Employee retention meaning
“Employee retention meaning is quite simple. Employee retention is a company's ability to keep its employees from leaving. In other words, employee retention is the company's concerted effort to retain its existing employees and preserve the best talent for the company's success.”
What is a talent retention plan?
A retention plan or retention management is a strategy that companies create and use to prevent employee turnover, increase retention, and improve employee engagement. While some turnover is inevitable, companies can save a lot of time and money by building a retention strategy that minimizes voluntary turnover. A good retention plan is significant as it is much easier and cheaper to train and enhance your current employee than to keep hiring new ones.
How to measure employee retention
Employee retention is expressed as the percentage of employees who stay with the company for a specific time. Use the given formula to measure it:
Employee retention rate = (Total number of employees - Total number of employees that left) / Total number of employees * 100
Importance of employee retention
1. A sustained flow of productivity
The importance of retention can be seen with the increase in productivity. Employees who work for an organization for a long time bring great added value to the company. They have a deep understanding of the company's vision and know exactly how to meet the expectations of their role. Moreover, with time they have also mastered all the basic skills required to efficiently complete their tasks daily.
2. Cost-saving
Retaining qualified and reliable employees is economically beneficial to an organization. Searching, interviewing, recruiting, and onboarding new employees are expensive and time-consuming processes.
For a $60,000 job, you need to spend around $180,000 or more to fill that open position. With higher recruitment costs, you will lose the money you could have invested in other areas of your business.
3. Reduced time consumption
Long-term employees are well-trained and confident in their ability to perform their daily duties. They have established effective communication channels with their teams and managers and they know how to meet deadlines. New hires require some training and time to accommodate the new environment and its needs, which can temporarily put pressure on team productivity.
4. Improved company culture
There is no denying that the perceptions and behaviors of your employees shape your company's culture, which plays a significant role in attracting as well as retaining the right talent. When an employee leaves, other employees may wonder why and begin to question their loyalty to the company. Conversely, if engaged employees remain connected to the culture of your organization, they strengthen the ethos and environment of the organization.
Also read: Top ways to improve your company culture
5. Morale improvement
A revolving door environment can reduce employee morale. Aside from the loss of connectivity, the remaining employees may need to take on greater workloads and responsibilities. This can also reduce motivation and satisfaction.
Equally worrisome is the contagious nature of turnover. Employees may choose to leave after seeing others looking for work, talking about leaving, or leaving the company. Companies with successful talent retention management programs can boost employee morale, increase connection and engagement, and evoke positive emotions in the workplace.
6. Increase in employee loyalty
Employees, who work for a longer time, are more attached to their organization because they enjoy all kinds of benefits from it. They rarely abuse their organization and always think and work for its growth. For them, the organization comes first, and the rest comes later.
7. Effort-consuming
HR personnel select a few people from a large pool, conduct preliminary interviews, and finally hand them over to the relevant managers. Managers will then further consider whether the recruits are a good fit for your organization. Hiring the right candidate is an effort-consuming process.
Why are your employees leaving?
Every company should conduct exit interviews as they are highly essential as they provide valuable insight into your organization's employee perspective and help you determine if your employee retention strategies need improvement.
Most of the time, you hear an employee who is leaving talk about one or more of the following reasons why he left.
- Inadequate salary
- Not-so-competitive package of perks and benefits
- Feeling overworked and/or unsupported
- Limited career advancement
- Need for better work-life balance
- Lack of acknowledgment
- Monotony
- Dissatisfaction with management
- Concerns about company direction or financial health
- Dissatisfaction with corporate culture
- Desire for change
- More attractive jobs at other companies
How to retain employees for a longer time
With higher retention rates of the skilled talent pool, your company can achieve the unachievable. But retaining the right talent comes with its own set of difficulties.
With the growing opportunities in the employment market, people switch to different firms within a shorter period as they get 40-48% hikes. So how are you planning to retain your employees with such aggressive competition?
Given below are some of the best employee retention tips that can help you retain your employees for a longer time.
