While hiring employees is a relatively easy task, it is not a painless task to retain them – and to retain them happily. Employee retention is simply defined as the ability of an organisation to retain its employees, thereby reducing the employee turnover, whilst also promoting an active and trustworthy working environment.
The employee retention objectives and goals include a wide variety of targets, designed specifically to make the working experience beneficial and smooth sailing for both employers and employees. It instils a sense of loyalty in the employees, which in turn, adds to growth of the company. Successful companies often have a laid-out framework to achieve maximum employee retention, which not only saves them resources and turnover costs, but also helps in building a network of self-driven and talented employees. Such employees thus have the motivation to take on specialised and expansive projects, and work in line with the company culture.
Retention strategies for Employees also help in better customer engagement. Clients feel more secure and cared for if their business is handled through a continuous association with one single employee or the same team of employees. A host of changing employees grant the company a not-too-reliable image, and customers might feel alienated if the key figures keep changing too often. It makes a substantial dent in company morale as well. New employees not only mean a loss for the company in terms of turnover, but also include innumerable working hours spent in recruitment, selection, and training. Altogether, it poses a major hurdle in achieving the business requirements of a company.
A latest survey on turnover rates has revealed that the cost of employee turnover in 2018 exceeded $600 billion. While the turnover costs vary across countries and sectors, on an average, losing an entry-level employee can cause up to 50% of their salary, a recent study on retention rates shows. It has also been revealed that the average US employee turnover rate has increased from 3.5 years in 1983, to 5.1 years in 2019. Thus, it is evident that there has been a steady inclination towards employee retention in the last decade. This is not only owing to the huge costs associated with employee turnovers, but also due to explicit loss of productivity and expertise that comes with it.
In employee retention, the role of Human Resources (HR), becomes extremely crucial. It is the responsibility of Human Resources to design, manage, and update various policies and processes through which staff retention can take place effectively. It is also instrumental in the creation of a working environment that facilitates professional development for different types of employees and helps them carve out their own career path. By creating mechanisms to ensure work-life balance, while also striving forward to achieve company’s business goals, HR makes sure that both parties are benefited and satisfied.
To do this, it sets up objectives and goals of employee retention in the following ways:
- designing and updating an effective employee retention program
- looking after employee nomination and approval plans
- adapting schemes according to changing conditions, etc.
This just goes to show the importance of employee retention in any company to achieve an easy flowing experience. It needs a systematic approach to it, that has various positive outcomes.
Objectives and Goals of Employee Retention
1. To Reduce Turnover Hassles
Employee turnover costs a company not only in terms of money, but also time and productivity. Replacing people means hours spent in hiring and training, which also becomes cumbersome for existing employees. It becomes even more difficult when it comes to replacing senior-level executives, sometimes the cost of turnover reaching 213% of a CEO’s salary to replace such employees! Thus, to replace highly educated or skilled employees, is a risky and costly task, and it often takes a substantial amount of time to make up for these huge losses.
2. To Reduce Acquisition and Training Time
It is no secret that hiring the right employees can go a long way in bringing all-round profits for any company. While dedicated workers can take the company to new heights meeting collective objectives, wrong fits can cause the company a ton in terms of both monetary and human resources. Training an employee to meet the job description is not an easy task, and usually takes a lot of effort back and forth between the trainer and the trainee. It is a much easier and safer option to keep existing employees satisfied, than to spend precious company time in acquiring new ones.
3. To Improve Employee Morale
Employee satisfaction rates are directly connected to the success of a company, however small or large. An office is not just a cubicle with no communication with the outside world but is rather a breeding ground for young friendships and good life experience. Seeing one’s colleagues get regularly replaced not only comes off as a personal loss to employees but makes them question their own security in the distant future. Team dynamics also change, and it usually takes months for team members to build a rapport that would bring them up to speed with productivity again. Disruption in communication between employees thus renders a huge hit to both productivity and employee morale.
4. To achieve Increased Employee Productivity
By now, it is clear that employee retention can be one of the best ways to ensure that a company continues to grow. A successful retention scheme can also be a fundamental way of ensuring effective employee engagement. A long-drawn association with a company ensures that employees know its nooks and crannies, and can contribute to it wholeheartedly, often going the extra mile for achieving the business objective.
On the other hand, employee retention challenges occur when experienced employees leave, they also take away essential expertise and mechanisms that they learned from the company. This could pose a threat from another company offering competitive salary, and could also lead to a loss of loyal customers in the long run.
5. To achieve Improved Customer Experiences
Keeping in mind the bigger picture, employee retention becomes essential in order to ensure customer satisfaction. One study has found that improved customer relations can boost a company’s sales by almost 20%. Apart from this, experienced employees have better knowledge and skills to deal with customers they have a long association with, thus decreasing time spent in problem solving. In customer-oriented businesses, the replacement of employees could incur huge losses to the company. The easiest way for this to take place is through the direct communication between a customer and a disgruntled employee. Unhappy employees could partake in cutting corners, or rude behaviour, causing harm not only to sale numbers, but also to the company name at large.
Employee retention strategies should ideally focus on not only keeping the employees satisfied with their present position in the company, but also help them in setting targets for their career development. A study on why employees leave their jobs revealed that the lack of a healthy work life balance and job satisfaction factor as major reasons for the same. Unmitigated cold behaviour by superiors severely affects competent employees, and subsequently, makes them question company values. Therefore, employee attitude goes a long way in deciding organisational performance and achieving business objectives. to grow. A successful retention scheme can also be a fundamental way of ensuring effective employee engagement. A long-drawn association with a company ensures that employees know its nooks and crannies, and can contribute to it wholeheartedly, often going the extra mile for achieving the business objective.
On the other hand, when experienced employees leave, they also take away essential expertise and mechanisms that they learned from the company. This could pose a threat from another company offering competitive salary, and could also lead to a loss of loyal customers in the long run.
To summarize, Employee retention is a multi-purpose strategy that serves the company in fulfilling both short-term, and long-term goals. It saves the company thousands of dollars in turnover payments, whilst also saving precious working hours spent in recruiting and training new employees. It is a relatively easy way to ensure that the company is heading in the right direction, since the employees are motivated and dedicated to give their best.
With employees that see eye-to-eye with the company vision and strive to create a healthy space for themselves within the company, productivity soars to new heights within the shortest time period. When management and employees can rely on each other, daily hassles are easily managed. Moreover, when employees feel secure about their positions, they can utilise their time to work on their skills, eventually contributing to the company in newer ways.