or Corporate Benefits such as home office or company car. Emotional retention measures are considered to be more sustainable and economical than rational ones. For example, someone who only joins a company because of a high salary will leave for the same reason as soon as a competitor offers more money. However, a unique corporate culture with which the employee identifies cannot usually be easily outbid by a competitor.

The challenge with the two approaches

The problem with both options: Individual emotional or rational measures to promote employee loyalty always target only one group or individual within the workforce.

By offering a home office option, you can only appeal to those who want it, while others would like to come to the office and would like to see improvements there. Still others want emotional bonding measures - for some, greater appreciation from management is important, others want to have more of a say in shaping the company's vision, etc.

Organizational commitment

Es gibt verschiedene Arten von Mitarbeiterbindung Commitments
With affective commitment, employees identify with the values and goals of the company (Image source: fizkes – Shutterstock.com)

The psychological connection of employees to a company, also known as commitment, can be strengthened through emotional bonding measures as described. However, in addition to this, there are affective commitment, in which employees want to work for an organization because of their identification with its goals and values, according to John P. Meyer and Natalie Jean Allen, there are two other forms of commitment:

  • Calculative commitment: The employee stays with the company because he thinks that it is sensible to do so and that a change would involve costs and effort.
  • Normative Commitment: The employee feels obliged to stay with the company, for example because a relative has already worked there for a long time and has always been loyal to the organization.

At first glance, these two forms of commitment do not require any effort on the part of retention management. The employees stay in the company of their own accord. However, appearances are deceptive. Employees who remain "loyal" to a company only out of fear of unpleasant consequences or just out of blind loyalty are generally not very committed and sit out their working hours, for example, purely out of a sense of duty.

The aim of employee retention measures should also be to increase the motivation of these employees and thereby their commitment.

Measures and ideas to increase employee loyalty

At a glance – what can you do to retain employees?

Rational employee retention measures:

  • Salary increase
  • Company car / job bike
  • Home Office Offer / New work concepts
  • Staff discounts
  • Modern equipment / workplace
  • Social benefits
  • Bonus payments
  • Opportunities for advancement
  • Corporate health promotion & retirement provision
  • Further training opportunities
  • Offers for parents (company kindergarten etc.)

Emotional employee retention measures:

  • Appreciation by managers
  • Modern working structures
  • Team building / team events
  • Participation rights
  • Promoting internal knowledge transfer
  • Promoting sustainability
  • Employee surveys
  • Participation in the development of corporate values
  • Idea management
  • Social Responsibility

Of course, the list is only a rough overview – there are many other options that can be used to retain employees in the company.

Different levels of employee engagement

It is advisable to approach retention management in several phases and to focus on the essential pillars. The following 4 steps provide a good structure.

Die vier Phasen beim Retention Management
A structured approach is crucial for success in retention management (Image source: Worawee Meepian – Shutterstock.com)

1) Analysis: First, an analysis of the current situation should be carried out in the company. The aim is to identify the current risk of employees leaving the company. In addition, employees and teams should be identified who are important for the company's long-term success and should therefore be the focus of employee retention measures. A competitive analysis is also required - how does the organization stand in the market?

2) Objective: After the analysis, it is a matter of setting goals. For example, this could involve reducing the turnover rate by a certain percentage or increasing employee satisfaction in feedback surveys by a certain number of points.

3) Implementation: Depending on the objective, suitable measures for employee retention must be selected and applied. As already described, the scattergun approach does not work in retention management, because a certain (rational or emotional) retention measure is important for employee A, while another is important for employee B.

4) Evaluation: Of course, the measures taken must also be evaluated. If they are successful, then you need to keep at it and continually improve the retention rate. If they are not successful, the measures need to be improved or possibly replaced.

Looking for employee retention advice?

Is the turnover rate among your employees high? Are you worried that you will lose important talent in the near future? Our recruiting experts will be happy to advise you on how to counteract these developments with efficient retention management. You will receive tailor-made solutions for the individual starting point in your company.

But employee retention is not only important in times of crisis. Discuss optimization potential with our professionals to improve the company culture, increase employee satisfaction and boost the commitment of your employees.

Feel free to contact us without obligation Contact with us!

(Cover photo source: Roman Samborskyi – Shutterstock.com)