The Importance of Employee Retention

 

The global pandemic taught us many things about the way we work such as the fact that we can actually work from home. But one of the key takeaways for many employers that may have flown under the radar somewhat is the fact that employee retention is more important now than ever before. 

This is because, thanks to the global talent shortage, we are now in a candidate-driven market. This means that employers need to work twice as hard to first attract the best talent and to then keep them on board. 

Add to that the fact that resignations, in general terms, are on an upwards curve and you can see why 87% of HR leaders now feel that employee retention is a top priority. 

And despite the appearance of a paradox, believe it or not, employee retention is just as important to recruiters too. 

Before we get into that let’s start with the basics. 

What is employee retention?

In simple terms, this is a company’s ability to keep or retain its employees. Of course, we’re not just talking about the ‘top’ employees but everyone in the organization. Remember, each cog no matter how small has its place in the smooth running of the company machine. 

So why is it so important? Well, there are quite a few reasons, but here are the most significant. 

Retention cuts costs

According to research, hiring a new employee can be twice as costly as keeping an existing one happy and in their position. Another study found that it costs around 20% of any employee’s salary to replace them. This is a figure that is hard to ignore, but it actually gets even more expensive the higher qualified an employee is. That same research found that in high-income positions where higher education and skills are a prerequisite for the role, the actual cost of employee turnover can be as high as 213%. 

That’s, quite frankly, an incredible figure that should have employers investing heavily in employee benefits to keep their talent on board. 

Familiarity leads to efficiency

Some say that employees who are in a role for too long may end up ‘stuck in a rut’. They lose their enthusiasm for the job and output starts to suffer. In fact, they may have already checked out on the job months before they finally hand in that letter of resignation. 

But that’s only really true for those who are unhappy in their role or who feel unchallenged by their responsibilities. However, for the employers that help their employees to set and achieve clear career goals and milestones, this is rarely the case. 

Employees who feel engaged in their role and ultimately happy with their employer’s efforts to support them tend to stay for longer. And that familiarity, far from breeding contempt, actually leads to a level of efficiency that employers can only dream of having in each of their team members. The longer your talent stays, the more efficient your team is as a whole. 

Retention helps recruitment

There’s that paradox we mentioned earlier—a company retaining employees is actually good for a recruiter. 

This is true for a number of reasons, but the main one is the fact that a high employee retention rate is an incredibly impressive metric to roll out to impress potential candidates. This is especially true now that we’re in that candidate-driven market that we spoke of earlier. 

Candidates want to see what exactly it is that sets a potential employer apart from the masses. Sure, employer branding plays a massive role in this and helps a candidate see how a company may support its employees and the good that it does through its social responsibility initiatives. But the real truth is in the stats. When a recruiter can show that a company can retain its core talent for extended periods, that speaks volumes about the company culture. 

And speaking of which…

It improves company culture

Company culture is extremely important. It can affect everything from your employee’s happiness to productivity and, as a result, your bottom line. In fact, did you know that companies with strong and positive working cultures have 72% higher engagement rates? And as you may have guessed, a more engaged workforce is much more likely to stay put rather than jump ship. 

This is also another aspect of employee retention that can help a company and a recruiter to attract the best talent for a role. As the candidate performs their research on a potential employer and, through the company’s employer branding efforts, they see a culture that supports and champions their employees…well, you can guess where this is going. That great company culture that has been cultivated through retaining employees is a major selling point for any recruiter. Trust us, we’ve seen this in action. 

How to improve employee retention?

Aside from a competitive salary and benefits package, if a company wants to improve employee retention it must offer all employees:

  • A positive working culture and environment where all are equally valued
  • Achievable goals and milestones
  • A defined path towards career progression
  • Financial or logistical support on that path 
  • Support for personal matters 

Of course, it’s easy to talk about these things (or write them on a list), but it can be much more difficult to put them in place and no company is perfect. That said, every employer with realistic aspirations to hang on to their valued employees or attract the best talent in their industry should strive for that perfection. 

 

Are you struggling to find the best talent for your company? Or maybe you’re a talented individual on the lookout for a change. Either way, we’d like to help. Feel free to reach out to us today and we’ll be more than happy to help you achieve your goals. 



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