On its surface, we know employee retention is centered around “keeping employees.” But employee retention is a bit more nuanced than merely ensuring your employees stick around.
By digging a bit deeper into the impacts of employee retention, you can create a more positive company culture and work atmosphere where employees want to stay, are more engaged, contribute to the organization’s goals, and feel they have a good work-life balance. In the end, it’s a huge plus for your organization and your employees.
There are numerous reasons why companies should prioritize employee retention. Read on to learn more about the impacts to a company.
The Downsides of Losing Employees: When Employee Retention Rates Struggle
It’s estimated that 51 percent of all employed workers in the US are either actively or passively seeking a new job. Translate these statistics to your company. How many of your employees potentially have one foot out the door?
The Cost of Turnover
Perhaps one of the most tangible ways you’ll feel the effects of losing employees is the cost of turnover. Research shows that it can cost somewhere between one-half and twice an employee’s salary to replace them when they leave. Some of the costs associated with employee turnover are obvious, but others might be a little harder to spot at first. The “hidden” costs of turnover include:
- Advertising an open position, screening and interviewing applicants, and running background checks.
- Accounting for new hires who may counter your initial compensation offer with a higher one.
- Onboarding and training new hires, which will take days or even weeks or months.
- The “learning curve” new team members may have, and the potential for lost or lowered productivity during this time.
- Lower employee engagement and morale after team members leave.
- Potential lowered work quality while new hires adjust to their roles.
- Impact on the customer experience as new employees acclimate and get up to speed.
Lost Knowledge and Experience
Each employee on your team brings their own set of traits, skills, and knowledge to your company. Unfortunately, in many cases, it is not until after an employee leaves that their full contribution is recognized. If there isn’t a good plan in place to transfer that knowledge, the impacts to the business are steep.
Reduced Financial Success
It’s not just the cost of hiring and onboarding a new hire that’s impacted by employee turnover. Low employee retention rates can hinder your organization’s financial success. After all, your team members are the powerhouse of your organization; they’re often the reason an organization hits or misses financial targets.
New employees need time to adjust and reach the productivity levels at which their predecessors were operating. During the time it takes them to get acclimated, the quality and quantity of their work may hinder progress toward the organization’s goals.
Employee Retention: The Positive Impact of Keeping Your Team
Leaders need to care about employee retention, not just to avoid the negative impacts of high turnover that we’ve just provided, but to benefit from the positive impact when retention is a priority.
Foster a Positive Workplace Culture
Culture impacts retention and retention impacts culture. If employees see that other team members are looking for work elsewhere, or they witness many departures, they’ll start to wonder if perhaps they should consider leaving too.
A positive company culture is a significant factor in employee retention. Studies show that 77 percent of prospective employees factor in a brand’s company culture before applying for or accepting a new job. When employees feel valued, respected, and supported, they are more likely to stay. This positivity has a ripple effect too, spreading satisfaction and encouraging camaraderie among the team, leading to increased retention.
Provide a Better Customer Experience
Your clients and customers notice high rates of turnover. Not only might this be a point of concern for customers seeking to support value-driven businesses, but high turnover can also bring about poor or incomplete customer interactions.
More positively, having long standing employees allows for relationship-building with customers. This kind of familiarity fosters brand loyalty. Additionally, employees who are with your company for longer develop their skills and knowledge of how your company operates. This enables experienced employees to more easily solve problems customers may face. In short, the correlation between high employee retention and positive customer experiences is strong.
Improve Financial Gains
A positive work environment with strong employee retention rates can have a direct impact on revenue in all kinds of ways. For starters, better employee retention improves productivity and engagement, while also helping to attract more quality employees and keep them on board longer compared to companies that do not place the same emphasis on positive workplace cultures and employee retention.
What’s more, organizations that have highly engaged employees can experience financial gains in the form of increased profitability. Studies have demonstrated that companies that have engaged employees and strong employee retention can experience 21 percent higher profitability.
Tips for Boosting Your Company’s Employee Retention
Placing value on employee retention can have a myriad of benefits–but how do you make it happen? Here are a few strategies for improving your organization’s employee retention rates in today’s current landscape:
- Research and offer competitive pay and benefits
- Consider work-from-home or hybrid policies wherever possible
- Offer flexible scheduling and reduced hours to avoid employee burnout
- Encourage a healthy work-life balance for all your employees
- Recognize and reward strong performance
- Find ways to build employee engagement
- Provide avenues for employee feedback and make improvements based on input
- Offer opportunities for professional development
- Give perks and incentives beyond basic pay and benefits
- Coach and support employees so they feel they are part of a team
- Show interest and care in employees outside of their workplace contributions
CRS Helps You Improve Retention
Employee retention isn’t something you just set and forget: It’s an ongoing effort that shifts and changes over time to ensure your company is a place where your employees want to be; where the workplace culture is positive and driven, and where people feel connected and engaged with your organization.
Sure, there are bound to be some team members who part ways with your company sooner than you’d prefer. But by intentionally focusing on employee retention, you’ll not only keep more team members around for longer, but you can also make the decision to leave a little harder. And if your company is a place where employees know they are supported and valued, if they leave, they’ll still have positive things to say—and they might even come back someday. (It’s happened for CRS and many of our clients!)
Are you ready to see firsthand how increased employee retention can improve every aspect of your company? Contact us to learn more about how you can retain your employees.