Startup founders and entrepreneurs often talk about customer retention rate – the percentage of customers that, after signing up for their product or service, stay with the company as it continues to grow.
Increasingly, customer retention rate is being replaced in meetings and discussions by another form of retention rate: employee retention rate. With so many companies competing for talented people, retaining your top employees can be difficult.
This is particularly true in a startup environment, where there’s a good chance you won’t be able to offer the same level of compensation as a well-funded, established and entrenched competitor.
Despite this disadvantage, it’s still possible to retain employees for your company through a variety of methods. In this guide, we’ll share five simple but surprisingly effective ways for your startup to improve its employee retention rate.
Offer a Competitive Salary to Increase Retention
While your startup may not be as well funded or as profitable as its competitors, it’s still vital that you offer a competitive salary in order to attract (and retain) the most qualified and capable people.
The most important word here is competitive. Your company’s compensation need not be greater than what your competitors are offering – few people expect so from a startup – but at least in line with what employees could expect elsewhere.
Working with an HR or recruiting firm is often a great way to assess how much your competitors are paying their key employees. By offering a competitive salary, you’ll be able to attract top talent to your business and retain employees effortlessly.
Hire Selectively to Make Sure Employees are Loyal
A key part of the employee retention process is hiring people who have a history of loyalty to their employers. People that jump from one employer to another may do the same thing to you, leaving you with a gap in your company’s staffing.
Regardless of how qualified a person may look from an educational or professional perspective, look at their resume and job history to understand how loyal they are to their employers.
A history of switching jobs after one or two years (or even worse, a few months) is a sign that someone, no matter how qualified or capable they might be, might not be a good permanent fit for your company.
Create a Culture that Makes People Want to Stay
The key to hiring people is often offering a competitive salary. The key to retaining people is far more often creating a culture and work environment that makes them feel at home, comfortable and valued as a member of the company.
By developing a company culture that’s built around respect for each other, a focus on achieving goals and recognition of people’s achievements and contributions, you can retain key employees at a far greater level than your competitors.
Cut-throat work environments often produce great earnings, but they can result in massive turnover and dissatisfied employees. Ease the pressure and create a work environment that’s friendly and welcoming and you’ll effortlessly retain people.
Provide a Map for Advancement in the Company
Ambitious people are unlikely to stay with a company that doesn’t offer them a path for advancement. Whether it’s a results-based compensation system or a path to the company’s upper management, you need to provide a roadmap for advancement.
The most successful companies, particularly from a retention perspective, focus on filling management roles from within the company. Their focus on moving onwards up the employment ladder encourages loyalty and focus in their employees.
Provide your team with a proven path for advancement – whether it’s advancement from a career perspective in potential promotions or a financial perspective in stock in your company – and your retention rate will improve dramatically.
Offer Performance Bonuses and Great Benefits
Employees are often motivated by performance-based compensation, particularly in fields such as sales and marketing. Offering performance bonuses and commissions is a great way to make sure top-performing employees stay with your company.
In addition to performance-based compensation and bonuses, great benefits can be the difference between good retention and great retention. From healthcare to life insurance, think of ways your company can extend its benefits for employees.
Other factors, such as paid vacations and flexible work arrangements, can also have a huge impact on your company’s retention rate. It can often be the seemingly small things, aside from compensation, that help your company retain its best employees.