A crucial issue that many employers must contend with no more than ever, is employee retention. With one third of new employees leaving their jobs after approximately six months, employers are losing a significant amount of time and money. The main reason for many departures is due to employees feeling too dissatisfied to continue with the employer.
According to the Job Openings and Labor Turnover Survey, in the United States, 3 to 4.5 million employees quit their job each month. However, employee turnover rates vary by industry, with professional services and construction suffering significantly higher turnover than public sector roles. Sectors that traditionally employ many part-time, seasonal, student and first-time workers are also susceptible to this departure of employees. Industries such as retail, hospitality and restaurants often experience high employee turnover.
Employee turnover has been on the rise in recent years, particularly in the aftermath of the pandemic, costing employers valuable talent as well as the expense and effort involved in hiring, training and replacing workers.
Why Is Employee Retention Important?
Employee retention usually refers to the rate at which employees stay with a company after being hired. However, the term also describes the efforts made by employers to keep their employees satisfied on the job.
An individual may choose to leave their employer for a variety of reasons. They may find a better job with a more attractive salary or benefits, they may go back to school, or they may move to a different area. Some workers may be fired or laid off, while others leave a job due to retirement. However, employee retention is focused specifically on voluntary turnover.
Here is a look at some of the reasons having a high employee retention rate is so important for businesses.
Large American employers spend more than $1 trillion each year discovering and recruiting replacement workers, according to Oracle. These costs include advertising open positions, interviewing candidates for roles and the screening and onboarding expenses such as training and management oversight.
There are other ways in which having high employee retention reduces costs. It prevents the lower engagement and lost productivity that occur when employees leave, as well as reducing the negative effect on the company culture that compounds the cost of turnover.
A Better Customer Experience
The perception customers have about their interactions with a business, from the first contact to post-sales support, can make or break a company. In many ways, these interactions depend on the relationship that customers have with employees and the overall impression they form of how well a team works together.
New employees sometimes take longer to accomplish tasks and may need assistance to solve problems, making them more vulnerable to customer service mistakes that can compromise the customer experience and lead to dissatisfaction. These unhappy customers may share their negative experiences and put the company’s reputation at risk. However, the higher morale of satisfied employees tends to shine through in their interaction with customers which can create a positive impression.
One of the impacts first noticed is that constant turnover is lost productivity. In fact, it can take new hires one year or longer to reach the productivity level of existing employees. Building relationships with coworkers and customers alike takes time.
While replacements are being sought, an understaffed environment can lead to other issues that negatively affect productivity among existing employees, such as excessive overtime, work delays, burnout and reductions in the quality of work.
Increased Employee Engagement
Having a positive employee experience boosts engagement, which is a reflection of the level of dedication and connection of the employee to their role as well as the company at large. Employees who are engaged care about their work and want to perform their best for the company because they feel they have a real stake in their outcomes.
Engagement levels are closely tied to employee morale and satisfaction, which, in turn, are vital to the success of the organization.
Improved Company Culture
The corporate culture of the company also plays an undeniable role in recruiting and retaining top talent and the behavior of employees strongly influences this corporate culture. When workers are constantly leaving, others may wonder why they are seeking employment elsewhere and may begin to question their own loyalty to the company. At the same time, when engaged workers who are aligned with the company’s culture stay in their role, it can strengthen the overall corporate culture and working environment.
More Experienced Employees
When an employee leaves a role, it is not just about losing an individual; they are also taking institutional knowledge, relationships and skills that cannot be simply replaced by hiring a different person for the role.
When a senior employee leaves a company, it can negatively affect succession planning. Unfortunately, top-performing employees, and those with skills that are in high demand, are constantly at risk of turnover as other organizations make attractive offers to secure their talent. Therefore, many organizations find that focusing on retaining experienced and senior employees provides a significant return on their investment because it allows them to keep professionals who can solve complex issues and have established relationships with clients and others within the company.
Companies that have a revolving door when it comes to employees often experience low worker morale. In addition to the disappointment that comes from losing coworkers with whom they have built relationships, remaining employees may have to assume heavier workloads or more responsibilities as a result, which can harm their motivation and satisfaction.
Moreover, turnover can have a contagious aspect to it, with employees sometimes choosing to leave because they have seen others leave the company and move on to other opportunities. In some cases, former employees may even recruit their former coworkers to join their new venture.
Organizations that have successful employee retention programs can enjoy greater employee morale and engagement and create a workplace full of positive emotions reflected in everything their workers do. This demonstrates to clients that they are working with a winning team and can help a company become more successful.
Contact The Experts At Business Benefits Group
Schedule a consultation with the experts at Business Benefits Group (BBG) today to find out more about designing a comprehensive benefits strategy that can maximize employee retention.