Ensuring your business flourishes relies heavily on having a strong team of employees. As the job market continues to expand and evolve, it has become increasingly difficult for companies to keep their most talented workers.
Additionally, it's important to recognize that employee priorities may have shifted during the past years and take steps to retain your most skilled employees.
The challenge is no longer about finding qualified people but retaining them. Employee retention is becoming a major problem for businesses around the world.
According to Sprout's study titled "The Great Resignation Part 2: The Journey to the Great Retention," 85% of organizations reported an increase in employee resignations, particularly in the BPO, IT, and manufacturing industries.
The study also found that 42% of individuals who quit their previous jobs cited factors such as insufficient pay and limited opportunities for professional development.
Fortunately, technology and cloud-based solutions can help organizations develop new strategies that engage and motivate their employees. By utilizing these platforms, employers can better understand the needs of their staff and identify areas where improvements are needed.
In this article, we'll explore what employee retention is, several strategies you can use, and how technology and cloud-based solutions can help you retain your most talented and experienced employees.
Understanding Employee Retention
Employee retention involves ensuring that your staff stays with the company for an extended period of time. Organizations invest time and resources in finding top-notch employees, and then they must ensure that those employees stay with the company.
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The employee retention rate of a company is the percentage of employees who remain working with the organization for a specific time frame, typically one year.
To calculate the retention rate, use this formula:
- number of employees who stayed during the measurement period ÷ initial headcount on day one x 100
Suppose you wish to calculate the employee retention rate for the previous month. On the first day of the month, there were 50 employees, and by the last day of the month, two workers had left for other opportunities, resulting in only 48 workers. In this case, your employee retention rate would be (48/50) x 100, which is 96%.
Retention rates are often calculated yearly. However, measuring the rate over shorter periods can provide quicker results.
If you have a high retention rate, this can be a sign of excellent performance, but it should be kept in mind that retention rates vary in different industries.
Employee Retention vs. Employee Turnover
Employee retention rate measures the number of employees who stay in an organization during a certain period, while the employee turnover rate measures the percentage of employees who leave the organization in that same time frame.
There are four types of employee turnover:
- Voluntary turnover. This happens when an employee decides to leave their current organization willingly. The reasons for leaving can vary, ranging from receiving a better job offer to facing burnout or personal issues.
- Involuntary turnover. This refers to a situation where the employer terminates the employee's employment, typically due to inadequate performance or force majeure.
- Functional turnover. This refers to letting go of low-performing employees without experiencing any internal problems.
- Dysfunctional turnover. This refers to the departure of high-potential employees who possess leadership qualities. This type of turnover is highly undesirable and can be prevented by implementing a succession plan.
Most companies prefer annual turnover rate calculations as it takes time for meaningful patterns to emerge in the numbers. To calculate your annual employee turnover rate, use this formula:
- number of employees who left ÷ (number of employees at the start of the period + number of employees at the end of the period ÷ 2) x 100.
For instance, if a company had 50 employees at the beginning of the year and ended with 70 employees, with 10 employees leaving during that year, the annual turnover rate would be 10/(50+70)/2 x100, which is 16.66%.
To keep it simple, having a lower turnover rate indicates better performance.
The Role of Technology in Employee Retention
Technology plays a vital role in employee retention.
Today, HR services are mostly accessed through technology and web-based applications rather than through direct contact with HR personnel. This has resulted in a significant shift in the traditional approach to human resource management, with almost all companies offering universal access to HR services.
Organizations frequently make these changes to reduce expenses and enhance services, which can involve adopting advanced HR technology tools. Research has shown that companies that use these tools proficiently perform better than those that do not.
Companies need technology tools to:
- Simplify HR processes and decrease administrative tasks.
- Lower HR admin and compliance expenses.
- Enhance global talent competitiveness.
- Provide employees and managers with better service and data availability.
- Offer real-time metrics for decision-makers to identify trends and improve workforce management.
- Allow HR to evolve and take on a more strategic role.
By leveraging technology, employers can help create an environment conducive to employees feeling motivated and engaged.
One of the popular technologies available is cloud-based solutions.
The Impact of Cloud-Based Solutions on Employee Retention
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What is a Cloud-Based Solution?
