Your people are your most valuable asset. It's a business cliche for a reason. And in New Zealand's relatively limited talent market, retaining top workers is every bit as important as attracting them, because the best can prove quite hard to replace.
The good news: there are a range of proven strategies that can help your business to retain its best employees. By implementing these strategies you can boost employee job satisfaction, make your business more efficient and productive, and build a reputation as an employer of choice amongst top talent.
In this article we'll share seven of the most effective employee retention strategies, and learn how a few NZ organisations have used them to boost employee retention rates.
Why staff retention matters in New Zealand
Before we get into the 'how', let's answer the 'why'. Why is it important to retain employees?
Hiring, onboarding and training new employees is a costly business. According to the HR Industry Benchmark Report for Australia and New Zealand, in 2022 it took an average of 40 days to fill an open position, and the average cost to hire a new employee was $23,860.
If that figure feels high, consider the domino effect that can be triggered by the loss of a top employee. Your organisation needs to deal with:
Recruitment expenses: You'll need to pay for advertising and agency fees, and spend time conducting interviews.
Onboarding and training: You'll need to invest time and resources in integrating new hires.
Lost productivity: It can take months for new employees to reach full productivity.
Knowledge loss: Departing employees take valuable experience and expertise with them.
Client relationships: Turnover can negatively impact the experience you offer your clients, which, in a market as intimate as New Zealand's, can have a significant impact on your ongoing ability to win business.
Decreased morale: High employee turnover can negatively impact remaining staff, causing even more to leave.
Team dynamics: If a key employee leaves, it can take time for the rest of the team to adjust to and cover for their absence.
Employee retention strategies save you money, strengthen your company culture, and make your workers feel appreciated. They offer your business much needed stability, and grant you ongoing access to the best talent.
In short, there are a wealth of reasons to implement employee retention strategies. But what exactly do these strategies look like?
7 effective staff retention strategies
There are many ways to reduce employee churn. The following seven strategies are proven to boost employee retention, and can be combined in any way that suits your needs, wants and situation.
1. Competitive compensation and benefits
Your employees don't work for your organisation out of the goodness of their hearts - they're there to earn a living. And if a better living can be earned elsewhere doing a similar job, you can't be surprised if they choose to up and leave.
Beyond minimum wages, you should consult salary guides and job ads for open roles to understand the market rate for a given position. If you aren't in a position to pay a higher salary than your competitors, you could offer other benefits, from KiwiSaver contributions to employee discounts and perks.
2. Career development opportunities
Most employees want to feel like they have professional development opportunities - that the job they're currently in is a stepping stone to something more.
Employers with high retention rates tend to promote internally where possible, so employees feel like their hard work is more likely to be rewarded in the long run. Mentorship programs can reinforce this feeling, as the presence of a mentor demonstrates explicit intent to develop the future leaders of your organisation.
You can also encourage employees to gain qualifications and certifications that will help with their professional development, and offer tuition reimbursement for relevant training proactively undertaken by self-motivated employees.
3. A positive work environment
In New Zealand workplaces we prioritise inclusivity, collaboration and egalitarianism. Workers want to feel like part of a team, ideally a diverse one. They want everyone to be on a level playing field and treated the same. They want good ideas to be listened to and implemented, no matter who or where they come from.
You can create this positive and open work environment by:
Breaking down needless hierarchies and flattening the organisational structure.
Trading closed offices for a more open floor plan.
Holding regular meetings that allow everyone to have their say.
Encouraging collaboration between individuals and teams.
Establishing employee recognition programs: rewarding outstanding ideas, efforts and contributions.
4. Work-life balance
COVID made many workers realise that commuting to the office to work 9-5 was more a ritual than a requirement - it really didn't matter where and when they did their work, as long as it was done.
A modern organisation should be prepared to offer more job flexibility to its workforce than it may have in the past. Allowing your employees to work remotely, or during hours that better suit them, can be a huge reason for them to stay with you. Other flexible work policies can include:
Compressing a work week from five days into four (potentially longer) days
The option to transfer hours from one week to another
Job sharing (where two part-time employees sharing one full-time role)
Time in lieu/time banking (paid time off for extra hours worked)
Allowing employees to take breaks whenever it suits
On the flipside, remote work and flexible hours simply aren't possible for some jobs, and COVID also served to highlight the value of office time - the difference that physical presence can make to the connectedness and happiness of a team. It's important to consider whether a specific flexible work policy is what's best for both your workers and your organisation.
5. Open communication
Perhaps the best way to keep employees is to listen to them.
According to a 2023 PWC survey, only 28% of Kiwi workers believe that their manager encourages dissent and debate in the workplace. This lack of openness and accountability can lead to employees feeling like they aren't really valued - that they're just another number, another cog in the machine - which can lead to dissatisfaction.
You should actively encourage transparency, by sharing everything you reasonably can with your employees about the more strategic, big picture decisions that the company makes. You should also actively solicit feedback. This could be anonymous, like surveys and suggestion boxes, or it could be in an open forum, like a weekly team meeting.
6. Employee engagement
Further to open communication, you want the employee experience to be an engaging one, where the worker feels invested in and passionate about where the company is heading. As we've discussed before, disengaged employees are 69% more likely to leave for slightly higher pay.
Employee engagement should begin with the onboarding process, which is an opportunity to get to know your new hire and adapt the employee experience to their needs and preferences.
You should consider incorporating team-building activities to help employees get to know one another better, and connect on a deeper level than they otherwise might. Bowling, paintball, escape rooms, art workshops, something as simple as Friday night drinks - non-work activities can strengthen the culture and collaboration of your team, and can also just be really fun!
7. Wellness programs
Health and wellness programs are proactive efforts to improve employee wellbeing. They can take a variety of shapes and forms: basic first aid courses, mental health check-ins, eight-week fitness challenges and more.
These programs show your employees that you care about them, which your workers will appreciate. In fact, no less than 92% of workers rate workplace wellness programs as 'very important'. This is something that most Kiwi employers are well aware of too, with 84% of workplaces agreeing that staff wellbeing initiatives helped to retain high performing employees.
In recent years there has been a particular focus on mental health and wellness, given the difficulties that many workers faced during COVID.
NZ employee retention success stories
Looking for proof that these strategies work? A number of Kiwi companies have already demonstrated just how effective retention best practices can be, including:
Air New Zealand: The national carrier realised that they needed to invest in their people if they were to retain the best. So over the course of 13 months the airline raised wages for all airport employees by 9.5%-26%, including entry-level roles. The business also provided professional development opportunities, and placed a focus on internal promotion, to encourage Air New Zealand employees to think about their work as a career instead of a job.
James Cook Hotel Grand Chancellor: The hotel industry is known for high employee turnover. But this Wellington hotel took on that conventional wisdom, creating an organisational culture that encourages and rewards productivity, to significantly improve employee retention.
Employee retention: the key to business growth
People are a business's most important asset: to be the best, you need to keep the best. The simple act of being aware of the importance of employee retention can be the trigger to treating your workers better, and keeping the best around for longer.
A good culture, flexible work arrangements, development opportunities, and a focus on employee health and engagement can all form effective retention strategies.
But one of the simplest yet most effective ways to show your workers you care is to reward them for their efforts. And we're not just talking wages and bonuses.
With the help of 1Team, your business can offer high performing team members a range of perks, such as savings from New Zealand's leading retailers – Torpedo7, Dulux, Pita Pit, Hirepool, Repco, Warehouse Stationery and more. What's more, these rewards can be delivered to your workers through an app that has been tailored and branded specifically for your business.
Ready to reward and retain your best workers? Get started today.
