Did you know that replacing an employee can cost a firm 9 months of their salary? This seems to be a good head start on why employee retention must matter for an employer. Employee retention is defined as what an organization can do to keep employees from quitting. Employee departures do not just come with monetary disadvantages, but also a negative impact on the workplace culture. That is why the companies today work hard to retain employees just as much as they do to hire and train them, and here we give you top three reasons to do that.
Reduces the hassle of employee turnover
The 2018 Retention Report by Work Institute underscores that firms incurred expenses of $600 billion because of employee turnover in the year 2018. That’s a whopping number and it highlights that organizations may have to pay a hefty price of poor retention. Some percentage of employee turnover is not abnormal. However, this becomes manageable when firms know the exact turnover data. LinkedIn survey from 2018 shows that the technology sector (software) has the highest turnover rate at 13.2%. Taking into account these data points can help organizations in taking up measures like - career focused employee conversation, lateral career moves within organization or figuring out when employees are disengaged.
The same report also mentions that since 2009, there has been a 141% increase in job openings, which means that the good employees do not have the dearth of options. Employee retention therefore remains a rising concern among the firms.
Your loss could benefit your competitor
Employees who’ve worked with a company for a good time period become its intellectual property and hold many of your trade secrets. Losing a good employee indicates that a firm gives an opportunity to its competitor to use their assets for their advantage. Employees who leave an organization can go to work for competitors based on the skills, training and potential they’ve learned.
Even if your employee is not actively searching for a job they still are prime candidates in the process of passive recruitment by smart hiring managers. If your employee retention game isn’t on-point, you aren’t giving enough reasons for the employees to stay put within the firm.
To Avoid dent to company’s brand repute
Employer reputation highlights the quality of any firm as the employer. With the advent of social media and public reviews, transparency in the reputation of a company has become evident.
While most companies focus on good industry reputation, they forget that employer reputation is just as important. Industry reputation defines how well a company is perceived in the market, along with its value proposition.
To ensure that a firm remains positively credible in the job market, employers should invest in employee retention. To establish this credibility within a firm, companies must cultivate a culture which promotes a positive brand image of an employer.
No entrepreneur wants their business to be a revolving door for employees. Anticipating turnover, taking actions to retain key employees and hiring new talent ahead of the time requires proactive planning and the right employee retention strategies. In our next story, we’ll talk about the top employee retention strategies which can help businesses discover the art of holding on where it’s the hardest.