Quick look: In 2021, Gallagher data showed employee engagement and retention strategies were not aligned, meaning employers had to work twice as hard to keep their top talent. However, the latest study in 2023 shows the two are converging once again, and business leaders should be ready to adapt to and optimize what’s most effective.
A recent Gallagher study covers the impact of the past few years and how HR and business leaders have been forced to make radical shifts in their retention strategies. Employee engagement has always been an essential part; however, Gallagher reports not all engagement tactics performed in the same way.
In this candidate-driven climate, employees know they have options elsewhere, and the most talented ones aren’t afraid to go looking. Therefore, it’s up to company leaders to revisit their engagement strategies and work with their professional employer organization (PEO) partners to update them as needed.
The study advises keeping an eye out for company “seekers,” in particular. Seekers are employees who are happy in their roles but may still look for other opportunities. Though engaged at work, if not satisfied with their level or pace of career development, they’ll set out for greener pastures.
Gallagher shares seekers make up about 20% of a company’s workforce. Therefore, any loss would be detrimental and could create a negative domino effect if many top performers left at once. So, how do companies battle with retaining top talent if engagement isn’t an issue?
It calls for a modification of retention strategies which reintegrates factors driving employee engagement. Per Gallagher data, the top drivers of employee engagement are:
- Sound career development pathways
- High confidence in the organization’s products/services
- Trust in senior leadership
- Experience a culture of respect and inclusivity
- Relationship health and overall connectivity with manager/supervisors
These differ slightly from the top factors for employee retention, though each are equally important when customizing an effective plan. Here are the five areas employers should focus their efforts and where the advantage of having a PEO partner comes in.
1. Sound career development pathways
In previous years, the focus on well-being and availability of remote or hybrid work environments became a priority for employee retention. While these remain valuable retention factors, establishing solid career pathways has reclaimed the top spot.
Employees want evidence their company is invested in their professional growth, and when this component is missing, the ability to retain them declines. Even though seekers are satisfied in their roles, retaining them requires employers to be proactive.
It’s best to focus on establishing specific career paths and opportunities for employees to learn and advance. This includes initiating employee feedback and having open conversations about expectations and goals. Additionally, individual career paths should be regularly revisited to ensure everyone stays aligned.
2. Management of work-life balance
The pandemic felt like a reckoning on the workforce as a whole as people reached their limits of burnout. Initially, a work-life balance was essentially non-existent as normal routines and functions were upended. But as the two evened out, employees sought to keep their work in check with what they needed at home.
As a result, many companies began offering telecommuting and flexible work schedules to accommodate employee needs. And research has shown flexible work arrangements have actually led to 39% higher productivity rates than employees without them. As the second most important retention factor, it further illustrates employees’ need to feel valued.
3. Trust in senior leadership
Employees also want confidence in the growth of their company. This includes an increase in services and revenue, but also involves a company’s willingness to progress in terms of diversity and inclusion to uphold a strong company culture.
When leadership is lacking, it has a trickle-down effect, which can cause an increase in what the study calls “campers.” Campers are employees who are dissatisfied with their jobs but choose to stay where they are. Unlike seekers, this group typically exhibits less productivity and lower performance, negatively infiltrating the workplace as a whole.
Compensation is still a leading factor in employee retention. However, a competitive salary isn’t the only thing swaying good employees to stay. The inclusion of a robust benefits plan is necessary now more than ever. Therefore, traditional health plans must be reviewed and revamped to accommodate the benefits employees value most.
Competitive compensation packages include medical health benefits as the standard but now also include mental health care coverage, financial guidance and support, and other types of voluntary benefits. Working with a PEO partner puts employers in a good position to meet the evolving demands of today’s workforce by modernizing and customizing benefit options.
5. Feeling recognized and respected for work contribution
Generally speaking, employees want to perform well and bring value to their companies. However, when they don’t receive the same attention and respect in return, they start to lose their loyalty.
The Great Resignation proved even long-time employees aren’t afraid of moving on to a new company, if not a new career altogether. Therefore, retention strategies remain a top business priority. These efforts, in addition to all the other full-time responsibilities of HR, are where a PEO partner steps in. They help to ensure employees are kept happy and engaged and companies continue toward their growth goals.
Realigning employee engagement and retention strategies with a PEO
As part of its full suite of HR services, a PEO partner like ExtensisHR can dive deeper into what employees want and what is needed for them to stay. From there, they can create a personalized strategy to “re-recruit” employees and highlight a company’s value. This can be achieved in several ways, including:
Generating consistent communication
Employees value transparency. When there are changes to benefit plans and options, it’s important for employees to understand reasons why, and how they will benefit from the changes. It’s also necessary to share information in multiple ways to ensure equal accessibility, especially among distributed workforces.
Customizing employer benefits
Basic health plans are expected but don’t necessarily keep employers competitive. Instead of run-of-the-mill options, employees want customized benefits. By keeping current on employee preferences and benefit trends, a PEO partner provides access to premium options at an affordable rate relevant to a company’s specific needs.
Implement a re-onboarding process
It’s smart to continually review and update processes, as needed. With career development as the number one engagement factor, stay interviews and anonymous employee surveys have become increasingly important to understand employee motivations. It provides a chance to realign priorities and alert employees to new benefits, tools, and resources they may not realize are available.
Employees are the heart and soul of companies and require constant attention to keep them moving forward. Learn how our team of HR experts can help you drive higher employee engagement and retention. Contact ExtensisHR today.