More than 17% of employees leave their jobs within the first month. The process results in a high employee turnover that costs US businesses 1 trillion annually. Generally, companies tend to lose one-half to two times the salary of the employee who left.
As a result, every employer should make an effort to retain their employees. They should develop sound employee retention strategies to reduce their employee retention rate.
Employees leave when they are unhappy. Therefore, your retention initiative will make your employees feel valued and a part of the team. They can form strong connections with their peers and give their best to achieve your business objectives,
Moreover, employer Loyalty
s who work for a long time are able to pick up different skills. They will be able to identify problems and provide solutions adeptly.
In comparison, a new hire will need time to learn their responsibilities and build skills. Therefore, the company has to bear a huge cost when employees leave.
The employee retention tax credit was 50% of qualified wages in 2020. However, the IRS decided to increase the credit limit to 70% in 2022 to provide more relief to businesses.
Qualified wages cover salaries or any additional compensation paid to employees. The list may include perks like health insurance many employers offer.
However, employers may claim up to $7,000 under the ERC limit for one quarter. Moreover, the maximum qualified wage eligible for tax credits is $10,00 for one employee.
You can find out the 70% of the qualified wage you pay to determine how much ERC you may receive.
Employers with fewer than 500 employees may be able to claim the tax refund even if they are working. However, companies with over 500 employees may get the benefit only if their employees are not able to work due to lockdowns.
Summary: Find out the 70% of the qualified wage of each employee to calculate employee retention credit.
How Long Do You Have to Keep Employees for PPP?
The Paycheck Protection Program or PPP assists businesses in maintaining the count of their workforce. The need for PPP arose as many entrepreneurs had to lay off employees or place them out of work due to low demand for products and services.
The PP is a forgivable loan available from the government to rehire your employees. You can use the funds to hire back the employees you had to let go during the pandemic.
However, businesses may also utilize the funds to hire new talents to fill in the labor shortage.
Unfortunately, the PPP comes with a time limit of 24 weeks once you apply. During that period, you may rely on your PPP funds to pay your staff.
However, you will stop receiving funds once 24 weeks is over. You will have to look for other options after that or let go of your employees.
As a result, they perform poorly, hamper productivity, and impact the success of the company. They are also the ones to sign the resignation letter after a few months of joining.
Therefore, work to improve employee engagement. Make work fun and encourage your employees to form strong bonds. You may also improve engagement by giving your workforce new responsibilities and roles.
Most importantly, work on your managers and improve their relationships with the rest of the team. Often, employees leave due to bad or abusive managers.
Therefore, you will have to promote a friendly work culture where everyone feels welcomed to work and contribute.
How to Keep Employees from Leaving
Employers should be fair and equal to every employee in the organization. Any form of discrimination or harassment that is not addressed can make your employees quit.
Therefore, treat everyone equally and ensure each employee has the same rights. In addition, you can take several steps like:
Showing appreciation for good work
Rewarding top performers with day-offs, movie tickets, and so on
Listening to your employees and their problems
Paying your workforce on time and in full
Not allowing your employees to work beyond scheduled timings
Giving days off for vacations
Signing up your employees for degrees and courses
However, it is also necessary to hire the right people to improve employee retention. If you hire a person who is not passionate about their role, they are more likely to leave earlier.
Employee retention is a priority for every business. Companies should hire the right people and provide a good onboarding program. In addition, it is necessary to recognize and reward good work. Employers should also stay flexible and ensure their employees achieve the perfect work-life balance.