How to retain staff if you can’t pay more

    How to retain staff if you can't pay more


    How to retain staff if you can’t pay more

    Retaining talent remains a priority for employers, not least due to the cost and effort of recruiting replacement personnel.

    Pay rises are usually the first consideration when looking to keep staff, but that may not always be a viable option.

    The following guide examines the importance of proactive staff retention with practical advice on how to retain staff if you can’t pay more.

    What is staff retention and turnover?

    Staff retention relates to the extent to which an employer retains its employees, and may be measured as the proportion of staff with a specified length of service, typically a year or more, expressed as a percentage of workforce numbers. In contrast, staff turnover refers to the proportion of employees who leave an organisation, again expressed as a percentage of the total workforce, and usually on a year-on-year basis.

    The term ‘staff turnover’ is used broadly to cover all leavers, including those who retire, or leave involuntarily, due to either dismissal or redundancy. It’s also possible to calculate more specific breakdowns of turnover data, such as redundancy-related turnover or resignation levels, although the number of resignations tends to be the most useful statistic when it comes to assessing the effectiveness of people management practices, and informing the design of targeted retention initiatives if more needs to be done to help retain staff.

    Why is staff retention important?

    Where staff retention is an issue, securing suitable replacements in a competitive job market where candidates are getting lots of offers can be extremely difficult. There are also a number of other logistical and costs consequences arising from poor staff retention, including:

    • administration costs relating to each resignation
    • low productivity of resignees during their period of notice
    • the cost of temporary cover during the period in which there are vacancies
    • recruitment and selection costs to replace lost members of staff
    • induction training and onboarding costs for replacement members of staff
    • low productivity of new employees during their first weeks or months in a role
    • low performance and productivity levels amongst established staff due to loss of morale
    • interruptions in daily operations and business continuity due to being understaffed
    • an overall inability of an organisation to meet short and long-term strategic goals.

    There’s no set point at which staff turnover starts to have a negative impact on the performance of a business, where much will depend on the type of labour markets in which your organisation competes. In cases where it’s relatively easy to find and train new employees quickly, and at reasonably low cost, it’s possible to sustain high quality levels of service provision despite having a high turnover rate. However, where skills are relatively scarce, recruitment is costly or where it takes several weeks to fill a vacancy, poor staff retention rates are likely to be problematic. The more valuable the employee in question, where individuals either have specialist skills or where they’ve established strong relationships with customers and clients, the more damaging the resignation, especially when they move on to work for competitors who can offer a more lucrative pay packet.

    Why is it important to monitor and measure staff retention?

    Monitoring and measuring staff retention rates, and understanding the reasons behind high staff turnover, means that employers, managers and HR personnel can more effectively devise retention initiatives that reduce the numbers of employees resigning.

    There are a number of reasons why employees may choose to move on to pastures new, where it’s important to identify any pattern in poor staff retention to decide how this can be best dealt with moving forward. In addition to a lack of regular pay rises, common reasons for high staff turnover rates include unfair treatment at work, poor working relationships, a negative working environment, poor employee wellbeing, inflexible working practices, limited career advancement and a lack of any adequate forum for staff to voice concerns.

    In some cases, it may simply be the attraction of a new job that ‘pulls’ someone away from their existing employer, especially if this offers better pay and benefits. In many cases, however, it’s the ‘push’ factors, where an employee feels forced to seek alternative employment because they’re dissatisfied in their present job or with their present employer.

    Staff retention strategy

    The first step in reducing high staff turnover rates is by developing an effective staff retention strategy for your organisation. To develop an effective strategy, you’ll not only need to identify the reasons for employees leaving, but the impact that this has on your business, including the associated costs. This data can then be used to develop a costed retention strategy that focuses on the particular issues and causes of high staff turnover specific to the organisation.

    Having identified where any problem lies, careful thought must then be given to the ways in which you can continue to meet the economic and operational needs of your business through your existing workforce, whilst keeping that workforce loyal and committed.

    Ideally, the methods to be employed should be clearly set out within a written policy to be used by all line managers, HR personnel and anyone else responsible for people management practices within the business. This will provide a clear template on how to get the best out of your people, and ensure a consistent and united approach across the board.

    How to increase staff retention

    In addition to pay and benefits, there are various ways in which staff retention can be increased, all of which have been shown to play a positive role in improving retention. This means that even if a higher paid job is on offer, there can still be ways to avoid losing valuable employees, as the size of a pay packet isn’t always what motivates an individual.

