Employee retention is one of the only metrics that can be directly correlated with all of business success, revenue, customer satisfaction, employee morale, and business cost. Not only that, but it’s an extremely important metric that business owners can measure on a weekly, monthly, or quarterly basis.
Every successful business or company has an employee retention policy in place – and there are some good reasons for that. If you are yet to implement something, you should begin setting one up and discuss with your leadership team how you can increase employee retention. It’s the number one method for ensuring that your workforce is happy and satisfied, and there are several reasons why you want to do that. By not focusing on employee retention, you risk losing your most valuable people, losing revenue due to inexperience, and losing customers due to lowered satisfaction levels.
What is employee retention? Well, primarily, employee retention is extremely important. So much so, that it needs to be one of your top priorities and a primary strategy. That’s because taking care of your employees means taking care of business. Developing personnel within your organization will only lead to greater success and morale across the board.
How to Retain Good Employees
Gallup cites a study that discovered staff turnover can hit heights of 50% in the first year and a half of employment. Retaining good employees is different for each company and each use-case. However, your primary objectives can be boiled down to address retention on an employee-specific level. That means, in order to retain talent, you need to address each employee separately and as an individual. Though not as easy as enacting a business-wide decision, focusing on individual employees and their developmental needs will increase overall employee retention.
For new hires, retention efforts must be put into place from day one. You should focus on training and ensuring that they have the resources and tools at their disposal to accomplish their job seamlessly. In addition, enacting “buddy systems” or mentorship programs will help newer hires feel more welcomed and accepted from their first day.
In a study carried out by the Society for Human Resource Management, 52% of the organizations surveyed perceived an improvement in employee retention after implementing an onboarding program. 60% saw an increase in productivity, and 53% felt onboarding improved their customer satisfaction rate.
For mid-level employees, programs should be enacted which allow the continuation of learning and development of their skills. They should not feel that their careers and skills are being side-lined, underdeveloped, stalled, or underutilized. Mid-level personnel should also be invited to sit in on certain high profile and high priority projects. They should be encouraged to contribute both knowledge and expertise – upwards, sideways, and toward lower ranks. Lastly, their efforts during and after the project should be acknowledged and promoted, especially to their direct manager.
A study by the Australian HR Institute found that 63% of respondents cited a lack of career progression options when leaving a role. The same survey discovered that the top three perceived strategies companies have to promote employee retention include providing training and development opportunities, flexible work arrangements, and performance feedback systems. Around half of the respondents also reported that workplace culture forms an effective staff retention measure.
When it comes to senior-level employees, it’s best to get a sense of what they truly want from their careers. Are they looking for a higher management position? Do they want to lead an internal project? Ask senior employees what their goals are and where they want to travel. That should be a natural part of working within your company, so keep the atmosphere relaxed, open, and inviting. Make it the norm to take an interest in the ambitions and dreams of your people, and they’ll thank you for it by staying put.
For all management-level employees, take on their feedback directly. Work with them on developing their teams and their management styles. Encourage managers to meet every other week and discuss what’s working and not going so well on their teams. Encourage managers to hold their teams accountable and to hold themselves accountable for the performance of the people under and around them. Provide a small budget for each manager, allowing them to dole out gifts and rewards to team members when they deserve a pat on the back. You should always empower your managers and give them the flexibility and space to develop their teams.
Why Retain Employees?
Seasoned Employees Add Organizational Value
Having seasoned, veteran employees adds direct value to any company. Knowledge is worth something, and so is experience, so make sure the employee experience is a great one – including for your most experienced personnel. Seasoned employees are much less likely to make avoidable mistakes. They’re also more likely to understand the nuances of organizational systems and be able to handle unexpected errors or blips when they do inevitably occur. Older hands tend to be more comfortable with clients and customers and understand how to deliver on their expectations.
Employee Retention Provides a Sense of Stability
Perhaps above all, having seasoned, experienced employees around adds a sense of stability and calm to any team or department. Experienced employees benefit newer and younger staff members, too, because they promote the idea your company provides a safe and stable career environment.
No one likes working for a company or on a team that is constantly losing members – poor employee retention is bad for morale. High staff turnover rates create a general sense that something must be off. After all, why would so many people continue to leave if this were a great place to work? That sort of atmosphere is unavoidable when employee retention is low, and it makes for itchy feet. It’s self-perpetuating, and the whole thing quickly gets out of control, accelerating the rate at which employees are jumping ship. When things get to that point, it’s usually a lot more challenging to address the problem, so act now and put a policy in place.
