Retention-focused hiring has experienced a resurgence in recent years due to several factors affecting the workforce. The days of simply hiring to fill vacancies and choosing employees based on tangible experience and skills alone are slowly coming to an end. This change has been driven by top talent and hires who don’t fit the company culture as they are more likely to seek new opportunities. So, how do you execute retention-focused hiring and find employees who fit the hiring model?
Let’s explore that concept further.
Transactional Hiring vs. Retention Focused-Hiring
There are generally two reactions when people hear the term “transactional hiring”. First: most find the term off-putting, as it comes across as though something is being taken rather than offered. Second: it seems sensible, as an employer offers a position, pay, pension, benefits, etc., in exchange for work and expertise.
Transactional hiring is known for only seeking out an employee to fill a role, such as hiring for specific projects, seasonal demands, or to quickly replace an employee without considering long-term fit.
Rarely is there any emphasis placed on training the employee further, upskilling, or developing their career opportunities. The only emphasis is whether the candidate can perform the job in the moment, often disregarding other important factors, such as longevity and alignment with the current company culture.
As a result, these employees are either let go, seek out new opportunities, or fail to thrive under the business model. Before you know it, you’re likely looking for yet another employee to fill the role you originally hired them for. This is a waste of time and resources, as management have a new employee to get up to speed who may not be here by the end of the year.
Retention-focused hiring, on the other hand, places great emphasis on hiring an employee by projecting their long-term value to the company, while offering additional supports, opportunities and training to ensure they stick around. This reduces turnover rate and improves overall employee satisfaction. A win-win for everyone.
Why Transactional Hiring Tends to Fail
Using the transactional hiring method, employers seek out and hire employees who simply meet their immediate needs with almost no focus on long term success or career development. This approach, while efficient at solving the problem in the now, often fails due to a lack of foresight and strategic planning.
Let’s examine a few potential limitations of this approach.
Increased Turnover Rates
Transactional hiring always opts for the short-term over the long-term, typically failing to consider future and cultural alignment. This tends to lead to poor job satisfaction, causing employees to abandon their positions in search of more fulfilling work opportunities. While hiring using this process is quick in the moment, it can delay projects and increase workloads while you search for an additional replacement. This also inflates the hiring cost you hoped to save money on through limiting training and growth.
Inconsistent Performance
When they aren’t able to build strong relationships or have the ability to invest in their career opportunity, employees in transactional roles are likely to lack motivation to go beyond the minimum required tasks. This often results in a reduced productivity and inconsistent performance. Employees who don’t feel valued often won’t go above and beyond.
Damaged Workplace Reputation
If your company becomes known for transactional hiring and having hire turnover rates, prospective employees might assume the worst. Your business could come across as short-sighted and limited in terms of opportunity. Top performing employees aren’t going to apply nor dedicate time and effort to a company with a reputation for having a high turnover rate and lack of employee satisfaction; in fact, they’re more likely to connect with businesses that look for long-term employees, who are willing to upskill and develop their career prospects.
Increased Costs Overall
While filling a role in the now, even temporarily, may seem like a cost-saving method, it can actually increase your payout overall. Even during seasonal hiring, you have to use time and resources to seek out individuals to fill these roles, which takes time and money away from your business. If you’re also constantly having to rehire due to high employee turnover, you’re actively spending time and money on locating, retraining, and hiring a new employee. That’s not even factoring in onboarding costs. You can save significant money by having a permanent employee that not only stays with the company, but grows into the position and is able to take on more tasks.
Missed Opportunities for Growth
It isn’t just employees who miss on growth opportunities; your business does, too. If opportunities for career growth are limited for your new hires, then it’s unlikely that you’re going to miss out on the benefits of a long-term hire. Temporary/limited employees often don’t have the incentive to go above and beyond to take projects and positions to new heights. As well, employees with the great base-level skills to grow with the company may be constrained to their station due to the transactional nature of their hire, meaning their potential could be going to waste.
The Perks of Retention-Focused Hiring
Retention-focused hiring focuses on finding and hiring long-term employees who can grow with the company. They not only bring the right experience and skill set, but they also align with the company culture. Sometimes, employees who are hired under the retention-focused process may not have the highest level of experience or skill, but have the grit, desire, and positive attitude to advance their career with vigor. These employees are also desirable under the retention-focused hiring method.
Employees who want opportunities will work hard for a company and make the necessary moves and sacrifices to climb the corporate ladder, becoming some of the top-tier talent.
Of course, hires are based on circumstances and company needs. Either way, the point of retention-focused hiring places emphasis on keeping employees long-term through opportunities, upskilling, desirable wages/work packages, etc.
Reduced Turnover (and Costs)
When employees are set up for success over time, you decrease the likelihood of them moving on to the next opportunity. Why? Because your company already offers them what they want and need to have a fruitful, future-focused career:
Competitive, reasonable wages
Benefits/workplace perks
Growth opportunities
Upskilling
Desirable company culture
When you have happy, retention-focused employees, you're likely to find they're more motivated, engaged, and committed to doing their jobs well. This reduces disruptions from constant staffing changeover, allowing your teams to focus on completing their work efficiently with consistent collaboration. These employment solutions ensure that you’re not spending more on trying to fill a role than what’s necessary.
Improved Workplace Culture
Want to not only keep that desirable workplace culture consistent? Familiar faces who truly understand and enhance the company culture create a supportive environment that boosts morale across the entire workforce. This also means ensuring management and team leads understand the importance of keeping employees happy.
According to a 2024 study, millennial workers prefer to prioritize "people and culture fit" over other workplace perks, with team leaders having the biggest impact on company culture overall. Positive company culture leads to more engaged employees. According to the same study, engaged employees can lead to a 202% increase in work performance, with 69% of which admitting they'd work harder if they receive more recognition.
Translation? Good company culture and recognizing your employees hard work, equals: more motivated, hardworking, happy long-term hires.
Access to Institutional Knowledge
Long-tenured workers have the chance to accumulate valuable institutional knowledge, giving them the expertise to push innovation and efficiency within the business. By honing in on retention-focused hiring, you can ensure this invaluable knowledge stays within the company, not only becoming an asset, but also having the opportunity to make new discoveries.
Adaptability During Change
Having long-term, knowledgeable employees who have experienced the ebbs and flows of your business know how to act quickly during sudden industry shifts. Adaptability during times of change is something you’re not likely to find in a transactional hire that’s only been working for a month or two; however, your seasoned employees who understand the business and processes inside and out, they’ll be quick on their feet and adjust to change fast.
Return on Investment (ROI)
Retention-focused hiring is designed to maximize your ROI on employee development programs. Employees who dedicate themselves to one employer tend to contribute greater value over time. This means the initial investment into the employee is not only returned, but as they upskill and gain more experience, they become even more valuable. Before you know it, long-term employees can help fill gaps and find new, innovative ways to improve your business, making your investment well worth the cost while also saving you money in the future.
Looking for Long-Term Hires? itec group Can Help
Itec group understands that the workforce is always changing, and so are the unique demands of your industry. Technology continues to advance and companies need innovative employment solutions to stay ahead of the curve.
Let itec group match you with some of the top talent in the ever-evolving manufacturing industry. Contact us today.
