How to increase employee retention in 2023

Teodora Mechetiuc
Senior Solutions Consultant

The job market has only become more competitive in 2023, with top talent vying for new opportunities on the horizon. Meanwhile, company layoffs pose uncertainty for the employees that remain in post. Our research found that workplace anxiety as a result of job uncertainty and direction is at an all time high in 2023, threatening to push your most valued employees to look for new opportunities or switch careers. 

Attrition can come at a cost to the organization and lead to decreases in productivity, increased hiring costs, and damage to the company’s culture and employee engagement. Employee retention is critical to organizational effectiveness, and a top concern for business and HR leaders. Fortunately, there are specific actions backed by behavioral science and proprietary research that HR leaders and managers can take to improve employee retention, keep people motivated during times of change, and foster an engaging workplace culture.

Recognize accomplishments and effort

If there’s one thing that managers can do to boost employee retention right away, it’s to recognize the hard work and achievements of their people. 

Our research shows that recognition is the largest predictor of employee retention, so much so that people who strongly agree that their managers make them feel appreciated for the work they do, are almost 3x more likely to still work at the company 6 months later.  A little recognition goes a long way and is a powerful motivator that can ultimately increase employee engagement and retention. 

Behavioral science research finds that tapping into employees’ intrinsic motivation, or feeling authentically valued and appreciated, can be more effective at driving employee retention than extrinsic motivation, or  monetary compensation. If you’re a manager, try simple acts of appreciation that celebrate individual efforts, like calling out a team member’s achievements during a team stand-up or company newsletter. Or if your team member cringes at the idea of public recognition, try sending them a Monday morning note of gratitude on Slack, email, or Teams to give them a boost of positive energy to start the week. Additional tip: Pop a recurring reminder in your calendar to make sure recognition stays front of mind, especially if you’re a busy manager!

HR leaders also have a hand to play in improving employee retention through increased recognition. Creating a communication channel in Teams or Slack where employees can give a shout out for each others’ latest accomplishments is a high-impact, low-effort to create a culture of appreciation.  At Humu, we practice the behavioral science we preach with a recognition channel named #cheersforpeers. Any Humu team member can praise and recognize a colleague or direct report for a job well done. While it only takes a few minutes to appreciate your team members,  the positive impact on employee retention and company culture can be long-lasting. 

Offer personalized growth and development opportunities

Just after recognition, behavioral science shows us that employees who feel like they have room to grow and develop their skills are more likely to stay with a company long-term. In our research, offering growth opportunities to team members was a key characteristic of top managers - and it’s also an excellent way to engage and retain your team. Managers who offer growth opportunities and provide their team with feedback are 8x more likely to retain their people. Offering stretch assignments, mentorship, and coaching signals to your team members that you’re invested in their long-term career growth and development, motivating them to stick around.

Source: What employees need from managers in 2022

HR leaders can support managers by kicking off growth initiatives such as creating personal development templates to help guide managers and team members as they have these conversations. Development plans should be dynamic - revisiting and refreshing them every 6 months helps the manager and team member identify whether development objectives are still up-to-date, relevant, and whether the manager can offer any additional support, such as removing organizational barriers or providing mentorship by sharing their own career experiences. 

While performance review and development plans are critical to people's development, having more regular growth and development conversations with your direct reports during 1:1s is one of the most effective (and low lift) actions that managers can take to improve employee retention in your team. Employees who said they have one-to-ones with their manager at least once a week reported feeling 20% less anxious, dreading them 17% less, and feeling 12% more successful at their jobs compared to managers who met with their team less often. Weaving feedback and discussions about skill development during existing 1:1 time can make these conversations feel less formal and anxiety-provoking both for the team member…and the manager!

Don’t just take our word for it. Across customers in a variety of industries using Humu as their engagement survey provider, a lack of growth opportunities and recognition were identified as top drivers of attrition based on direct employee feedback.

Foster a culture of belonging

Finally, to increase employee retention, focus on creating a culture of belonging where employees feel valued, heard, and connected to others. Besides being a basic fundamental need, a sense of belonging at work makes people feel satisfied and productive. Research in behavioral science has even found that a sense of belonging can act as a protective mechanism against stress and burnouts during uncertain times. 

Creating a culture of inclusion can fall to the wayside among an ever growing list of to-dos, but prioritizing belonging can have a real impact on retaining your employees. Try taking small everyday actions can add up to impactful and long-lasting behavioral change. For instance, asking your team members what they’re looking forward to this week, rather than a usual ‘how are you?’ will open up a dialogue and make space for a more meaningful conversation. And if an employee expresses that they have a work-related issue or a personal problem, consider asking ‘how can I be helpful to you’ rather than ‘Is there anything I can do to be helpful’. Asking how you can be helpful shows that you want to support them and take action immediately. 

But let’s not forget about supporting the people who are your most important lever for increasing employee retention - managers themselves!  By supporting belonging among managers, leaders can increase performance and retention. In fact, in one study, behavioral scientists found that high belonging was linked to a 50% drop in turnover risk.

Consider providing training programs and development resources that align what managers are asking for help with and what the organization needs to achieve quick wins. It doesn’t have to be a huge lift. For instance, set up spaces for hybrid connection - like peer-to-peer mentoring groups or mastermind sessions - with cross-functional managers from across the business. Managers solve the latest and greatest issues they are facing with their team while also creating a sense of belonging, support, agility and cross-functional partnership amongst people that might otherwise not get to work together. Managers need connection too!

Activating a retention strategy at scale can be tricky, but it doesn’t have to be. Learn more about how Humu can help uncover your organization’s drivers of retention and activate behavior change by requesting a demo today.