What are the benefits of employee retention?
Table of contents
- What is employee retention?
- Adverse effects of overlooking employee retention
- Benefits of employee retention
- Wrapping up
What is employee retention?
Today’s employees have good opportunities — especially those who are experienced and talented. As soon as they feel dissatisfied with their current employer or job due to lack of advancement opportunities, a low salary, or other factors, they switch jobs.
The result is that employers lose their investment in training and employee development to their competitors, corporate memory is lost, employee-customer relationships are strained, and the morale of existing staff decreases. It’s very important that employers retain their employees, especially those with experience.
Employee retention is a process in which employees are encouraged to remain with the organization for a long period or until the completion of a project.
Adverse effects of overlooking employee retention
Before looking into the benefits of employee retention, let’s start with an overview of what happens when you overlook retention.
Managers quickly get frustrated with constantly revolving employees. Plus, poorly equipped and trained employees burden managers by forcing them to get directly involved in everyday operations. The time and resources lost to repeated training and hiring activities also take HR managers away from their decision-making and supervisory duties.
High turnover damages a business’s ability to retain customers and supply high-quality customer service. Customers might feel more comfortable talking to the same staff and client service representatives over time. Personal relationships and familiarity will build customer loyalty.
Training and development costs
Hiring and training a new member of staff costs an average of $1,252. Also, new employees take time to develop into skilled professionals.
Employees with expertise at a particular company are aware of its policies, goals, and how to fulfill their roles. New employees typically need time to learn how to fulfill their roles. Since firms with high turnover can tend to have many inexperienced employees, they may suffer from lower employee productivity.
Morale in high-turnover firms is usually weak. A company’s culture is the shared norms and values of its coworkers. Workplace relationships are critical to an employee’s work satisfaction. Gallup estimates that actively disengaged employees cost $7.8 billion annually in lost productivity.
Benefits of employee retention
The global economic environment is changing drastically. Developments such as globalization, technological innovation, and growing competition pressure businesses and other organizations to focus on maintaining their competitive edge, at least by maintaining employees’ skills. Due to continuous changes and new developments in the economic environment, it becomes necessary on the part of an organization to retain its employees through continuous learning and development.
Retaining employees is crucial for organizations for the following reasons:
Decreased cost of employee turnover
Total employee turnover costs include recruitment and training costs, decreased employee morale and productivity. The more talent a person brings to the company, the more expensive that person is to replace. Proper retention initiatives are essential, as they help to reduce turnover and other related costs.
Extra tip to reduce employee turnover: Explore causes of high employee turnover and solutions to combat it.
Fewer organizational losses
When an employee leaves an organization, they take with them not only their own knowledge and skills but also knowledge about the company, customers, current projects, and history. An organization invests resources such as time and money into employees with the expectation of some future return. The investment is lost once the employee leaves the job.Retainment of employees helps reduce both direct and indirect costs associated with turnover and, thus, helps in reducing losses to the company.
Tip to save money in organizations: An organization saves money only through employee retention. Download our guide to learn how strategic workforce planning can help your organization save money.
Increased employee and organizational commitment
Proper employee retention initiatives help to increase employees’ commitment to work and the organization. Such initiatives motivate employees to work hard and encourage them to stay with the organization. Employees who think the organization values their input show a positive attitude towards the organization by enhancing their commitment, and performance.
Extra tip to earn employee commitment: Uncover several ways to win your employees’ commitment through this blog post.
Improved employee performance
Benefits of employee retention include motivating employees to put in the maximum effort to achieve organizational goals. Better performance directly leads to higher productivity. The rise in productivity, in turn, reduces the cost of production.
Employees who are loyal and engaged in their jobs tend to generate increased sales, improved productivity, profitability, and enhanced employee retention.
Tip to enhance employee performance: Did you know that more than 80% of employees state that upskilling can boost their confidence? An employee who is confident in their skills is likely to be more productive. Learn the core concepts behind upskilling, reskilling, and cross-skilling.
Better employer–employee relationships
In every organization, employees concentrate on fulfilling the organization’s objectives and carrying out the employer’s plans and policies. If employers initiate employee retention policies, both parties benefit. When employees feel their employer has their well-being in mind, it motivates them and builds a bond between employer and employee.
Tip to motivate your employees: Consider more ways to motivate your employees to choose a path that aligns with the organization’s goals.
Better organizational brand
Organizations that offer better retention policies or initiatives to their employees usually have a better image in the talent market. Such organizations succeed in attracting a qualified workforce and are less likely to face employee turnover and absenteeism compared to organizations that don’t invest in employee retention. According to a LinkedIn study on employer brand statistics, a positive employer brand helps to reduce employee turnover by 28% and hire 50% more qualified applicants.
Tip for avoiding high absenteeism: As work-life balance becomes more complex, explore reasons for high absenteeism and solutions to overcome it.
Better work–life balance
The quality of work–life balance refers to how favorable a job environment is for employees. Proper retention initiatives can ultimately lead to better work–life balance. Employee retention strategies aim to change the organizational climate by humanizing the work, humanizing the organization, and changing the structural and managerial systems.
Ready to start enjoying the benefits of employee retention? This blog post outlines 14 employee retention strategies that you can adopt right away.
Employees may leave their workplaces due to job stress, job dissatisfaction, job insecurity, toxic work environment, poor motivation, low wages, and a lack of rewards. Furthermore, employee turnover has a huge impact on an organization due to the costs associated with employee turnover. It can harm an organization’s productivity, sustainability, competitiveness, and profitability.
Organizations must understand the needs of their employees to adopt strategies to improve employee performance and reduce turnover. Implementing such strategies will increase job satisfaction, motivation, and productivity for both individuals and the organization. In turn, this can reduce employee retention problems, absenteeism, and employee turnover.