As you likely know, employees are leaving their workplaces at higher rates than ever. According to Work Institute’s 2022 Retention Report, in 2021 alone, more than 47 million employees quit their jobs voluntarily, which is the highest number of departures since the Bureau of Labor Statistics began tracking this specific statistic in 2001.¹ This same statistic was only 25 million people just ten years ago.

Not only is employee turnover disheartening and time-consuming for employers, but it is also expensive. According to Work Institute, it cost a business approximately 33% of an employee’s annual base pay when they quit. The time and resources spent advertising open positions, interviewing potential hires, and training new employees adds up quickly. While the statistics of how many employees are leaving and how much it is costing businesses may be alarming, they are likely not surprising to employers. However, the reasons that people leave may be more difficult to understand.

According to Work Institute, less than one in ten employees cited their pay as the main cause for leaving a job in 2021. This should be good news for employers. Retaining employees may not be nearly as expensive as you think; it may not be about the cash. While there are many ways to improve your workplace and retain employees, we, as employment lawyers, suggest three action items that have been shown to make employees stick around: clear expectations, regular constructive performance reviews, and a safe and efficient workplace, free from harassment.

1. Establish and Enforce Clear Expectations

Most employees want to be good at their jobs. They want to be a valuable member of the team and meet or exceed an employer’s expectations. The first step in meeting expectations is… knowing the expectations. The employer is responsible for establishing, communicating, and maintaining expectations. An employee handbook is an excellent way to lay out your expectations as an employer.

The primary purpose of any employee handbook should be to provide employees with information regarding their employment in a way that maximizes cooperation and communication between management and employees and promotes high employee performance. An effective employee handbook is just one of many tools that employers can utilize to organize, manage, attract, and retain employees. An effective employee handbook is one that is both practically and legally useful. Such handbooks typically include:

• Comprehensive information about the employer’s policies, rules, and employee benefits;
• A clear statement of the employer’s uniform performance and behavior expectations that puts employees on notice regarding conduct that will not be tolerated in the workplace; and
•  A concise statement of the employer’s intentions to comply with all employment-related laws and regulations, including its status as an equal opportunity employer.

Effective employee handbooks are also current and regularly revised to reflect changes that have occurred in both the law and the operation of the workplace. Though employee handbooks are not contractually binding, an effective employee handbook can help to support a legal defense in the event of an employment-related claim filed against the employer by a disgruntled employee.  In the same vein, an employee handbook that is not effective can provide a disgruntled employee with a source of direct or circumstantial evidence that could be harmful to the employer in the event of an employment-related claim.

2. Conduct Regular, Fair, and Constructive Performance Reviews.

Regular performance reviews, both formal and informal, help employers manage expectations and can be a great way to have a productive conversation with your employees regarding whether those expectations are being met. If expectations are not being met, performance reviews provide a constructive and efficient way to present employees with opportunities for improvement. Performance reviews are also an effective way to implement any promotions or pay increases.

In smaller workplaces the perception of treating one employee more favorably than another can be problematic when not all employees have an understanding of how decisions are made. It is important that employees know that they are being given the same amount of attention and consideration for promotions or pay increases as their fellow coworkers. It is also important that employees do not feel like they are being singled out with a list of areas for improvement. If employees know that everyone is partaking in performance reviews, they may be less likely to feel defensive about suggested improvements and instead, more likely to feel like performance reviews are an effort to make the whole team and office better.

Before conducting performance reviews, it is important to go in with a plan regarding the criteria of how you are going to evaluate your employees, especially with respect to promotions and pay increases.

Prior to meeting with employees about their performance, it may be beneficial for your workplace for employees to complete a self-evaluation. Self-evaluations can help employees feel like they are being listened to and that their input is valid. Self-evaluations may also help with any defensiveness associated with suggestions for improvement. Employees likely know what areas of their job they can do better at. For example, if one of your employees struggles with being on time, they are made aware of this fact with every minute that passes while they are sitting in traffic. If you ask this employee to complete a self-evaluation prior to a performance review, they will have some time to think about how to approach the conversation with the employer and may provide the employer with some insight into why they are always late. Then, at the performance review, the employer won’t have to spend time explaining to the employee that he or she is always late, and instead, the employer can remind the employee of the attendance policy (and cite to the handbook) to ensure that expectations are clear. Then, the two can spend the remainder of the meeting brainstorming ways that the employee can improve their timing.

3. Provide a Safe and Efficient Workplace.

In 2022, seven percent of employees who left their jobs cited the environment as their main reason for leaving. The subcategories under the umbrella of “environment” were organizational culture, facilities or physical environment, mission and values, safety, diversity, or coworkers. Over half of employees that cited environment as the reason for their departure cited organization culture as the reason. It is clear from these statistics that a healthy work culture free from harassment and discrimination is essential to retaining employees. One way to create such a culture is by ensuring that your antidiscrimination and anti-harassment policies are current and up-to-date.

As you know, numerous federal and state laws make various employment-related behaviors including discrimination and harassment on the basis of protected characteristics like race, sex, gender, and age illegal. Although Indiana has not enacted any law dealing with “workplace bullying” or generally negative behaviors that do not rise to the level of discrimination or harassment, Indiana courts have made it clear that workplaces should be free of this type of behavior.

The Indiana Supreme Court, in Raess v. Doescher, ruled that workplace bullying, though not a form of prohibited discrimination or harassment under Title VII, could rise to the level for an employee to have a valid cause to sue an employer or other employee.  In that case, the employee sued a doctor at an Indianapolis hospital for assault and intentional infliction of emotional distress after the doctor aggressively approached the employee, screaming and cursing, with clenched fists, in the hallway of the hospital. The Court concluded that this behavior, though clearly not “discriminatory,” could cause the employee serious emotional distress and thus be a valid basis for an award of damages.  Thus, the decision in Raess has opened the door to a state court cause of action for employees who have been verbally and emotionally abused in some way while on the job. 

While the decision in the Raess case did not specifically affect the employer of the perpetrator, the negative effects that workplace bullying can have on employees and business in general should encourage you to take an active role in preventing workplace bullying at your worksite before it begins. Several steps may help to curb workplace bullying including: prohibition of such conduct, company policies that emphasize cooperation and respect, and clear, publicized internal complaint procedures for such conduct. By creating an environment of non-tolerance for bullies, you can avoid the negative energy caused within the workplace by such conduct while also helping to avoid the reputational damage caused by potential lawsuits for workplace bullying.

Conclusion

While it may seem harder than ever to attract and retain employees for your workplace, there are concrete policies and procedures that you can put into place to make employees more likely to stay. As discussed, it is certainly cheaper to retain your current employees than it is to go through the process of hiring new ones.

For a more in depth look you can watch a recorded presentation here.

[1] 2022 Retention Report - Work Institute.pdf