Staff recruitment and retention is a thorny issue and one facing many businesses.  Data from the Confederation of British Industry found that 93% of employers surveyed said that they had experienced issues with recruiting over 2022, up from 86% in 2021 and just 77% in 2020.  There are many reasons for this – unemployment is currently at a low rate meaning the potential pool of candidates is much smaller.  Brexit has meant fewer foreign workers, and economic uncertainty generally encourages employees to stay put in jobs they might have left in more prosperous times.

As an employment lawyer, businesses often discuss with me ways in which they can tie their staff in and prevent them leaving.  There is a lot of information out there, so consider this my “No BS Guide” to actually retaining staff.

Tying in your staff contractually?

When businesses approach me to discuss staff retention, often the suggestion is some sort of contractual obligation, for example, minimum fixed terms, periods during which staff would have to repay expensive training costs, or onerous restrictive covenants which mean finding another job would be so difficult, there’s just no point in them leaving. 

In my experience, such clauses are either unworkable or do not actually prevent staff leaving, as a recent case involving a firm of solicitors, in which the firm attempted to contractually prevent a solicitor leaving for three years, goes to show. 

In the case of Hine Solicitors v Jones, Hine solicitors put in place a contract which supposedly said that Ms Jones was not entitled to resign for the first three years – but the firm could dismiss her at any time on three months’ notice.  Believing this clause was not enforceable, Ms Jones resigned during the three year period and joined another firm.  At this stage, Hine Solicitors issued proceedings for an injunction to prevent her working for another firm, telling the court that she could come back and work for Hine if she wanted.  As this was an interim hearing, the Judge did not give any opinion on whether or not the three-year fixed period was enforceable, but declined to give Hine the injunction it sought.  

Aside from any technical arguments about whether such a clause would work, contractual attempts to tie in your staff seem so draconian that one has to wonder why a company would need to resort to such measures.  My immediate thought as a prospective employee receiving a contract which included such a term would be “is this place really so unpleasant that they have to contractually keep you for three years?”.  Of course in some cases, for example fixed term projects requiring a particular skillset, fixed term contracts may well be reasonable or even expected.  However in the majority of cases, a clause of this type would more likely put off a prospective employee.

As for particularly onerous restrictive covenants, these are unlikely to be enforceable.  The point of a restrictive covenant is to protect your legitimate business interests and prevent employees from using your resources (such as confidential information, customers, staff, and industry contracts) to compete unfairly post-termination.  They are not intended to prevent free market competition or free movement of people.  Any clause which is so onerous as to be considered a restraint of trade would be deemed void.  Any restrictive covenant aimed to preventing an employee working entirely, rather than protecting the business, would almost certainly be void and unenforceable.  You should always seek professional advice when implementing such restrictions.

Moreover, in my experience advising employees, if an employee really wants to leave, they will.  Whether this means a legal battle, a career break, or spending some time in a different industry, if an employee is desperate to go, they will do whatever it takes.

What about the beanbags?

The opposite end of the spectrum from the types of businesses who would attempt draconian contractual measures are the businesses who try to keep staff with a ‘super fun’ working environment.  These companies will offer free tea and coffee, breakfast cereals and snacks, brightly coloured “relaxed” beanbag-filled co-working spaces, pool tables, pizza Fridays, yoga classes, office cats, an in-office smoothie bar complete with uninvited nutritional advice, and more.  The list really does go on and on. 

These businesses tend to be well intentioned and these things are all great – after all who doesn’t love a free pizza?  However, all too often companies offering these perks are putting lipstick on a pig.  No amount of Tuesday morning rounds of pool or table tennis with your colleagues will help if you are overworked, underpaid, under supported, or mismanaged.

What should businesses actually do?

The formula for retaining staff is actually quite simple:

Pay properly

A major reason for people to leave companies is pay.  You should be reviewing the markets regularly and ensuring your pay matches (or exceeds).  Ideally you should offer market increases before they are requested, it just leaves a better taste in everyone’s mouths and makes your employees feel more valued.  No one likes discussing pay so normally by the time your employees are asking you for a pay rise, they’ve had several months of resentfully ruminating on the fact that they’re being underpaid.

