Imagine a successful rock band. Their hits are topping the charts. They’re doing sold-out world tours. But then, something changes. The guitarist leaves to join another band. The drummer goes on an indefinite hiatus. The lead singer quits and moves to the mountains to start a tomato garden. The band’s manager scrambles to fill the spots as they open, but the constant turnover of members leaves fans feeling detached. The band cancels gigs. They stop writing new music. And the manager really wishes he took more action to hold onto the original talent that made the band such a success in the first place.
This demonstrates the importance of employee retention. Maybe you don’t manage a rock band. But if you have a team in any capacity, you want to make sure to keep your talent. Here’s why that’s crucial for an organization in today’s career landscape.
What is employee retention?
First, let’s go over what employee retention is. Employee retention refers to an organization’s ability to keep staff and prevent turnover. Turnover refers to people leaving a role, for reasons that are either voluntary (starting a new job somewhere else) or involuntary (being let go by the organization for underperformance or other issues).
There are a number of factors that go into employee retention, or lack thereof.
Factors that can affect turnover:
- Financial concerns (employee wants to earn higher wages, better benefits)
- Personal matters (moving, having a child, etc.)
- Interpersonal relations (issues with managers or colleagues)
- Work-life balance (employee wants a role that better fits their desired lifestyle)
The goal of employee retention is to keep employees working at the company for an extended period of time and for them to be happy and satisfied in their role.
Employee retention is a metric that can be calculated by taking the number of employees you had at the beginning of a particular time period and dividing it by the number of employees that remain. This will give you a percentage, your employee retention rate. It is important to keep track of this rate and measure it accurately so you have an idea of where your organization stands when it comes to employee retention. This will help you identify areas for improvement, as well as what your organization is doing well.
Why is it important to avoid turnover?
Turnover is costly. Think of the time, money and effort that goes into recruiting and onboarding new employees. Now imagine doing that over and over again.
Losing an employee can cost an organization thousands of dollars, from $1,500 for hourly employees to more than 200% of a C-suite employee’s salary.
Remaining employees might have to take on extra work during this process, leading to burnout. In addition, constant turnover lowers morale and could lead to employees feeling less connected to the organization and less camaraderie with one another, which damages company culture.
Take our turbulent rock band, for instance. The time the manager spends putting out casting calls and auditioning new musicians is time not spent booking them gigs and finding new opportunities for the band.
In addition, finding new talent can be a challenging task. Qualified candidates may be contacted by other companies or recruiters, making it competitive and difficult to sway the person you think would be right for the job. The hiring process could take a long time depending on the steps involved at your particular organization.
So it’s a much more efficient use of time, in addition to being more cost-effective, to reduce turnover and strive to keep the talent you have.
What is The Great Resignation?
You may have seen this term floating around the internet in news articles and think pieces as the phrase picked up steam in early 2021. It refers to employees leaving their jobs in droves for a variety of reasons. A Pew Research Center study found that the major factors for Americans quitting their jobs last year were low pay, a lack of opportunities, and feeling disrespected at work.
It’s been over a year since the term entered our vernacular, but The Great Resignation is far from over. According to the PwC’s Global Workforce Hopes and Fears Survey 2022, one in five Americans plan to quit their jobs this year.
While the survey found money to be a large factor, employees also cited fulfillment and the ability to be one’s true self at work to be important factors to workers considering job changes. So while fair wages are crucial, we’ve seen that what matters in a job goes beyond what’s on the paycheck.
Despite the boom in quitting and job-switching the country has experienced since the pandemic began, some are finding that the decisions they made during The Great Resignation might have been a mistake. According to recent surveys and polls, both employees and managers have found that the “grass isn’t always greener.”
According to USA Today, only 26 percent of people who switched jobs say they like their new role enough to stay.
Employees and managers alike can benefit greatly from avoiding turnover and preventing a sweep of resignations.
Benefits of effective employee retention
We’ve seen how turnover negatively impacts an organization and gets in the way of its goals. Now let’s look at the upside of having a successful employee retention strategy. In addition to reducing costs and time associated with a high turnover rate, having good employee retention has other added perks.
Effects of good employee retention
- Increased productivity
- Better employee morale
- Increased focus on the customer
- Having a high-quality, talented staff
Prioritizing employee retention will have a ripple effect on the goals, productivity, and success of your company. When employees are happy where they are, they feel invested in the growth of the organization and motivated to grow in their roles. These are the people you want on your team long-term.
Strengthening employee retention
We’ve gone through why employee retention is important. Fortunately, there are strategies and methods you can use to strengthen your organization’s employee retention and develop a policy to maintain it.
Ideas for employee retention
- Make sure employees are set up for success with effective on-boarding and training.
- Support employee health with wellness programs and initiatives.
- Celebrate employee milestones and let them know they’re appreciated with a digital card like Kudoboard.
- Conduct regular surveys to gather data on employee satisfaction and learn about ways the organization could improve.
- Consider a retention bonus as a method for incentivizing employees to stay with the company.
- Give compliments, both publicly and privately, to let employees know when things are done well.
- Explore more about workplace appreciation with Elevate by Kudoboard.
It is more efficient, cost-effective, and better for morale to work on retaining the talent you have than finding and hiring new talent. Employee retention leads to a happier and more productive workplace, where members feel appreciated and are able to envision themselves at the organization for a long time. With strong employee retention, your organization can hit all the right notes.