Employee Retention - Understanding the Necessity

 

Part 1: Understanding the necessity of employee retention for companies in today's uncertain times


When it comes to people, many firms are plagued with questions such as "are they pleasantly engaged, are they comfortable, or are they likely to leave?" Moreover, despite technical advances, businesses continue to struggle to answer these issues since they depend on various circumstances. Factors such as the COVID-19 pandemic have had an enormous influence on employee engagement as well, with Gallop stating that it has reached a new high following a historic drop.


But why is employee retention so necessary?


As it turns out, companies with lower retention rates struggle with productivity, efficiency, and corporate culture where people come and go, creating a "revolving door" environment. Here are a few compelling reasons to keep your best performers with you.


Retention Saves Money

According to the US Bureau of Labor Statistics, one-third of new employees resign within six months, with 3 to 4.5 million people quitting their jobs each month in the US alone. And replacing so many people within six months is a massive cost to the company. Specifically, the cost of identifying, hiring, training, and developing new personnel. Whereas simply retaining your company's existing talent might save you a lot of money.


Retention Saves Time

Not only is it costly to replace personnel regularly, but it is also time-consuming. Onboarding a new employee properly might take several months, if not a year. So, there goes a valuable number of hours that could have been saved by using tools like people analytics and retaining the employees.


Furthermore, when an individual quits a firm, a good deal of knowledge is lost with them. In fact, according to Panopto research, 42% of an employee's expertise is unique and not shared with coworkers, and that information follows them when they leave the company. This usually creates a knowledge gap requiring the new hires to go through the entire learning process from top to bottom. 


The business analytics research also discovered that the average new recruit would spend over 200 hours on wasteful work (such as waiting for replies from coworkers or re-learning items to pick up where their predecessor left off). Therefore, retaining the employee would save substantial time for any employer.


Retention Enhances Company Culture

Finally, employee retention is beneficial to your company's internal culture and morale. That is because problems with company culture and significant staff turnover often go hand in hand. For example, continuous turnovers and uncertainty may lead to employees stressing over their own position and the future in the company.


To conclude, employee turnover is one vicious cycle that might eventually lead others to their own quitting. Therefore, it is essential to understand that employee retention is a long-term game. And to establish a continuous connection with an employee, you should start with employing the finest prospects for your company using advanced people analytics. Following that, you'll need to assist the employees with learning and development activities during their tenure at the firm, and you'll need to conclude the relationship on a positive note with an exit interview or retirement preparation. Read Part 2: Employee Retention – Improving the Game to understand better how to improve the retention game.

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