Bad Hires Cost Good Money and Good People
By not retaining your best employees, you increase the likelihood of making a bad hire. Bad hires cost money. That gets reflected not just in the initial training costs, but in the mistakes they make too. That is direct, unrecoverable revenue that is lost and gone forever.
Employee turnover costs US companies of all shapes and sizes around $160 billion a year. Replacing a staff member is likely to eat up a figure approximately double their annual salary. High performers contribute around 400% more toward productivity than average employees. It’s better to attract and retain good people than it is to settle for second best – that’s obvious, and it’ll be just as apparent on your balance sheet. There’s just no avoiding this reality – bad hires are a detriment to morale and success, and both those things can encourage better, more talented employees to hand in their notice.
Don’t Lose Your Best Ideas
What is employee retention, and what are its primary benefits? Well, longer-term staff are one. Employees who have been with a company for a long time understand its working structure and culture and can help it excel from the inside. They bring forth new ideas in a manner that will be welcomed and accepted by their peers. Their thoughts are regarded highly and get considered more readily and carefully.
The Loss of Friendship and Rapport
Though indirect, by having a high turnover rate, departments and teams won’t be able to establish and maintain long-term working relationships and friendships. Relationships in business are massively meaningful, and there is evidence to show direct correlations between levels of productivity, commitment, and the quality of bonds between staff. You can’t expect valuable relationships to develop if teams are not given time to work together and build bonds, get to know how their colleagues work, and figure out what makes everyone tick.
Besides productivity, high staff turnover also leads to a lack of camaraderie and rapport. When that happens, your organization is far less likely to be a place where everyone works for both the company and each other, pulling together in one direction for a common purpose or goal, covering known individual shortcomings, playing to individual strengths.
Lose Your Best Staff, and You Might Lose Your Customers Too
Make no mistake, on a daily basis, loyal and longer-term customers will begin to notice that lack of employee – and that can get clients asking themselves questions. They’re likely to start to feel that something’s amiss. At best, that can lead to uncertainty, a lack of confidence in the way your organization is run. At worst, it might lead to clients upping sticks and taking their accounts elsewhere.
Not only that, but poor morale and low rates of employee retention don’t exactly promote excellent customer service. The two things just don’t go hand in hand, and your clients very probably won’t be getting the treatment they desire and deserve. It’s a recipe for disaster, but it’s one that’s entirely avoidable too. If you want to retain more clients, try showing you can keep your best people first.
The Benefit to The Competition
So, what is employee retention is one good question, but another one you might want to ask yourself is, where does good talent go when you lose it? Well, the unnerving answer to that particular question is often that they end up working for one of your direct competitors. Fact is, if they had the skills you needed, they’d stay within the sector, and that spells bad news for you. That sort of loss can have not only immediate, direct impacts but also long-lasting ones as well. While you’ll immediately feel their departure, you’ll also likely see the competition get stronger, smarter, and more capable.
Your Reviews Will Suffer
With the proliferation of job and company review boards such as Glassdoor, losing employees and not being aware of your retention rates – plus the reason for departures – can lead to negative reviews being left on your company profile. Most people these days use websites like Glassdoor to check out companies before they apply for jobs. Bad reviews directly impact your ability to hire qualified talent. Remember that company culture in the modern sense doesn’t strictly adhere to our traditional views about corporate culture – it goes beyond basic niceties, and there’s stiff competition for talent.
Conclusion: Employee Retention Impacts Success
If you’ve been asking yourself, what is employee retention? The answer is that it’s something you just can’t afford to overlook any longer. It should be a focal point of all businesses because employees are the backbone of every successful company and can generate new, innovative ideas and products. Successful companies share their success with their employees, both financially and indirectly, via acknowledgment, awards, and recognition. Keeping your staff happy is a no-brainer – and it’s relatively easy. Pursuing a retention-first strategy is one that is likely to pay dividends in the long-term. Not only that, but your growth, stability, and success may rest on how many talented employees you can retain.
Do whatever you can to keep hold of your star performers because doing so will pay for itself several times over, and your business will become stronger as a result. Promote good communication and mentorship, lay on learning opportunities – even let your staff bring their dogs to work. Do whatever it takes, and you’ll be better off for it!