A cloud-based solution is a service or resource accessed through the internet using a shared cloud computing framework provided by a third party. This can include applications, storage, on-demand services, computer networks, and more.
To better understand cloud computing, you can consider it similar to electricity. You don't need to have a power plant at your place just to use electricity; instead, you can connect to the one that provides electricity to your area, whether it's for your home or business.
Similarly, with cloud computing, you don't need to have all the necessary hardware and infrastructure on your property.
The Types of Cloud Computing Solutions
Software-as-a-Service (SaaS) is the most widely used form of cloud computing. It provides on-demand internet access to applications and services, often for a monthly or pay-per-use fee.
In the Philippines, Sprout Solutions is the largest B2B SaaS company and the country's most trusted HR tech company. Their cloud-based platform automates and simplifies manual and complex HR processes.
Platform as a Service: PaaS
Platform-as-a-Service (PaaS) gives developers a platform to build web or mobile apps without having to manage hardware components or other infrastructure themselves. Examples are Google Cloud, Microsoft Azure, AWS, and IBM Cloud.
Infrastructure as a Service: IaaS
Infrastructure-as-a-Service (IaaS) is the most basic form of cloud computing. It provides customers with access to virtualized IT infrastructure, such as servers, storage, and networking resources, on a pay-per-use basis.
IaaS providers include Amazon Web Services, Microsoft Azure, and Google Compute Engine.
The Benefits of Using Cloud-Based Solutions for Employee Retention
Today, cloud-based HR solutions give businesses the computing power they need to succeed. Here, we'll explore how cloud-based software has enhanced the workplace by discussing its benefits.
Reduced amount of paperwork.
Gone are the days of storing personal information in large filing cabinets. Nowadays, cloud-based HR software, such as Box, Google Drive, and Dropbox, allows for safe storage and quick retrieval of all files.
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With digital storage, an HR staff member can easily search and print a file in seconds using a cloud HR solution. Using HR cloud software can save time and improve organization.
Real-time and accurate performance assessments
HR considers evaluating employee performance to be a crucial responsibility. Traditionally, assessments involved extensive paperwork and data collection that was time-consuming. However, cloud-based HR software now automatically tracks employee performance in real-time.
This software uses machine learning, dashboards, and reports to analyze data. Cloud HR solutions can assist the HR staff in implementing new processes or provide additional training in just a few hours.
HR systems incorporating Artificial Intelligence (AI) can assist with employee retention and advancement issues after recruitment. AI analyzes data from across the organization to predict which employees might become dissatisfied and takes preemptive measures to address the issue.
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HR solutions can detect and resolve staff issues before they cause employees to quit or reduce productivity. Although it's a recent technology, experts are enthusiastic about its potential and believe it will play a crucial role in helping HR keep companies competitive.
According to a recent study, AI can significantly improve employee retention in the HR industry. However, implementing it requires careful planning and consideration of potential risks and ethical issues.
Boosted Employee Engagement
Cloud-based HR solutions utilize big data and mobile technologies to enhance employee engagement. An instance of this is using a platform like Pulse to send a survey to workers within moments, obtaining feedback on ways the company could improve its service.
Before adopting cloud-based HR systems, companies relied on padlocks and fireproof archiving to secure sensitive personal data. However, with the shift towards online storage, organizations must reconsider their security arrangements.
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This is particularly crucial for multinational companies due to the Data Privacy Act of 2012.
It's worth noting that many cloud HR software providers emphasize security significantly. They implement all the latest security measures to safeguard your company's important data conveniently.
This implies that they are accountable for maintaining security, even if regulations change.
Plus, in case of a hard drive crash, essential project files can be retrieved conveniently from the cloud.
Cloud-based solutions offer better value than proprietary HR software at a lower upfront cost. Cloud solutions bring immediate benefits like improved data management and time savings when implemented.
This means your business can allocate more resources towards enhancing products or prioritizing employee satisfaction.
24/7 Access to Pay and Benefits Information
HR software allows employees to easily access important information about their salary and benefits, no matter where they are. This includes clear details on how much their pay is allocated to taxes, 401(k) contributions, government benefits, and other expenses.
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In the past, employees had to rely on outdated HR and phone systems to access this information.
HR systems are now more reliable as they are always available and have higher storage capacity and better bandwidth than traditional ones. Additionally, employees can easily modify their salary and benefits details using cloud HR solutions.
