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How to Increase New Hire Retention

How to Increase New Hire Retention

High employee turnover is a problem many executives face – and an expensive one too. It costs 21% of an employee’s salary to replace them, meaning a high bounce rate can be detrimental to the company’s progress. Also, workers are more prone to job hopping in an economy where they face fewer consequences.

Although longtime employees can leave abruptly, losing new employees is a more common problem. So how do you get new staff to stay? Let’s explore some employee retention strategies that executives can use and avoid high employee turnover.

Why do Employees Leave?

The statistics for new hire retention are mind-boggling. For instance, 25% of new hires will resign within six months – this is even higher in the services industry, where it exceeds 50%.

Nearly half of all companies agree that retaining employees is a regular problem, while 70% struggle to replace lost staff. Most managers think that employees leave because of pay, while in fact, only 12% of employees cite this as the deciding factor.

Leigh Branham, the founder of consultation firm Keeping the People Inc., comments on the data from a study of 19,700 post-exit employee interviews that confirmed non-pay related issues are more prominent for exiting employees. Some of the reasons he provides that cause employees, especially new ones, to resign include:

1. The Job is Different to What was Portrayed

This is usually a result of rushing through the hiring process. It’s important to ensure that you are as detailed as possible with the candidate so that they have a complete picture of what they are expected to do. In customer service roles specifically, ensure that a discussion about difficult situations and customers is addressed – especially if they have no prior experience!

Keep in mind that a job advertisement focuses on the skills you need for the role, but won’t always talk about the challenges.

2. Where to Next?

Another common problem is growth. Employees generally want to have an opportunity to grow and expand their skills, either within the department or the company.

Employees who land in a dead end job are likely to flee. The company should provide training tools and programs for career and personal advancement.

3. Minimal Coaching or Feedback

Employees, especially young employees, expect feedback to be given to help them understand how they’re doing. This is, again, extremely important for employees without prior work experience.

Feedback and coaching shouldn’t be difficult. Focus on the objective realities of their role (which you’re hopefully measuring). Provide them with a comparison against their teams (not specific employees) and ensure that they have SMART goals to address any gaps.

4. Recognition and Listening

It’s important to recognize employees for a job well done. Many employees complain that they feel devalued and their opinion doesn’t count.

The following business anecdote explains why listening to employee feedback is important:

A certain 24-hour automated factory plant decided to ask all employees to suggest how they could save money. When they got to the janitor, they thought he would suggest keeping the place clean.

The janitor simply said “Turn off the blaring lights at night. The robots don’t need them. ”

The factory listened, and ended up saving on their huge electricity bill.

Employees are human, and a little appreciation will go a long way. It’s important to measure what employees say they need through the use of internal engagement surveys. If you do it on a regular basis, it will allow you to baseline your current state and hopefully measure your improvement over time.

5. No Confidence in Management

When employees lack trust in their managers, their performance stagnates and churn increases. This is especially true during transition periods – mergers and acquisitions – as employees are generally more uncertain about the future. Even without mergers and the like, a lack of communication around big changes can increase distance between management and teams.

It’s important for the executive team to understand that employees interact with their customers more frequently than they do, so they frequently have a good idea of how changes will impact upon them. The focus needs to be on ensuring that staff understand what is happening when big decisions are made – not just understanding the scope of the change itself, but understanding the reasons behind it. It’s important here that the employee needs are met and decisions are made keeping this in mind.

Some Case Studies for Guidance

If you are looking for some employee retention ideas, then you can borrow an idea or two from the actions of these businesses. Companies like Big Spaceship and Netflix have set up their frameworks right from the hiring process to encourage the training and nurturing of their employees. The result is high employee satisfaction and retention levels.

1. Netflix

Patty McCord, the Chief Talent Officer at Netflix, is not only accustomed to the norms when it comes to hiring new employees. She takes a different stance and only hires “A” players on her team.

Conventionally, companies know that there are three groups of employees: high performers who produce the best results, average performers and poor performers who need training or replacement.

At Netflix, they only hire high performers to the team since they are much more valuable than all the average and poor performers combined. Any “A” players already on the team are surrounded by new like-minded colleagues, hence work produced is of a high quality.

Netflix recommends that HR officers should focus on the character of new hires as much as they usually focus on skills and experience. The new employees you bring aboard should be more focused on the success of the team than their own achievements.

