Why is employee retention so important? Well, companies with a high employee turnover rate spend a lot of time and money on recruitment. Large corporations might be able to mitigate such costs, but can startups? Every penny counts when you’re new to the game.
Low retention rates can also harm a company’s reputation, impact team morale and ultimately, stunt growth. Not ideal. Leaders ought to hold on to talented team members and top performers for as long as possible.
The UK job market is recovering post-pandemic, but it’s still competitive. Startups need an effective employee retention strategy to attract and retain the best talent.
So, how can startups improve employee retention rates? We’ve listed a few things for startups to consider when building a successful employee retention strategy.
If team members are coming and going rapidly, it’s worth investigating the reasons why. Hold an exit interview to better understand why the employee is leaving. Are there any recurring themes or obstacles? Employees should feel comfortable enough to share their thoughts in complete confidence.
And if for whatever reason that’s not the case, that’s a concern in itself. It may be worth sending out an anonymous survey to the team to gauge overall happiness levels and gain valuable insight.
We use CharlieHR to send out a weekly survey with a specific theme, focusing on effective teams, leadership and management, wellbeing and so on. It’s easy to set up and totally anonymous.
Optimise the recruitment process from start to finish.
"Retention starts right from the beginning, from the application process to screening applicants to choosing who to interview," Dan Pickett, CEO of Nfrastructure.
Time is precious. So, job hunters don’t want to waste time reading excessively long and overly descriptive listings. Or jump through hoop after hoop not to get so much as an acknowledgement in return.
Highlight the need-to-knows about the role, the kind of experience and skills an applicant needs and what they can expect in return. And don’t forget to show a bit of personality.
Does your business operate a remote or hybrid working model or offer flexible working arrangements? If so, say so, as flexible working is now a serious consideration for UK job applicants.
Indicate the kind of team player you are looking for. Share the company values that matter most to attract the applicants with core values that align with yours.
Also consider how easy is it for applicants to apply. The initial application stage is the perfect opportunity to impress with an engaging, straightforward and seamless process. After all, you want the prospect of joining your startup to be exciting, not uninspiring.
Providing that your recruitment process is optimised, it should be much easier to shortlist promising candidates and invite them to attend an interview.
Remember, the interview stage is as much about them liking you as it is about you liking them. It’s also about sharing realistic expectations of what the role entails and having a mutual understanding of what both parties bring to the table.
And whether you both feel the role is right for them. It might be a match made in heaven now but what about in two or five years’ time? You’re looking for loyalty and longevity to reduce the likelihood of the right person leaving sooner than you’d like.
And ultimately, whether the individual fits your company culture and will work well with the rest of the team. Are they familiar with startup culture? After all, a startup is a very different beast to a large corp.
The best person for the job on paper isn’t always the right person for the job. What one person may lack in experience, they make up for in aptitude.
When a candidate joins the team, do they have all the training materials and resources they need? An effective onboarding process will not only help the new employee feel welcome but set the tone for the rest of their tenure. Don’t underestimate the impact of day one.
As time passes and the new hire’s contribution increases, be sure to schedule regular catch-ups to see how they’re feeling, if they’re meeting objectives or if they need further support or training.
Regular one-to-ones are also an opportunity to ask the employee for honest feedback regarding onboarding, training as well as general processes and workflows.
One of the beauties of being a startup is that these core processes can be improved as the company grows. Instead of lobbying for change, you can mould the clay.
According to Agata Nowakowska (Vice President of Skillsoft), "businesses with a strong learning culture have around 30-50% increased retention rates compared to those that don’t". So, continue to engage employees with ongoing training and provide opportunities to progress.
“Retention is about cultivating an environment where people can do their best work,” Nick Francis, CEO of Help Scout.
What does company culture mean to you? Will new starters walk into an environment that’s diverse and inclusive? One that welcomes autonomy, honesty, transparency and trust?
Our core values are trust, collaboration, autonomy, purpose, recognition and diligence. How would you define yours?
A startup with great company culture will not only attract new talent but also help to retain talent. Fundamentally, positive company culture should:
Speaking of which...
There are different ways to do this, financially and culturally.
Generally speaking, startups don’t have the funds (yet) to reward employees with hefty salaries or big bonuses, as large companies do. And in a hyper-competitive job market, this can impact a startup’s recruitment efforts.
But there’s another way. Share equity instead. A slice of the action. Share schemes are proven to attract talent, increase engagement, productivity and improve retention rates.
In some cases, shares can be financially more rewarding than just a high salary and more tax-efficient than receiving a bonus too. Plus the company benefits by not having to pay out lump cash sums.
It’s a no-brainer.
Not all applicants will ask, but you can certainly put forward the idea of an employee share scheme. But which one? Well, there are various schemes available (subject to eligibility) including schemes specially designed with SMEs in mind, like Enterprise Management Incentives (EMI).
The nature of an option scheme like EMI means that equity is released over time, subject to conditions specified by you. So, it’s a long term employee incentive.
Feel free to book a free consultation with us to explore the ways you could share equity with your team as an alternative form of compensation.
Finally, recognition, recognition, recognition. Companies with a recognition culture have a 31% lower employee turnover.
Acknowledge all achievements great and small. If a team member completes a task ahead of schedule, celebrate it. If another goes above and beyond to help a colleague or a customer, celebrate that too.
It doesn’t have to be a top-down approach either. We’re launching a new recognition scheme internally where colleagues can nominate each other to be recognised and rewarded for their contributions.
So, to sum up, here are the steps startups can take to maximise employee retention:
Retaining talent and reducing employee turnover is no mean feat. But by putting these practices in place, startups stand a good chance.