Though the talk about employee retention is not new, it still pops up as a very practical and financially responsible business strategy. This article will share why employee retention is important for companies.
Despite many years of discussion on why your best employees leave, there is no agreement on this highly important issue. Most managers have only a vague knowledge of how much turnover affects their company nearly all studies showed that turnover is very expensive, thus behind promotion and pay raises the number one priority of every manager is to keep good employees.
15 Benefits Of Employee Retention For Companies
According to a Careerbuilder.com survey, more than half of all employees are not satisfied with their jobs. The main reasons for leaving are dissatisfaction with management, low salary, lack of opportunities for growth and advancement.
Let’s take a closer look at some of the reasons why employee retention is so important.
1. Employee Retention Leads To Financial Stability
High turnover is very expensive, as well as losing any other business asset. Businesses can survive a spike in customer demand and sudden loss of key personnel, but not both at the same time. The cost of lost productivity during employee search and training might be even higher than the actual salary of your new employee.
Moreover, hiring the wrong person could cost you much more because their bad performance might lead to other employees leaving or simply becoming unmotivated which is even worse than having a non-productive worker.
2. Employee Retention Decreases Stress
A study by the American Psychological Association found that job-related stress costs American businesses $300 billion a year in health care, missed work, and lowered productivity.
According to the survey, 44 percent of workers said their jobs were very or extremely stressful. It is not surprising that high turnover increases stress in the workplace. Constant change creates chaos and leaves little time for people to get used to new routines.
3. Employee Retention Saves Time And Money
Replacing an employee costs an average of six to nine months’ salary. Moreover, it is better to use up all possible ways to keep your employees rather than assume that you will always be able to find a replacement quickly and easily. This assumption often leads to bad hires, which costs even more money in training and lost productivity.
4. Employee Retention Increases Company Reputation
Today the social environment is very important for companies and their reputation is determined largely the by public opinion of their clients and other stakeholders. High turnover correlates with dissatisfied employees who tell others about that company’s shortcomings and this contributes greatly to its negative image in front of potential customers or investors.
Related Video – Winning The Game Of Employee Retention
5. Employee Retention Encourages Loyalty
When employees feel appreciated, they are more likely to be loyal to their company and less likely to leave for another job offer. They will also be more productive because they will not constantly be looking for a new opportunities.
According to the Society for Human Resource Management, it costs six to nine months’ salary to replace an employee who leaves voluntarily, and up to twice that amount to replace one who is fired.
6. Employee Retention Reduces Turnover
Replacing an employee is not only costly in terms of money but also time. It takes time to find the right candidate, interview them and then have them go through a training program. Moreover, high turnover creates disruptions workflow.
If your employees are always leaving the company, it creates a lot of problems for both your business and your clients. Replacing employees often led to lower productivity which is bad for business growth.
7. Employee Retention Increases Customer Satisfaction
If you have enough loyal customers who are satisfied with your product or service they are likely to return at some point or recommend you to someone else if they know that person needs what you offer.
Your high turnover might also be due to unhappy customers who do not come back because their previous experience was unpleasant thus creating a vicious cycle of low customer satisfaction leading to high employee turnover.
8. Employee Retention Boosts Company Morale
When your employees are satisfied with their jobs, they feel less employee and therefore the overall morale goes up. That attracts more good people to want to work for you because it is important that everybody likes what they do to be productive at it.
A low attrition rate boosts company morale which leads to happier customers which leads to more growth of your business.
9. Employee Retention Increases Productivity
Oftentimes turnover is high due to unhappy employees who are not satisfied with working conditions or treatment by management or colleagues. When this happens, productivity decreases because these individuals and spend most of their time thinking about other options rather than working on projects and tasks assigned to them.
10. Employee Retention Decreases Turnaround Time For Task Completion
When employee turnover is low, new hires are not constantly having to get up to speed or learn about their new job. That allows them to contribute fastest and leads to less time spent by managers training these newcomers which leads in turn to faster task completion and therefore delivering products and services on schedule with minimal disruptions.
11. Employee Retention Increases Community Devotion
If you keep your best employees around longer, they become more valuable assets because they know what to do and will do it well. This also helps your business to become more stable over time because these employees play a vital role in keeping the workflow on track which leads to better performance of the company overall.
12. Employee Retention Keeps Your Business Prepared For The Future
Employee turnover can bring about losses that are difficult to repair. When an employee leaves, you lose all the knowledge they have accumulated over time making them invaluable in terms of experience, connections built within the community, and overall credibility level in providing services or selling products available through your company or place of employment.
13. Employee Retention Helps Your Business Save Money
Replacing employees is expensive. You have to factor in the cost of hiring a new employee which can be costly and time-consuming, not to mention you might have to train them and that can take up a lot of valuable resources.
When you reduce or even stop turnover, you’re essentially saving all of those costs while also maintaining the productivity levels of your company.
14. Employee Retention Prevents The Negative Effect Of Turnover On Company Morale
It’s hard when people leave because it creates uncertainty for those who are left behind. This often leads to a drop in morale as people become anxious about their job security and how the company will move forward without the departed employee. Low morale means less productivity and therefore a snowball effect on the company’s success.
15. Employee Retention Increases Loyalty To The Company
Employee turnover costs your business both in terms of losing that individual and then potentially having to find and train a replacement. If you keep employees around longer, they’ll be more loyal and committed to the company which means less time wasted on finding new hires and more focus on work.
The Importance Of Employee Retention – Conclusion
Now you understand why employee retention is important. Having happy employees who like their jobs makes them feel like part of a community which is great for those who want to advance within your company or even those who want to stay there for a long time.
The more loyalty you have among your employees, the less likely they will be to leave and create a productivity gap which is the key to retaining the best of the best while reducing costs overall.