As a rule, Netflix only hires “fully-formed adults” who are responsible and don’t need supervision or micro-managing. The employees should also act in Netflix’s best interest. Things like printing for personal use, traveling on Netflix’s tab, using huge vendor gifts and spending the company’s resources should be done within justifiable limits.

This is important considering the perks that Netflix offers employees – like unlimited vacation time and full-year paternity leave for salaried employees. In order for their policies to work, Netflix needs to trust that they won’t be abused.

Managers are also measured by their ability to foster teamwork, and not how fast they can complete paperwork. This has inevitably led to Netflix’s above average employee retention rate.

2. Big Spaceship

This design and technology consulting firm, headquartered in Brooklyn, New York has a different approach to dealing with employees.

Their campaign, aptly named “humans are humans” has sent a powerful message to world-class talent and also contributed to their high retention rate. Big Spaceship’s outlook has helped them remain at the top of their field for 13 years running with big clients on their portfolio like Nike, Google, and JetBlue. Employees are given autonomy as a way to increase efficiency and productivity.

The company structure is flat, with each employee being positioned as an expert in their specific field. They encourage working without work items needing detailed instructions from others, as they find it fosters creativity and helps employees to build emotional connections to their work.

Employees are spurred on to deal with challenges and claim responsibility for their tasks, which often translates into passionate employees.

At Big Spaceship, a mixture of work and play is encouraged. Getting to know co-workers and establishing bonds with them is embraced since team harmony is everyone’s responsibility. Employees are excited to work with friends, and loyalty to the company is all but assured.

Their employee retention program also involves team rituals and activities that require communicating face-to-face. Big Spaceship also allows dogs in the workplace, as this is proven to reduce stress and induce relaxation. Finally, the organization allows freedom to move around. Sitting in an office chair all day long is unhealthy, and employees are discouraged from sitting at their desk all day.

3. Clif Bar and Company

Based in Emeryville, California, this company is the epitome of business success stories with its impressive rise from the kitchen of a single inventor, Gary Erickson, to its multi-million dollar status. But perhaps what is more impressive is their 97% employee retention rate. When interviewed, it became apparent why Clif Bar and Company has such an impressive retention rate.

In 2000, Gary Erickson wanted to use private equity to buy out a partner and prevent an acquisition by a multinational company. Since it went against the company’s “Five Aspirations” – to sustain Clif’s people, brands, business, community and the world – he ditched the deal in favor of an employee stock option program (ESOP).

The ESOP program would prove beneficial since employees were concerned with the success of the company as their benefits were tied to it. A personal and emotional connection to the organization helped ensure that employee retention stayed high.

Clif is concerned with personal development and found a way to link that to the progress of their company as well. The core “Five Aspirations” also paved the way for the Sustainability Benefits Program that helped the company win multiple workplace awards. Employees are also awarded according to actions that are consistent with their “Five Aspirations” values.

Top-level management gets involved with employee perks to make sure they are used, e.g. the company gym that is next to the CEO’s office which employees are encouraged and even paid two hours per week to use. CEO Kevin Cleary is often in the gym doing his daily workouts, and employees feel motivated from the top executive’s buy-in.


Looking back at these three case studies, it is evident that employees tend to stick around when their personal development is considered. The ESOP program at Clif and unbelievable perks at Netflix are some examples that have fostered employee loyalty.

Compare this to companies like Amazon where employees report being overworked, superiors have high expectations from them, and constant backstabbing is the norm. Their Anytime Feedback Tool that was intended for positive and negative feedback allows employees to complain about someone to their boss anonymously. But since Amazon is highly hierarchical, this tool is often used to sabotage co-workers; and the executives regularly used the negative feedback as a basis to deny the reported employees of their benefits. As a result, Amazon has one of the highest churn rates with the average employee lasting only one year.

How do you retain your employees and call center staff? Do you use specific programs, or is retention rooted in your culture? Let us know in the comments below.

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Hutch Morzaria

About Hutch Morzaria

Hutch has been involved with the Internet and technology from the days of dial-up and has been involved in building and growing successful customer service and technical support teams globally. He has a deep and abiding passion for customers and is always looking for ways to make his teams as efficient and productive as possible. In his spare time, Hutch focuses on sharing his knowledge and enjoys spending time with his family.