Did you know 25% of full-time staff plan to look for a new job with a different employer after the pandemic? These numbers are staggering, and companies should be wary of the repercussions of high employee turnover. Every company hopes to maintain a culture in their workplace that allows for employee engagement, increased job satisfaction, and commitment. These factors play a key role in keeping talented employees and maintaining a high staff retention rate.
The question is why is staff retention so important for organizations? We’ll answer these questions throughout this blog, but we first must understand that there is much more to staff retention than the statistics.
What is staff retention?
Staff retention is defined as the ability of a company to retain its talent. It is usually presented as a statistic and measured on an annual basis. Companies strive to keep staff retention high as they strive to increase revenue and decrease costs.
Why do employers worry about staff retention?
It’s fair to say that no company is dependent on one employee to generate revenue. Each employee is essential to the company, but they’re not irreplaceable. Unfortunately for companies, replacing an employee comes with a cost. From the employer’s perspective, the costs associated with replacing an employee include interviewing and hiring costs, training costs, and indirect costs from productivity. However, these costs are relatively meager compared to the deeper problem associated with low staff retention – organizational culture.
A company’s culture defines its mission, without which employees won’t see the value of long-term thinking in their tasks. Imagine working where there are more empty seats than coworkers. It may not affect the company’s day-to-day functioning, but it will make you question the culture of the workplace.
Any company with high employee turnover often remains at the same place unless there is a change in the existing culture. Subsequently, employers are becoming more selective in hiring staff that fit in the organization’s culture. This is important for people who use job interviews as a way to gain more information about the company culture to see if it’s a good fit.
How do we get our staff to stay?
Unfortunately, no matter how much importance companies give to loyalty, a certain amount of employee turnover is inevitable. Often, employees find jobs with better pay or find a more suitable job for themselves. Sometimes, employees have to move because of geographical reasons or simply because they want to return to school or retire.
Similarly, companies might not retain staff for financial reasons, such as those that occurred due to the pandemic. However, these types of turnover are involuntary. A way in which companies estimate staff retention is through voluntary turnover. Voluntary turnover is when workers switch jobs due to reasons that are preventable.
These turnovers are much more expensive to the company and result in the loss of high-performing employees. To provide a statistic, the cost of replacing an individual employee can range from one-half to two times the employee’s annual salary. These costs added to the new employee’s salary and training costs increase a company’s expenditure by as much as 50%. But once again, it’s not just money that would cause an employee to stay.
Why is staff retention so necessary?
Besides reducing turnover costs and setting a good company culture, staff retention is vital for other business-related metrics. Companies that improve staff retention and address turnover reap significant rewards. Let’s look at the multiple ways an organization can reap the rewards through effective staff retention.
Lower Turnover Costs
Employee turnover leads to direct and indirect costs. Direct costs include advertising, interviewing, and training. Companies incur these costs from onboarding new employees to replace older ones.
Similarly, companies save on many indirect costs due to effective staff retention. The Work Institute’s Retention Report shows that staff retention helps companies save approximately $16,500 per person for an employee earning a median salary of $50,000 a year in replacement costs.
As mentioned before, culture plays a pivotal role in retaining staff. A cultural match between employees and the organization can withstand job offers from other companies. Similarly, by retaining more employees, the company sets a culture of broadcasting loyalty rather than a culture of high turnover.
An employee’s perception, preferences, and behaviors play a fundamental role in developing the organization’s environment. Employees react to higher employee retention positively as it shows an environment of trust within the workplace.
Various problems lie with constant turnover. The time used to find a replacement and subsequently train them up leads to unproductivity. On average, it can take a new hire one to two years to reach the productivity of an existing employee. Connecting with coworkers and improving communication would also take significant time for the new employee. The other option with high staff turnover is to remain understaffed, leading to more significant problems such as employee overtime and burnout.
The best option for workforce management is to retain as many employees as possible. Effective staff retention saves a company from losing productivity. Workplaces with a high retention rate tend to have more engaged employees, who get more done as a result. Invested employees are more likely to form better customer relationships, as well as better teamwork skills.
Increase Employee Engagement and Job Satisfaction
A successful staff retention program can help boost employee morale, resulting in more engaged employees. Employees generally, over time, get accustomed to seeing each other and making connections that create a friendly atmosphere in the workplace.
On the other hand, high turnover can dampen employee morale as remaining employees have to take on heavier workloads and responsibilities. Worst of all, they may lose a close connection with a colleague. Consequently, staff retention is essential in ensuring remaining employees are not hunting for jobs where their former coworkers went.
Better Customer Experience
Customers also feel the impact of poor staff retention. Firstly, engaged employees who are happy in their work provide a better overall customer experience. Customer service interactions make a huge difference in how customers perceive the company. Customers that interact with the company frequently look to speak with the same employee to resolve their issues. When regular customers have to talk to a different employee every time, their experience will suffer.
Increase in Revenue
All the points mentioned earlier work together to increase the organization’s revenue. This revenue stems from lowering hiring costs, increasing employee productivity, and delivering a better customer experience. Companies are increasingly focusing on staff retention to keep this revenue-generating culture.
How can you better retain your staff?
Now that you know why it is vital to retain your staff, it’s time to explore what you can do as an employer to keep your top-performing employees. Companies must identify and recognize how to keep their employees happy within the workplace. For instance, development opportunities provide employees with an incentive to stay. A workplace survey report found that 94% of surveyed employees responded that they would last longer if a company invested in learning opportunities for them. Training and mentorship programs are usually inexpensive and reward proficient employees.
Moreover, companies can ensure that the work environment is catered towards employee success. A culture of trust and independence makes employees happier than a climate where they feel micromanaged or overworked. All employees work differently, and recognizing their working style is essential in ensuring staff retention. For instance, some employees like to be rewarded with small gestures such as praise for completing quality work, while others prefer being rewarded through monetary incentives. As a result, it is worthwhile to provide both monetary and non-monetary benefits to sustain a positive atmosphere.
Like any other business strategy, an employee retention strategy is important for the organization’s functioning. A staff retention strategy will help to ensure that candidates are joining the company not for its wages or position title but rather for its culture and loyalty. Companies don’t want to lose their reliable winners, constant innovators, and most effective problem solvers. As employees start to seek professional development programs and learning opportunities, the best way to retain or attract staff is in your hands: and it’s not the money!