Cloud-based solutions are designed to be quickly and easily deployed. This is excellent news for businesses that want to have their HR system up and running in a short amount of time.
It's also more user-friendly than traditional standalone HR systems. Additionally, the SaaS provider takes care of security updates and maintenance, so you don't have to worry about those.
Not only does this save time, but it also allows the business to concentrate on more important tasks like promoting employee wellness.
Easy Access to Upgrades
If your HR management software becomes outdated, the cost of owning it can increase quickly due to upgrades, deployment, and training. However, with cloud-based HR solutions available, both startups and large companies have equal access.
The cloud allows for easy software updates, eliminating the need for businesses to buy new software or technology regularly.
The major advantage of using cloud-based HR technologies is their ability to connect the HR team with the rest of the business. The HR department should be at the forefront, taking the lead in enhancing employee engagement and creating a positive work environment.
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Through cloud computing, companies can now consolidate and access data more easily. They can generate immediate reports and analyze trends and information with just a few clicks.
With these tools, the HR department can make better decisions to enhance employee recruitment, retention, and performance.
How to Implement Employee Retention Strategies Through Technology
As technology often changes how businesses operate, employee retention strategies must also be adapted. Employers must use the latest tools and platforms to ensure their staff feel appreciated, motivated, and engaged to keep them around for the long term.
Here are some of the ways organizations can use technology to create a positive atmosphere for employees:
- Use Automation Tools
Automating certain processes and tasks can help streamline operations and reduce time spent on tedious jobs. This can free up employees to focus on more creative, meaningful, and rewarding activities.
Automation tools also reduce the potential for human error, which leads to greater job satisfaction and retention rates. Examples of automation tools that can be used in the workplace include applicant tracking systems, payroll software, and human resources management software.
Sprout HR + Mobile can be a useful tool, as it can automate important processes like managing 201 files and tracking employee attendance. The platform can adjust to your evolving needs, so you can rely on it no matter what.
Additionally, it allows users to stay efficient and practical by accessing HR tools anytime and anywhere.
Another reliable tool is Sprout Payroll for easy payroll management. When you use a manual payroll system, mistakes and disputes can occur. With Sprout Payroll, you can avoid these issues by partnering with the most trustworthy payroll leaders in the Philippines.
This automated payroll solution assures that payroll reports are precise and reduces processing time by 90%. This allows the user to concentrate on more critical work, such as developing an effective compensation strategy.
- Implement Online Learning Platforms for Professional Growth
Organizations should consider investing in online learning platforms that enable employees to grow professionally from within the company.
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Access to online courses, tutorials, or other materials can allow employees to learn new skills while staying up-to-date with industry trends. These resources will make them better contributors and help them build loyalty toward their employers.
Furthermore, encourage managers to give opportunities to employees who have expressed interest in different areas. This will show that managers value their career growth and have confidence in their ability to contribute their skills to diverse areas of the company.
If you’re looking for an excellent online learning platform, check out Performance+.
This tool is the Philippines' first integrated system for performance and learning management. It enables businesses to enhance their performance management procedures, offering their workforce a more precise comprehension of their objectives and a route for learning and development.
This tool has over 500 learning courses automatically assigned based on competency. This eliminates the need for researching and organizing budgets for additional training materials.
As a result, employees experience increased satisfaction, growth, and skill development.
- Forster Open Communication Through Social Media
During uncertain times for a business or the economy, an organization must communicate authentically, honestly, and transparently with its employees, whether on-site or remote. This helps keep them informed about what's going on in the organization, what they can anticipate, and what's expected of them.
Employees need to feel connected and supported and not be surprised by organizational changes. Allowing employees to network with one another via social media can help develop strong relationships and trust between coworkers. This will foster collaboration and create a stronger community within the organization.
Employers should consider creating dedicated discussion groups on popular platforms like Facebook or LinkedIn to facilitate employee engagement.
- Use Employee Surveys
Technology can be used to collect employee data to identify areas for improvement regarding retention rates. Regular surveys sent out through email, or an online platform can provide employers with valuable insights into how their workers feel and what changes need to be made to increase job satisfaction and loyalty.
