Employers: How to improve your Employee Retention?

Since the start of the COVID-19 pandemic, companies of virtually all industries have experienced an increase in employee turnover.

This problem is chronically pronounced in industries where a majority of the workforce is in the lower- and middle-income job functions — manufacturing, retail, restaurant & food service, travel & tourism, logistics & supply chain, entertainment, customer service, etc. Employee turnover has always been higher in these industries and job functions. But today, it is higher than it has ever been before.

With this being the reality, Employee Retention needs to be one of the most pressing imperatives for every company.

Gone are the days when it was easy to backfill a role quickly and get back to business-as-usual. With total labor participation being the lowest it has been in over two decades and with competitive intensity at its highest, it is now taking longer and longer to fill an open role.

Which means companies have a shortfall in capacity to serve customers. Which in turn means this is a direct hit on revenues.

In fact, it stands to argue that employee retention needs to be a CEO imperative, not just one for the HR leadership. At many companies we work with, it is.

Why are people leaving their jobs in droves?

To understand how to improve employee retention, it is critical to understand what’s driving employee turnover.

According to BCG’s 2021 Decoding Global Talent survey, the #1 reason for employees to leave their jobs since March 2020 was pay and benefits.

According to Pew Research’s survey from March 2022, pay & compensation was the #1 reason for employees to change jobs in the last year.

While compensation seems to rule at the top, that doesn’t mean throwing money will solve the problem. Employers have increased pay across the US by 7–10% (sometimes more) for blue-collar job functions in the last 18 months. Despite this, 2021 saw the largest number of voluntary turnover ever recorded.

The full spectrum of reasons employees left their jobs in the last few years looks more like this:

So how do you improve employee retention in this complex environment?

Care.

If we look at the causes of employee turnover carefully enough, there is really just one thing that employees are looking for from their employers.

Care is the new currency to win employees over

1. Care for their physical wellbeing

The basic minimum is that employers provide a safe working environment, free of risks from physical injury while performing their job. This can include everything from architectural and building design elements (adequate railings for stairs) to providing protective gear onsite when needed (eye gear, gloves, etc.).

Being more holistic could include benefits such as sponsoring / subsidizing gym memberships, physical therapy, etc. and incentivizing employees to use them to take care of themselves. This is not just good for the employees, it’s also good for employers. Helping employees take care of their physical health reduces healthcare costs to their employers — and healthcare is the most expensive benefit there is.

2. Care for their mental wellbeing

Awareness of the importance of mental health of employees has never been higher, but it’s still not as high as it should be. But employers who do want to care for their employees’ mental health provide benefits such as access to therapy and counseling, either via in person or telehealth sessions.

While some companies may cover limited number of sessions or have a copay facility, some other employers are covering the full cost of therapy as needed. Companies are realizing that having emotionally healthy employees is only better for their productivity and longevity in the job.

3. Care for their professional wellbeing

It’s been proven many times over that employees prefer to stay where they feel respected and that they have a future.

Professional wellbeing includes potential to advance in their careers, transparent and adequate rewards and recognition for excellence, opportunities to upskill and cross-skill through training and mentorship, support for continued education, etc.

4. Care for their financial wellbeing

Some elements of financial wellbeing are pretty ubiquitous among large employers (though smaller employers have some catching up to do) — retirement benefits in the form of 401(k) plans are very common, and 401(k) matches are becoming more and more common for all job functions. Health insurance and income replacement insurance products are pretty ubiquitous too, although the extent of coverage varies widely.

Some other elements are less popular but growing — financial education, access to financial advisors, etc. However, this set of benefits are more appropriate for higher income job functions.

The gaping hole in this dimension is in helping people manage their finances better to build good financial health. Access to earned wages, cheaper credit when there are unforeseen expenses, real spend management products, intelligent automation of saving and investing, etc. are critical tools for lower- and middle-income employees and it is largely absent today.

At River, we help you help your employees build real Financial Wellness. From getting them paid when they need it most, to helping them better manage their expenses, to building and automating their saving and investing habits, and much more, River is designed from the ground up to transform the financial trajectory of your employees in lower- and middle-income job functions.

Learn how River works. Reach out to us for a free demo; say hello@GetRiver.co or contact us here.