Employee Retention And Engagement: Focus On One, Increase Both

We’re all busy. That’s why everybody loves a chance to kill two birds with one stone. 

What if I told you you could kill one of the largest problems plaguing modern companies—employee retention—by taking aim at another metric altogether? 

Investing in initiatives that improve employee engagement is the single best way to improve employee retention across your organization.

What is employee retention?

Employee retention is a measurement of an employer’s ability to keep its employees. Your employee retention rate is normally calculated as a percentage, showing the percent of your total employees who remained at your company during a given time period. 

How to measure employee retention?

There’s a simple formula for calculating your employee retention rate: Divide the number of employees that stayed for the whole period by the number of employees from the start of the period. Multiply that number by 100 to get a percentage, and you’ve got your retention rate. 

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Let’s look at an example: 

Say you had 100 employees at the start of the quarter and 95 of them are still with you at the end of the quarter. Your retention rate would be (95/100) x 100 = 95%.

It’s important to keep any new employees from the time period out of your calculation, as that will skew your numbers downwards.

Why is employee retention important?

Employee retention is a high-level metric that helps you understand if employee turnover is a problem for your organization. Employee turnover is incredibly expensive—replacing an employee can range from one-half to two times their annual salary—and it negatively impacts your team’s morale and productivity.  
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What’s employee engagement?

Employee engagement is a measurement of how enthusiastic your employees are about working for your company. Engagement impacts your employees’ motivation levels, loyalty, and emotional connection to your company’s mission. Employee engagement is complex and is impacted by many factors, including your company’s culture, leadership, benefits, and commitment to employee wellbeing.
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How to measure employee engagement?

Most companies measure employee engagement through doing regular employee engagement surveys. Employee engagement is usually measured on a scale of 0 to 100 using questions that rely on the Likert scale. These questions enable respondents to choose an option from “strongly disagree” to “strongly agree”. Each option has a corresponding point value. 
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To calculate your employee engagement score, you add up the total points from all responses, divide by the total points possible, then multiply by 100 to get a percentage. The higher the score, the more engaged your team members are.

Why is employee engagement important?

Employee engagement positively impacts so many different aspects of a business that it’s hard to summarize. An engaged employee is more productive, more collaborative, and more likely to stick around for the long-term. They care about your customers and their peers. They’re eager to see your business succeed.

When you can successfully cultivate engagement across your entire company, you’ll see higher levels of profitability, customer satisfaction, and customer loyalty.

How employee engagement impacts retention

One of the biggest positive impacts of employee engagement is that it has a strong positive influence on employee retention. Gallup’s research explains it this way: 

“Employees who are engaged are more likely to stay with their organization, reducing overall turnover and the costs associated with it. They feel a stronger bond to their organization’s mission and purpose, making them more effective brand ambassadors. They build stronger relationships with customers, helping their company increase sales and profitability.”

That’s compelling, but Gallup doesn’t end there. Based on their research, they claim an engaging work environment is now “a baseline requirement” for modern workers. In response, they claim that “For leaders, this means a culture of engagement is no longer an option—it is an urgent need.”

Strong words. But the impact of employee engagement on retention and many other areas of your business back them up. There are three big reasons why engaged employees are way easier to retain.

1. An engaged team is a happy team

Engaged employees are happier than disengaged employees. That might seem obvious, but it’s worth calling out. When employees are satisfied and happy in their roles, it only makes sense that they’d be less likely to bail on your organization. 

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Engaged employees also make better teammates, which makes for happier teams. Because engaged employees are excited about seeing your business succeed, they’re willing to go the extra mile and help their teammates. They’re willing to be flexible. They’re willing to share honest feedback to help you improve.

2. Engaged employees are less likely to burnout

Everyone knows employee burnout is a bad thing, but what exactly is burnout? Technically speaking, burnout is a combination of three factors at work: exhaustion, cynicism, and inefficacy.

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When viewed through this lens, it’s clear why engaged employees are less prone to burnout. In many ways, an engaged employee looks like the opposite of a burnt out employee:
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• Engaged employees are excited about their work; burnt out employees are cynical
• Engaged employees are eager to take on new challenges; burnt out employees are exhausted
• Engaged employees are your most productive workers; burnt out employees are ineffective and less productive
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Employees dealing with regular or consistent burnout are prime candidates for leaving your company. By fighting burnout with proactive employee engagement and wellness initiatives, you’ll also drive up your employee retention rate. 

3. Engagement is a form of communication

Employee disengagement is often characterized by withdrawing. When you’re bored, burnt out, or when you simply don’t care about your job, you’re naturally going to pull back from company initiatives. You’re going to withdraw from your boss and your teammates. 

Engaged employees usually do the exact opposite. They’re proactive about communication. They feel psychologically safe, meaning they’re willing to take the risk of sharing feedback on how your company needs to improve. They’re willing to be vulnerable and open about their career goals and objectives. 

This open and consistent communication makes it easier for you to identify concerns and take quick action to resolve issues. As you do your part to develop team members and to make your company a better place to work, you increase the likelihood of your employees sticking around for the long-term.

How to increase employee engagement and improve retention over time

The best way to improve engagement and retention is to focus on the areas your employees view as most meaningful. I’ll cover some of the most common and most impactful engagement drivers below, but you should ask your team directly to understand what specific areas matter most to them.
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Most impactful engagement drivers 
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1. Making an impact. Your employees spend most of their life at work. They want to know all that time is invested for a good purpose. Showing each team member the impact they have on your business and customers helps them feel excited about their work and increases their desire to stay with your company.
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2. Feeling heard. Employees don’t like feeling like a cog in a machine. When they know you’re listening—and responding to—their input, they’ll be more invested in your success.
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3. Empathetic leadership. Employees want to work for leaders that genuinely care about their wellbeing. Building a team of empathetic leaders goes a long way toward retaining employees. 
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4. Career growth. Your employees want to make progress in their careers. When they can’t find opportunities inside your company, they’ll begin looking elsewhere.
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5. World-class work culture. Your company culture is the way you do things within your organization. It includes your habits, norms, and values. When these things clash with your employees’ preferences, you’ll cause constant friction that will lead to eventual turnover. 
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6. Recognition. Finding ways to recognize your employees for a job well done or for embodying your company values reinforces their value. Even small acts of appreciation can be meaningful aid toward retaining employees. 

Increasing employee retention is easier when you have the right tools

|There’s no magic wand you can wave to improve employee engagement and retention. But there are tools that can make it easier, like Kona. As you consistently invest in improving employee engagement, you’ll see significant improvements in employee retention as well.

Ready to get started? Start using Kona for free today.