A study by Harvard Business Review discovered that asking employees how long they plan to stay is over two times more effective in predicting their turnover than predictive analytics. Those who didn't respond to the two surveys were 2.6 times more likely to leave within the next six months.
- Promote Employee Wellness
Technology can be used to promote employee wellness by providing personalized recommendations and resources for employees.
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For example, employers could provide an internal app or portal that provides workers with health and fitness tips, nutrition advice, stress management tools, etc. This will help employees feel better physically and mentally, which is key for ensuring job satisfaction and maximizing retention rates.
One tool employers could use is Sprout Wellness. This tool offers various services to address employees' physical and mental well-being needs. Employers can use it to implement their wellness programs and support their employees' overall well-being.
Offering employee wellness is a valuable investment in the health of the company. It not only boosts job satisfaction and employee engagement but can also enhance company profits by improving performance and reducing employee turnover.
- Prevent Employee Burnout
Employee Burnout can be a major factor in employee turnover.
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To prevent burnout, employers should use technology to monitor employee workloads and ensure employees have enough time for breaks and vacation days.
Online tools Nifty and Google Workspace can help track an employee's work and allow them to request additional breaks if needed. This will reduce stress levels and increase job satisfaction and retention rates.
- Recruit the Right Employees
Technology can also be used to ensure that organizations are hiring the right employees in the first place. Employers should use automated candidate screening tools and other recruiting software, like Mercer Mettl and The Predictive Index to evaluate a potential employee's skills before they are hired.
This will help identify any gaps between what a job requires and an individual's qualifications, which can save time and money in the long run.
This approach is especially effective when combined with traditional recruitment methods such as interviewing, assessment centers, and reference checks. By ensuring that the best fit for each position is recruited, organizations will improve their chances of employee retention significantly.
- Give Rewards and Recognition
Employers should create employee reward programs recognizing their employees for achieving goals or completing tasks on time.
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These programs can include incentives such as gift cards, additional vacation days, or cash rewards for exemplary performance. This is a great way to show appreciation and motivate staff to become more productive and engaged.
While employees appreciate monetary rewards, recognition of a job well done and appreciation greatly increases employee satisfaction and retention rates.
- Offer Incentives and Flexibility
Incentives such as flexible working hours, telecommuting options, and remote work-from-home allowances can make a huge difference in employee retention.
Providing incentives like these allows employees to have better work-life integration, which is key for ensuring job satisfaction. Employers should also look at offering competitive salaries and benefits packages to attract top talent that will stay with the company for the long run.
According to Sprout's study, 80% of participants would choose to stay with their current organizations if offered improved salaries and benefits.
These strategies will not only help retain existing employees but can also help an organization become more attractive to future job seekers who are looking for employers that care about their needs and offer great compensation packages.
- Build a Culture Where Employees Want to Stay
Finally, one of the most important factors in retaining employees is creating a work environment where they are happy and comfortable.
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According to Glassdoor's study, 77% of job seekers factor a company's culture into their job application decisions. Additionally, the Associated Press has reported that nearly 50% of employees are willing to leave their current job to join a company with a better culture, even if it means accepting less pay.
It's also important for employers to foster an inclusive culture that values diversity, encourages collaboration and open communication, and embraces team-building activities. By taking all these steps to create a great work culture, employers will be able to make employees feel valued and motivated to stay with the organization for the long term.
To build a thriving work culture, it's crucial to understand your workforce better. A tool like Sprout Insight can help with this as it offers HR dashboards for various metrics, including attrition, attendance, payroll expenses, and more.
With this tool, employers can pinpoint retention issues, refine their employee retention strategies, and gain a deeper insight into their workforce.
Technology can be a great asset for employers who want to increase their retention rates.
With these strategies in place, employers will be able to attract and retain top talent that will improve the overall performance of their organization.
Enable Your Retention Strategies with Sprout
Employee retention should be a priority for any employer. Sprout strives to provide comprehensive HR solutions that focus on retaining and engaging employees in the workplace.
The company's technology-driven platform helps employers manage employee data, track performance, improve communication, and strengthen organizational culture.
With innovative tools at your fingertips, you’ll be sure to keep your most talented employees motivated and engaged.
Invest in Sprout's suite of HR tools now to improve employee retention.
Book a consultation with us and start building a brighter future for your business.