Helpful Guides | Hiring

Why is Employee Retention Important for Your Company?

By wizu | 05 June 2022

There’s nothing more exciting than welcoming new team members to the business. However, if you do this often, then you may have a problem with employee retention. Why is this important for your business?

When you continuously go through the process of hiring and training new employees, it costs your company money. But it is more cost-effective and better for the company to retain employees. Plus, if you put employees first, this is a sure sign of a great workplace, and the word quickly spreads that your business is a great place to work. So, when it’s finally necessary to search for new candidates, you never have to worry about finding top talent. They come knocking on your door! But first, it’s essential to master retaining your employees.

Studies have shown that turnover costs are pretty expensive. They can range up to $2.5 million in yearly costs for small businesses. With higher turnover rates, productivity is also sure to fall. Your team has to constantly cover for missing employees or take precious time to train a new one. With high employee turnover rates, the morale and productivity of your entire team can suffer.

 

What is Employee Retention? 

Employee retention is the process of keeping talented, productive employees on board who also have a ton of knowledge about your business. Reducing turnover rates creates a more positive work environment. You can achieve this by offering competitive salaries and benefits and a positive work-life balance for all employees.

But what many businesses fail to grasp is that employee retention isn’t only about offering the greatest benefits and perks. Employees want and deserve a competitive salary and benefits package, development opportunities, engagement, and job satisfaction. These are the factors of a great employee retention strategy.

 

Benefits of Employee Retention

Of course, there’s always going to be a certain amount of employee turnover. This is inevitable. Employees leave for many reasons, such as changes in their health, moving for their spouse’s job, and more. Even so, if your company has a high employee retention rate, it’s sure to gain a reputation for being a great employer.

This reputation can help attract top talent when you do have open positions.

There are several benefits to having a high rate of employee retention, including the following.

 

1. Improved Productivity

It can take over a year or two for new employees to build relationships and become productive within the company. What’s more, experienced employees must take time away from their own work to help new employees learn the ropes. That means a loss in their productivity. Plus, if employees have to cover for employees who have quit and train new ones, the process can lead to:

  • Frustration
  • Poor quality work
  • Burnout
  • Lower morale

Nothing is worse than having to train a new employee every few months or so. The cost to the company is enormous. However , you’ll see improvement in productivity, morale, and more with improved employee retention.

 

2. Lowered Costs

The costs involved with hunting for new candidates can be high. It’s necessary to pay for ads, onboarding, training, and development. All of this costs both time and money. When you have to repeat these processes too often, the business can lose money.

High turnover rates can lead to:

  • Loss of productivity
  • Customer service problems
  • Impact company culture
  • Lower engagement rates of all employees

Retaining employees reduces or eliminates these issues and their associated costs. With increased productivity and engagement, the quality of work improves, and the company can earn a good profit.

 

3. Improve Morale and Team Accord

When your company has a higher employee retention rate, employee morale increases and creates better team accord. It takes time and effort to build a team that works well together. Retaining employees makes this process easier and creates positive synergy throughout the company.

 

4. Employees Have Better Skills

When a company has better retention rates, it means employees become more skilled at their jobs. The goal is to develop employees and allow them to gain knowledge about the organisation. This process takes time.

Skilled employees are a tremendous asset to the business. They have the skills and knowledge to plan and solve complicated problems. They also have the ability to mentor other employees, improving your company’s quality of work at every level.

 

5. Reduced Training Time & Costs

With higher employee retention rates, it’s possible to use company time and resources to help current employees improve current skills and learn new ones.

Professional development services offer long-term benefits to scaling your company.

 

6. Better Customer Experience

When you hire new employees, they don’t have the knowledge and experience needed to provide expert assistance, as do veteran employees. However, veteran employees are the ones that can keep customers coming back rather than moving on to a competitor.

The more experience and deeper knowledge veteran employees have, the better they can provide the assistance your customers need and expect. These employees can become creative at solving complex customer issues and ensuring a good outcome for the customer and the business.

 

7. Improved Employee Engagement

New employees take time to become fully engaged with the company. However, long-term employees are more apt to be more loyal and more engaged.

Employee engagement means employees bring their best to work every day, are committed, and want to refer your company to others. Keeping employees engaged also creates a more supportive and positive work environment, with better workplace culture. All of this can go a long way in increasing employee retention.

 

Improve Employee Retention Rates in Your Company

It’s possible to improve employee retention rates for your business. Use these steps to reduce employee turnover rates:

  1. Have a comprehensive hiring practice.
  2. Create a supportive work environment.
  3. Provide the right training and development for employees.
  4. Encourage communication.
  5. Create competitive salary and benefits packages.
  6. Provide effective manager training.

 

Summing It Up

As you can see, there are many benefits to ensuring your company has a higher employee retention rate. Not only does the business save money and time, but employees are also happier and more productive.

What’s more, long-term employees have a chance of improving themselves and moving up within the company. Ultimately, when you have happy, engaged employees, your business also has more satisfied customers and more business.

So, take the time to develop a program that improves your company’s employee retention rate!

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