One moment you are going through a beautiful onboarding process, meeting your new colleagues, setting up your workplace, and being overfilled with excitement and joy to start your new career journey. Then in the next, you are shaking goodbyes with your office buddies, packing up the things from your desk, and moving on to the next career opportunity, only to restart the cycle again. For employees, landing a new job and moving forward is something completely normal, natural and one might say mandatory. But from an employer’s point of view, things look rather different. Headhunting, hiring, onboarding, and training are expensive processes and the expected result is to keep the new employee for a longer period of time. Sometimes there are irreconcilable differences and managers have to part ways with the new hires rather quickly, but most of the time employees just don’t feel compelled enough to stay with the company and decide to move elsewhere. The measure that helps businesses understand why their employees leave and how they might prevent them from doing that is called employee retention. In this article, we’ll share what it is, what it means for businesses, and talk about some strategies which might improve it. As always, pick up the cup with that favorite drink of yours, and let’s plow ahead.
What is employee retention?
Employee retention refers to the ability of an organization to retain its employees over a certain period of time. It’s a measure of how well a company is able to keep its employees satisfied, engaged, and motivated to stay with the organization. It can be calculated by the simple formula below:
As we already mentioned employers are particularly interested in retaining their employees for longer periods of time, especially if they are top performers, and in times of economic uncertainty. A high turnover rate, meaning the company can’t retain its employees for long, can damage the image and reputation of a brand, which can negatively affect its presence on the market. On the other hand, a low turnover rate can make a brand more appealing not only to new talent but also to potential customers. If employees are loyal to a company and are proud to work for it shows the outside world that it definitely is doing something right. Both the human resources department and management have the responsibility to maintain a low retention rate.
Why employee retention is important?
Retaining employees is important for businesses for a number of reasons. First and foremost, high turnover rates can be very costly for a company. The high price of recruiting, hiring, and training new employees can be significant, not to mention the lost productivity and potential disruptions to the business that can occur if key employees leave. Another negative effect of turnover, which we already touched upon, is the impact it has on customers who notice that they’re dealing with a continual flow of different people.
Additionally, retaining employees can be a significant factor in maintaining a positive workplace culture. When employees feel valued and supported, they are more likely to be productive, engaged, and invested in the success of the organization. This can lead to improved morale, higher levels of collaboration and teamwork, and a stronger sense of loyalty to the company.
Effective employee retention strategies
There are a number of strategies that companies can use to improve employee retention. Here are some of the most important ones:
- Offer competitive compensation: Employees are more likely to stay with a company if they feel that they are being fairly compensated for their work. This includes not only salary, but also additional benefits like health insurance, retirement plans, and paid time off.
- Provide opportunities for career growth: People can be more encouraged to stick with a company if they feel that there are opportunities for them to grow and advance in their careers. This can include things like training programs, mentoring, and leadership development.
- Create a positive and supportive work environment: Workers are less likely to leave if they feel that the workplace fosters a healthy work setting. This can include things like promoting a strong work-life balance, recognizing and rewarding good performance, and cherishing a sense of teamwork and collaboration.
- Cultivate open communication: Employees can be more loyal to an organization if they feel that their voices are heard and their opinions and ideas have an impact. This can include things like regular employee feedback surveys, town hall meetings, and one-on-one meetings with managers.
- Provide work flexibility: People might opt to stick around if they feel that they are granted more control over their work schedules and can better balance work with other commitments. This can include things like flexible work hours, remote work options, and part-time or job-sharing arrangements.
- Hire the right people for the job: We understand that this is common sense but a lot of the time employees decide to hand in their resignation just because they feel that they aren’t part of a team of like-minded individuals who share the same or similar work ethic and values. Companies should focus on hiring talent who are a good fit for the company culture and who are likely to be happy and successful in their roles.
Technology also offers a helping hand to companies to improve employee retention rates. While all software solutions have different uses and track different metrics all of them aim to achieve a similar goal — to ensure the well-being of employees and to improve employee retention rates. Some of them are:
- Employee Engagement Platforms: These platforms can help companies measure employee engagement and provide insights into areas where improvements can be made. They typically offer features such as surveys, pulse polls, and sentiment analysis, which can help companies identify potential retention issues before they become major problems.
- Performance Management Systems: These systems assist companies to track employee performance, setting goals, providing feedback, and coaching to employees. By helping people to improve their skills and performance, businesses can increase their engagement and reduce the likelihood of turnover.
- HR Information Systems: These systems can help companies manage their HR processes, including onboarding, performance management, and benefits administration. By streamlining these processes and providing a better employee experience, companies can improve retention rates.
Overall, employee retention is an important consideration for any business that wants to build a strong and productive workforce, maintain a positive workplace culture, and reduce the costs associated with turnover. By developing and focusing on a set of strategies, companies can position themselves for long-term success and growth by retaining their best employees.