Why does Employee Retention Matter/Identifying staff retention risks and developing ways to lower talent attrition rates is an important aspect of human capital management. Employee turnover is extremely expensive, affecting not only operating costs but also revenue, efficiency, corporate culture, customer experience, and other factors.
Despite the negative impact that high employee turnover can have on a company, many businesses fail to prioritise employee retention. Those who do invest in improving it, on the other hand, find big results in a number of key areas.
It’s no surprise that retaining great people is essential for business growth. Recruiting and keeping new staff costs money and takes time. Furthermore, turnover has a detrimental impact on your employees’ productivity and morale.
Leaders have scrambled to combat turnover in the past year due to staff shortages. The necessity for efficient retention methods is becoming more and more apparent.
Employers in North America expect issues in attracting and keeping personnel to persist until 2022, according to a survey conducted by Willis Towers Watson in 2021. Specifically, 61 percent of respondents said they had trouble keeping personnel and anticipated the problem to continue into 2022, compared to only 15% the year before.
Employee retention is about more than just limiting the amount of harm to the company when people depart. It also provides an opportunity to boost firm performance in a variety of crucial areas. Here are some ways that strong employee retention strategies and practices benefit businesses.
Benefits of Employee Retention
Employees that have been with the company for a long time are more productive and engaged. Long-term employees have had more time to develop their skills, can complete jobs in less time, and are more dedicated to the company’s success.
According to research,
High levels of involvement contribute to improved productivity and better job quality. Employees notice and perform better when a company focuses on engagement and retention.
Workplaces with a high retention rate tend to have more engaged employees who, in turn, get more done. Employees that are more engaged are more likely to develop customer relationships, and teams that have had time to gel are more productive.
Turnover can be very expensive. Recruiting and onboarding new hires takes time, and it’s much more time-consuming when severance payments are factored in. Furthermore, inexperienced staff can degrade your customer experience, resulting in revenue loss.
Advertising, interviewing, and screening are all included in the costs. Onboarding costs, including training and management monitoring, mount up quickly. Other disadvantages include decreased productivity, poorer engagement, and the impact on the corporate culture, all of which add to the cost of turnover. An effective retention strategy will save your company time and money.
Improved Customer Experience
A consumer’s perspective or opinion of their dealings with a business, from the initial interaction to post-sale support, is referred to as customer experience. Employees’ personal experiences might influence how they interact with customers, therefore these interactions are dependent on them.
This is where a high level of turnover might be detrimental. New employees, for example, may take longer to complete tasks, be less adept at problem-solving, and be more likely to make customer service errors, all of which can negatively impact the customer experience.
Customers may then share their unpleasant experiences with others, jeopardising the company’s reputation. Satisfied personnel, on the other hand, have stronger morale and competencies, which show when working with clients.
Better Company Culture
Your corporate culture has an impact on whether or not your staff stay. You can credit your culture initiatives for your great retention rates.
In fact, 72 percent of employees said workplace culture is a deciding factor in whether or not they want to work for a company.
Employees feel more connected to their work, their team, and your company culture if you can engage and retain them. Employees should be celebrated, excellent perks should be utilised, and inclusion should be prioritised. Your norms will be automatically embraced and maintained in the day-to-day employee experience if you have a low turnover rate.
The loss of intellectual capital, skills, and relationships — both inside the company and with customers and partners — that occur when a person leaves is one of the most devastating costs of excessive turnover.
The organisation also loses the opportunity cost of the potential value the employee may have contributed. When senior staff leave, it can have an impact on succession planning. Even in times of high unemployment, these employees — particularly top performers or those with in-demand talents — are at risk of leaving.
Organizations that place a premium on retaining more senior or experienced staff reap huge rewards because these individuals are more likely to solve complicated problems on their own, which benefits the company.
Elevated Employee Experience
An employee’s view of their experiences within an organisation — from when they first applied for a job to when they left help form their overall opinion of the company. It also considers each individual’s interactions with coworkers, bosses, and customers. A favourable employee experience can boost productivity and encourage more pleasant customer interactions, which can lead to increased customer loyalty.
Many factors affecting employee satisfaction are beyond the HR team’s control. Businesses can establish a better employee experience, which in turn increases retention, by focusing on what employees need and retaining more of their best talent on board.
Reduced employment expenses, increased efficiency, and the delivery of superior customer experiences, among other things, all contribute to increased revenue.
Retention issues limit the return on investment of your talent strategies. Losing and replacing a departing employee is costly due to hiring costs, training investments, and missed sales and productivity. These expenses have both direct and indirect financial consequences.
Tracking revenue growth as a result of retention policies can be a useful HR statistic for demonstrating the programmes’ return on investment.
Emphasis on employee retention benefits the entire company. A comprehensive workforce planning strategy should include an effective staff retention strategy.
Developing a successful employee retention strategy involves a substantial amount of effort, senior oversight, and focused investment, but it rewards companies that apply the strategies, tools, and processes needed to keep their best and brightest employees.
Companies that do not focus on employee retention and turnover reduction can endure severe repercussions, not only in terms of the tough costs of locating, recruiting, onboarding, and coaching replacements, but also in terms of lost productivity and expertise, effect on customer and employee experiences, poor morale, and a weakened company culture.