Focus on Retention to Keep Employees Loyal

November, 2021

By: Cathy Hendry for Strategic Pay

Every organisation has varying rates of retention and employee turnover. The key is to keep your employees happy and engaged to the point where they are not actively seeking other opportunities. The cost of an employee leaving (90-200% of their annual salary, SHRM) is a large deficit that could decrease significantly with strong focus on a solid retention programme.

However, when the world has a pandemic, New Zealand’s borders close, work visas / residencies are delayed, and other organisations are attracting people from the same tiny pool of New Zealand talent, your organisation may soon have staffing issues. Your employees are likely to be ‘shoulder tapped’ by other organisations (if they haven’t been already) so your remuneration, recognition, reward and retention strategies need to be robust to withstand these challenges.

Here are some strategies to ensure people remain in your organisation. You will discover that not all options are financially focused:

  • The pay must be right

If you don’t provide competitive salaries in the market then you will have issues with retention, especially with the increasing market rates. Pay rises will only go so far to keep an employee, but if you don’t have the pay scale correct to begin with, then you will lose them anyway. Get the hygiene factor right so higher salaries offered by competitors will be less desirable. Also, in the current market you need to be prepared to offer above-market wages in certain situations.

Pay needs to be fair, do you pay market rates and distribute rewards fairly? Can you report on your gender pay gap? Is your remuneration transparent both internally and externally? By utilising transparency and fair pay in your organization you will generate trust and reassurance with your employees.

  • Renegotiate remuneration with employee job searchers

So, an employee would like you to match or improve on a competitor’s offer? The fact they are presenting this option suggests they would like to remain, so consider their request within reasonable limits. If you mess with your internal relativities and polices then it will quickly become a bigger issue so, do keep within your pay policies. 

Anecdotally we’re finding in our Pulse survey that some people were paying up to 20% premiums because there is such a talent shortage.  However, these people aren’t necessarily continuing in the same role, in fact, they usually move into a position with more responsibilities or seniority. Issues are now coming to light that these employees don’t always have the skills or experience to perform adequately in their new role. Each individual case is different obviously but do ensure the employee can manage the proposed new responsibilities before committing to the revised job description.

  • Provide long-term financial incentives

Offer key talent and executives long term incentives to encourage retention, because a well-designed incentive scheme will lift organisational performance as well as retain your important employees. Offering shares is a common incentive in listed companies whereas private companies often have cash-based ones. Many employees are concerned about retirement, so another incentive could be contributing a higher percentage to Kiwisaver. At the end of the day, the incentive needs to be meaningful to your employees.

  • Hire the right people

Ensure the recruitment and onboarding process is robust with realistic and achievable job descriptions, a strong HR hiring process with comprehensive candidate background checks, and good pastoral care of new employees (perhaps even their families). Provide motivating and challenging work to enhance their job satisfaction and generate a clear career progression mapped out within the organisation.  

  • Establish effective recognition and rewardpolicies

How an organisation rewards and recognises employees is an important strategic initiative that has an impact on culture and individual performance.  Getting Reward and Recognition right will boost attraction and retention of talented people; increase employee engagement and contribute to a positive employee experience. Showing that you care about your people and how they contribute to your organisation is essentially the heart of Reward and Recognition.

Excerpt from Strategic Pay’s Free Whitepaper:
Reward and Recognition by Holly Langman, Senior Consultant and Krista Kelland, Consultant

  • Creative incentives for employees

It is essential that organisations focus on employee’s wellbeing in the current climate with a total wraparound healthcare programme. Free fruit in the staffroom and a yearly flu jab isn’t enough to help your people. Alongside the aforementioned fruit, consider offering less obvious healthcare offerings such as massages, pets in the office and fun workplace events / training.

Invite local suppliers / businesses / advisors into the organisation so staff can consult with them during work hours rather tha n having to squeeze in appointments during lunch breaks. Local businesses could provide discounts / vouchers so they can generate more customers; you would save your employees money and contribute to the local community both financially and socially.

Also consider your employees’ challenges outside of work; perhaps provide or subsidise services such as childcare, gyms or sports teams. Encourage their professional and personal growth with contributions to their further education. Mindi Cox (quoted below) even recommends providing sabbaticals to staff you value highly. You may need to consider this option seriously when the borders open and your employees want to travel again, so keep it in mind.

“In crafting nontraditional benefits, a good question to ask is how to create culture and value with a company that workers can’t find anywhere else. What’s the unique experience that you want your people to have? What is the story you want to tell? What is the difference you want to make in their lives?”

Think NonTraditionally to Improve Benefits – and Employee Retention by Mindi Cox.

  • What are your employees’ motivations… it’s not always about the money

When your employees are asked where they work, do they answer with pride? Is it your wonderful company culture which is a massive appeal in the market at present? Or are they proud for what the company stands for; your brand / values / social focus / educational opportunities or other unique offerings in your organisation? Setting aside pay, these other motivations matter more than you think, especially in organisations with loyal staff who believe they are a part of the overall success. But if your employees are tucking their work lanyards out of sight leaving for lunch then you may have a problem!

  • Prevent competitors from approaching your employees

Cross train people in job roles and develop organisational specific skills that are difficult to transfer. You are likely to have this policy already in place but create an internal job market encouraging internal promotion wherever possible. Also engage restraint of trade or similar competition clauses in their contracts. Employer sponsored education can include the proviso that employees remain with the organisation for a certain period. Suggestions adapted from Milkovich et al. (2014) and Hom et al. (2017)

As a country, New Zealand was attractive to the world because we were free of COVID-19, and a lot of Kiwis came home in a ‘Brain Gain’. Unfortunately, now we are restrained, while the rest of the world is opening up so people who are fed up with lockdowns and home schooling are leaving. Other New Zealanders are struggling to return because of MIQ limitations and screening / vaccination requirements. So unfortunately, the talent shortage will only grow until restrictions lift and borders open to migrant workers.

Organisations are going to need to look beyond just pay to retain their key staff. The COVID-19 pandemic has altered our way of working. Flexibility used to be a big thing – everyone wanted it and it was seen as a reward. Now it’s expected, and if you don’t provide flexible working options then you’re behind. Working from home used to be considered a benefit, but now it’s essential, and remote living options are on the table. If anything, COVID has taught us that many people can work effectively remotely.

To attract and retain good employees’ organisations need to be creative and generous with their remuneration, recognition and reward strategies otherwise they will lose their best people. Ask your team what they want and why they remain. Their answers may surprise you and it could merely be a simple fix to ensure they remain loyal to you.

“It has been proven that failing to address the most important factor in operating a business (i.e., your people), will ultimately result in the demise of a company – or at the very least, the risk of reputational harm.”

The Attraction and Retention Paradigm by Kevin Kuschel and Tyler Brown.

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