Manage properly

We all know the phrase “employees don’t leave businesses, they leave managers”.  Bad management is a very common reason for people to leave.  Your managers should be present, attentive, and professional.  They should be trained on dealing with issues with or between staff members efficiently, effectively, and sensitively.  It goes without saying that they should be competent in their jobs. 

Be flexible

Flexibility is a huge perk – and a genuine perk, unlike free protein bars – which is invaluable to employees.  This might take the form of fair and accessible policies on remote or homeworking, flexi time, or flexible working.  It might be less formal than this.  Flexibility might look like your staff never being afraid to ask if they can take a long lunch to attend their kid’s sports day or book a dentist appoint during the working day.  What 'flexibility' looks like depends on your business and industry.

Flexibility is hugely important, especially to the younger generation and businesses will often find a two-way benefit.  If you’re flexible and understanding when your staff need something, you’ll usually find them much more amenable to the odd bit of overtime when you need them.

Promote and be clear on progression

I often find that businesses will leave good employees in their roles far longer than that employee would like because they perform well and training someone else would be inconvenient.  However lack of progression is a compelling reason for employees to leave their jobs.  As the saying goes “the quickest way to move up is to move on”. 

If you’re not in a position to promote a good employee, you should be clear on the reasons and timescales, as well as discussing other options.  Being told “there’s no management responsibilities available at this time, but let’s send you on the management course so you’re ready when a role opens up ” or "let's look at a sideways move which will broaden your experience and assist in your bid for progression in the future" is much more encouraging than “no, there’s nothing available”.

If an employee is just not meeting the standards for promotion, that also needs to be communicated with them (see below).

Give effective feedback

All too often businesses don’t use their appraisals effectively.  Most employees want and appreciate feedback.  If an employee isn’t receiving pay increases and promotions, but their appraisals are all “exceeds expectations” they’re likely to get frustrated and leave.   Feedback does not need to be limited to appraisals but all too often managers are not honest with their staff about where and how they could improve.

Provide the right support and equipment

You might be the nicest boss ever, but if your employee consistently can’t do their job because they don’t have the right information, software, equipment, or support, they are going to leave. It is a fundamental underpinning of the employment contract that your staff be able to do the job they were employed to carry out.

You may not understand your employee’s day to day responsibilities that well, so the best way to ensure that they have what they need is to ask them, and listen to the response.  Obviously silly requests for unnecessary top-of-the-range computers may not be granted, but if, for example, you have construction workers who don’t have the right tools, that is something which needs to be urgently addressed.

Have clear policies

People generally like to know where they stand and what they’re doing.  Having a clear, effective, and sensible set of workplace rules and procedures helps to prevent so many issues.  Your staff should know from your policies what they can and can’t do, who to go to with any issues, how much holiday they can take and how to book it etc.  All of this should be dealt with in a staff handbook which is relevant, clear, and concise. I am not a believer in onerous 200-page documents (in most cases) setting out hundreds of rules you don’t even apply. The simpler your policies can be, the better.

After putting in place your policies, you then need to make sure they are followed consistently and fairly.  Playing favourites, not applying disciplinary rules to certain employees, or allowing some but not others to break the rules, will only lead to resentment and dissatisfaction amongst your staff.

Don’t be horrible

Hopefully this last one is obvious (and ties in with managing effectively), but it doesn’t hurt to reiterate it.  The relationship between employee and employer is one of trust and confidence.  Many of us spend more waking hours with our colleagues than with our own families.  You don’t need to be (and often can’t be) best friends with your staff but mutual respect and kindness goes a long way to ensuring a long and happy working relationship.

Summary

This advice probably does not seem groundbreaking, and that’s because it isn’t.  The 8 simple steps above are the foundation of effective management.  If you have these 8 steps down, you will generally find that you have a happy and stable workforce. That is not to say no one will ever leave – that would be unrealistic, but you will find recruitment and retention much easier if you don’t have a reputation of being a ‘toxic’ place to work - and once you've mastered the basics, feel free to invest in as many beanbags and pizzas as your staff can handle. 

Should you require any assistance with recruitment, retention, implementing new structures or procedures, or employment contracts, please contact Arvin Sandhuby email or on 01494 893529.