Employee retention is a key issue for companies and one that can be instrumental in ensuring future business success. Employee retention means keeping the talented people your business has hired, rather than losing personnel to high rates of turnover. By paying attention to this component of human resources management, businesses can realize benefits to their bottom line, ensure the efficient use of time, preserve valuable knowledge and expertise, and differentiate themselves from their competitors.
Why does employee retention matter?
Employee retention is more than just a statistic; it’s a key human resources issue that can have significant impacts on a business’s productivity, professional environment, competitiveness, and bottom line.
Employee retention enables efficient use of time and resources
It takes time to find, hire, and train the right person for a job. When a fully trained, the successful employee quits, leaving their position vacant, everything your company invested in the departing employee just walked out the door. Not only is that all lost, but the entire process starts all over again – requiring a business to expand even more resources.
That’s time, effort, and money lost because the former employee decided to move on – all of which could’ve been avoided if employee retention efforts had enabled the business to keep that fully trained, productive worker instead.
A focus on employee retention improves the overall workplace environment
A focus on employee retention will create the kind of work environment and the company culture that is itself a hook in the recruitment process. high employee satisfaction and low rates of turnover are both positive indicators that attract excellent candidates to great companies. A focus on employee retention can result in attracting more top-notch candidates to fill any open positions and to help the company expand. Having made your business a great place to work provides something tangible that provides a competitive advantage.
Employee retention has a direct financial impact
Employee turnover, losing employees and having to fill their vacated positions, is enormously expensive. While current employees do often expect and receive raises, statistics reported by Human Resources professionals as of 2015 indicate that these raises are typically around 1-5% of an employee’s salary. On the other hand, replacing an employee can cost around 30-50% of the employee’s salary for entry-level employees, all the way up to 150% or more of the salary of a very experienced or highly specialized employee.
How can businesses maximize their employee retention?
Employees want to work for companies where they feel valued, where they feel good about coming to work each day and where they believe their careers will continue to develop. Businesses can improve employee loyalty and retention by making sure employees feel like they matter to the company, and by ensuring that the work environment is pleasant and productive. This can involve everything from providing excellent compensation packages to taking a look at the company culture.
Another excellent way to ensure that employees will remain with your company is investing in their future success. Opportunities to develop their careers and their professional skills and knowledge will boost employee loyalty. Demonstrating that your business values contributions employees can make in the future will keep your employees focused on their future with your company.
In order to determine whether your business is taking the right steps to retain its personnel, it's important to assess what employees think of the company, what's going well, and what areas represent opportunities for growth. Companies can use an employee engagement survey to see how satisfied their employees are and to gather feedback for areas in which the company can improve.
A business that’s focused on making sure it keeps its employees will likely be one that emphasizes making sure it’s a good place to work. Keeping employees satisfied helps ensure both their productivity and their loyalty.