Making employee retention a priority has positive ramifications that can ripple throughout an organization, while failing to do so has the opposite effect.
High levels of employee turnover can impact everything from company morale and culture to the customer/client experience and revenue, but what are the benefits of employee retention, and how can improvements be made to current strategies and company processes?
With some work and minor modifications, it’s easy to set a business up for improved employee retention, yielding a solid competitive advantage in any industry.
Define Employee Retention and Improve It
Employee retention is the ability and strategies an organization uses to reduce or eliminate voluntary turnoverand keep the hired employees satisfied by providing them with what they need to stay engaged in their positions.
What Are the 5 Main Drivers of Employee Retention?
1. Reward and Recognition
Give recognition to your employees when work is done well and provide performance feedback for all work.
Career development opportunities keep top talent reaching for greater heights, secure in the knowledge they can continue to learn and grow within the business instead of searching outside of it.
A dismal work-life balance often causes high turnover.
Ensure valued employees have ample time for both parts of their lives, ensuring work does not infringe on their personal lives.
4. Competitive Salary and Benefits
Employee surveys always show this to be at the top of the list of factors, so pay employees what they deserve and give them the benefits they seek to avoid high turnover rates.
The benefits provided need to keep up with employees’ expectations.
TIP: Use Edenred Benefits to enhance benefits packages and offer unique perks that are meaningful to employees, have a positive impact on company culture, and help employers retain the best talent.
5. Positive Employee Experience
Company culture will make or break the positive impression new hires and valued employees have.
To improve employee retention, build close teamswithin an organization where long-term careers can be seen and aspired to.
What Are the Benefits of Employee Retention?
There are many reasons why employee retention is important.
Employee retention impacts everything from boosting employee morale and lowering the costs associated with recruitment efforts to affording better customer service.
Here are the two biggest benefits of employee retention:
1. Teams That Have Time to Gel Are Often More Productive
Team building takes time, and when new hires arrive on the scene, it’s doubtful they will immediately gel with seasoned employees.
New employees will often feel out of place as they learn the ropes, and it will take them longer to perform new tasks, lowering productivity levels.
If priority is placed on retaining employees, this solidifies the individuals as a team, maintaining their institutional knowledge and allowing them to work as a cohesive, highly productive unit.
2. It Avoids the Significant Business Costs of Replacing Employees
When replacing one or more employees—especially in a skilled workforce—the hiring costs rise exponentially.
The price tag associated with advertising, interviewing, onboarding, and training employees should be weighed against the cost of the following:
- Creating a positive corporate culture.
- Providing a highly coveted benefits package.
- Maintaining an inviting office space.
- Instilling a healthy work-life balance.
- Making employee retention and employee satisfaction a priority.
When it comes down to it, retaining employees saves time, money, and resources.
What Are the Negative Effects of Employee Turnover?
It’s in the best interest of any organization to improve employee retention, so what are the repercussions of losing employees?
1. Lower Productivity Levels in New Employees
Turnover causes animmediate drop in productivity.
Therefore, percolating and acting on timely employee retention strategies is so important to the bottom line of any business.
When employees leave, it can take as long as 1 to 2 years for a new hire to catch up with the productivity of their coworkers.
Retention is also important because any new employee will have to start building relationships with customers and coworkers alike, causing the customer experience and the employee experience to suffer.
In a high-retention workplace, employee engagement is generally much greater because the group has had time to bondwith one another and with customers, boosting employee morale and the customer experience.
2. Stress Levels Rise in the Remaining Workforce
While an organization goes through the interview process, the current level of employee satisfaction can fall and crack under the added stress of a missing cog in the wheel.
The staff often find themselves picking up the slack, doing additional work, and working overtime.
Resentment can easily build up, even amongst the most engaged employees, pushing them to look for the exit sign as they burn out.
3. Poorly Impacts Company Morale
The higher morale generated within a company, the better employees feel, and the longer employees stay. High employee turnover causes a breakdown of the highly skilled workforce that takes time and money to build.
When engaged employees see their coworkers leaving, this causes an increase in the levels of disruption and eliminates any cohesion that has been built up between coworkers.
On top of greater responsibility and increased workloads, when employees lose their coworkers, a feeling of turbulence can run rampant throughout an organization, causing motivation and satisfaction levels to plummet.
Even with voluntary employee turnover, losing connections in the workplace can easily fragment the employee experience and can cause others to start looking for a new job or entertain the idea of quitting.
The higher employee morale remains, the greater the feeling of belonging and connection within the workforce, and this comes with a company culture that places a high value on employee retention.
4. Negatively Influences the Level of Service a Company Provides
Employee retention is important because it can influence customer and client satisfaction, especially if the new hire works in customer service.
When employees leave, they take all the institutional knowledge they obtained and regardless of the position to be filled, it will now take longer to resolve even common issues.
A veteran employee will have a plethora of working knowledge—practical knowledge that no system or amount of training will or can teach.
They know the industry, the clients, the culture, and the operations and can share these examples and insights with newer hires to benefit all involved.
A long-term employee with a high level of client interaction will inevitably build up relationships over time. These disappear the moment that the employee leaves.
This can easily sour customer and client relationships alike.
When you have seasoned employees, they can easily provide a far more tailored and knowledgeable level of service.
Why Is Employee Retention More Important Now?
Employee retention allows a company to make the most of the top talent it has previously recruited, leading to wide-sweeping growth opportunities.
An existing employee already holds the knowledge and training that new employees would need to acquire, and this deficit eats up both time and money.
The Society for Human Resource Management (SHRM) estimates it costs 6 to 9 months of that employee’s salary to locate and onboard a replacement, making high employee turnover devastating to the bottom line.
Some experts put that cost even higher when you factor in hiring and training costs along with the loss of productivity while there’s nobody installed in that position.
The higher the education level and need for specialized training a particular job requires, the larger the replacement cost.
Are There Any Disadvantages of High Employee Retention?
The only negatives of having a low turnover rate appear when long-term employees become disengaged.
This can lead to the following:
- Lost productivity.
- A detrimental work environment.
- Losing the most talented employees.
Higher retention rates can also impede an organization’s ability to implement change, decrease levels of inclusion and diversity over time, and lead to less innovation throughout the company.
Even disregarding an employee’s annual salary, when a worker leaves, the cost of replacing that individual is high and far-reaching.
Helping employees achieve a better work-life balance that offers flexibility and improved leave policies can lead to reduced hiring costs, increased employee satisfaction and engagement, better customer relationships, and a lengthened employee lifecycle.
Want to review, revamp, and revitalize your current employee benefits package to prioritize employee retention?
Book a meeting with us today so our team can help you retain your most valuable employees!