Employee retention tips
1. Onboarding and orientation
All new employees should be set up for success from the beginning. The onboarding process should teach new employees not only about their role but also about your company culture and how they can contribute and grow within it.
Don't underestimate this important first step. The training, support, and guidance you provide from day one can set the tone for your employee's entire tenure in your organization.
2. Compensation and benefits
Offering competitive salaries and basic benefits (health insurance, discounts on wellness programs, etc.) can attract top candidates but it is often not an incentive that could retain an employee.
Rewarding employees based on their performance, such as raises, bonuses, and thoughtful gifts, is a clear signal that you recognize their efforts and the value they bring to your organization. This leads to enhancement in your company's culture which is vital to retain your employees.
3. A nice working environment:
When you organize your company’s office, remember that it will be your employees’ "home away from home."
- Many companies offer their employees free snacks, lunches, and other perks to improve their office life and improve employee well-being.
- You can also organize team-building activities to promote healthy relationships in the workplace with both teammates and team leaders.
- You may do several new additions to company policies, such as offering them remote work to highlight your company's interest in promoting a work-life balance for its employees.
4. Training and career development
Around 80% of the people shifted to different jobs post-pandemic for better career advancement. Therefore, if you want to retain your employees, you need to think about their career advancement too.
- Providing opportunities for learning, training, and pursuing higher education is also a great motivator for talent retention.
- You can conduct seminars and workshops where your employees can acquire new knowledge for professional growth.
- It's normal and obvious for existing employees to want to try new methods and specialties.
Therefore, organizing various skill development activities shakes up their ingrained routines and motivates them to further develop their roles.
5. Clear communication
When sharing important information with employees, clarify all important details, for example, pay raise plans or new job assignments, and refer to relevant policies where possible.
Ambiguous messages and expectations can confuse employees and make it difficult to respond appropriately.
Develop and distribute helpful documents and guidelines to employees to avoid such hazards.
6. Continuous feedback
Many employers forgo annual performance reviews in favor of more frequent meetings with team members. These one-on-one sessions help you talk to employees about their short-term and long-term professional goals and help them envision their future at the company.
You shouldn't make promises you can't keep, but you should discuss possible career development scenarios together and come up with more realistic plans to reach those goals.
7. Flexible work arrangements
Even though many companies have reopened their offices, they understand that some employees prefer to work remotely, at least part-time. Without this option, employees may even quit. A recent survey by Robert Half states that half of the people working from home remotely would look for new job opportunities if they had to return to the office full-time.
So sooner or later think about what you can offer your employees if permanent work from home isn't an option. 26% of people mostly prefer working from home, 15% of them prefer both home and office but the higher share of people prefer working remotely. A work-from-home structure, flex-time culture, or a 4-day workweek system can help you reduce team stress while simultaneously increasing your company's employee retention.
Also read: 4-day workweek: A comprehensive guide
8. Manage change effectively
Apart from the recent disruptions caused by COVID-19 pandemic, all workplaces have to deal with certain changes, both good and bad. And in times like these, employees look to management for insight and confirmation.
When your organization is undergoing major changes, keep your team as informed as possible to help reduce anxiety and to control rumors. Make big announcements individually or in group calls or meetings and allow time for questions.
9. Emphasis on teamwork
All employees, not just star players, should be encouraged to come up with ideas and solutions.
Promote teamwork and collegiality by providing opportunities for collaboration, accommodating individual work styles, and giving everyone the freedom to make decisions and revise courses as needed.
10. Job security
According to the Great Resignation or the Great Reshuffle, 56% of people switch jobs for better pay but 20% switch jobs for other reasons such as better health benefits and job security. COVID-19 pandemic showed the disastrous effects of layoffs. As a result, employee loyalty witnessed a drastic change. Now employees think of themselves more than they think about your firm.
In such conditions, if you give them the security of their jobs, this will boost their morale. A sense of job security can do more wonders than higher wages.
The above-mentioned information clearly states the benefits that come with higher employee retention. Talent retention not only leads to your firm's continuous growth but also accelerates the entire process of growth.