    Below we set out a number of different steps on how to retain staff if you can’t pay more:

    Treat people fairly

    Perceptions of unfairness, especially when it comes to equality and diversity, is often a major cause of voluntary resignations. This means that there must be policies in place which adequately deal with equal treatment and inclusion in the workplace, as well as harassment, bullying, discrimination and victimisation. It’s in every employer’s interests to promote an inclusive and fair working environment in which employees can thrive, and any unwanted and unlawful conduct is eradicated.

    Foster healthy working relationships

    Poor relationships with line managers or colleagues can often lead to disengagement or even workplace conflict which, in turn, can lead to resignations. By encouraging effective and open communication, employees should feel more comfortable in airing their views and raising concerns to help minimise any conflict. Putting in place easily accessible grievance procedures can also help employees to feel confident that any complaint will be fairly investigated and their voice will be heard.

    Promote a supportive working environment

    If employees feel overworked and/or unsupported, this can often result in the loss of valuable members of staff. It’s vital that employees are not only practically supported in their job roles, but also made to feel good about what they do and appreciated for their efforts. By ensuring that your staff feel recognised for the work that they do, even through just verbal praise, this can help to create a positive employer-employee relationship. In this way, employees are much more likely to feel happy and motivated in their role, and loyal and committed to your business.

    Safeguard employee wellbeing

    Effectively managing issues such as workplace stress are vital to ensuring the health and happiness of your workforce. This means ensuring that your staff are not overworked, they’re fully supported, and any personal or professional problems are taken seriously. An employer who looks after the wellbeing of their workforce, and each employee’s individual needs, is more likely to boost both morale and levels of retention.

    Provide flexible working

    You should be open to flexible working arrangements and accommodate individual preferences on working hours wherever possible. In this way, staff can fit in personal and family commitments around their working arrangements, where a better work-life balance will promote a more positive workplace culture. Having a boss that’s flexible is often more highly rated by employees than a bigger pay packet.

    Offer career development and progression

    You must maximise opportunities for employees to develop their skills and careers, making them feel confident that you value their future aspirations. Equally, it’s important to understand and manage people’s career expectations, such that where promotions are not feasible, you should look for sideway moves that allow employees to gain different development experiences. In this way, employees are less likely to become bored or disengaged, and far more likely to enjoy their work and want to stay.

    Encourage your workforce to have a voice

    In addition to encouraging effective and open communication, you should ensure that employees have a voice through things like morning meetings, regular performance conversations, one-to-one appraisals, attitude surveys and even consultative bodies. If there’s no opportunity to voice issues or concerns, or to influence outcomes that impact their daily working lives, resigning may feel like the only option.

    Hire well

    Finally, it’s worth remembering that poor recruitment and selection decisions, by either the employee and employer, are commonly to blame for early leavers, where individuals are taken on in job roles for which they’re ultimately unsuited. This may be because a candidates’ expectations are raised too high during the recruitment process, for example, by the recruiter overstating the scope of the role or the opportunities for progression. This means that you must give prospective employees a realistic job preview at the recruitment stage, avoiding any temptation to oversell the job or minimise aspects of the role. Equally, when a successful candidate is onboarded, suitable induction procedures should be put in place, as first impressions can influence an employee’s decision to leave a business sooner rather than later.

    Tips on how to retain staff if you can’t pay more

    In many smaller organisations, an employer will not necessarily have the resources to invest in creating a comprehensive staff retention strategy. However, even in the absence of any formal written document, it’s still important to develop a positive workplace culture.

    The following checklist can be used as a reminder on how to retain staff if you can’t pay more:

    • Ensure diversity and inclusion within the workplace, treating staff fairly and lawfully
    • Foster healthy working relationships, where staff are encouraged to voice their concerns
    • Promote a supportive working environment in which employees feel valued
    • Safeguard employee wellbeing, ensuring the health and happiness of your workforce
    • Provide flexible working practices for a healthy work-life balance
    • Offer career development and progression to encourage high levels of employee engagement
    • Enable staff consultation, where employees have plenty of opportunities to have their say.

    Retaining staff if you can’t pay more FAQs

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    Legal disclaimer

    The matters contained in this article are intended to be for general information purposes only. This article does not constitute legal advice, nor is it a complete or authoritative statement of the law, and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its accuracy and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should be sought.



    Gill Laing is a qualified Legal Researcher & Analyst with niche specialisms in Law, Tax, Human Resources, Immigration & Employment Law.

    Gill is a Multiple Business Owner and the Managing Director of Prof Services - a Marketing & Content Agency for the Professional Services Sector.

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