Hiring employees is just a start to creating a stable workforce. One of the objectives of the HR Department is to retain qualified and committed people.
In a business setting, the employer’s goal is to decrease employee turnover, thereby decreasing training costs, recruitment costs, and loss of talent and organizational knowledge. Let us now look at the meaning of employee retention.
Employee Retention: Definition, Techniques of Employee Retention
Employee Retention Definition (What is Employee Retention?)
Employee retention refers to an organization’s ability to retain its invaluable people. Employee retention means the efforts of business organizations to maintain a working environment that supports current staff in remaining with the company.
Many employee retention policies aim to address the employees’ various needs to enhance their job satisfaction and reduce the costs of hiring and training new staff.
In the words of Armstrong, “Employee retention is the ability of an organization to retain its best employees and hence maintain a lower turnover. An organization can achieve this by adopting various employee retention programs.”
In the U.S, average employees change five to six employers before retirement. Employee turnover is a serious problem for many enterprises.
The problem of turnover is deeply rooted. These deeper issues may include low employee morale, a clear career path, lack of recognition, poor employee-manager relationships, etc.
A lack of satisfaction and commitment to the organization can also cause an employee to withdraw and seek other opportunities.
The pay does not always play as large a role in inducing turnover as is typically believed. Job autonomy, fairness, and recognition are equally important to discourage employees’ intention to remain in the organization.
Employers can seek “positive turnover” to maintain only employees they consider high performers.
Advantages of High Retention
The advantages of high employee retention are as follows:
- Retaining employees reduce training costs. A lot of investment is needed to train an employee and to make him productive. If such an employee leaves the organization, they lose the money invested and an employee who could have contributed significantly to the organization.
- If a person employed in a critical role leaves, it disturbs the organization’s functioning. Also, replacing such an employee involves huge costs.
- Customer Service may be disrupted. Customers and clients do business with a company partly because of the people. Relationships are developed that encourage continued patronage of the business. When an employee leaves, the relationships that the employee built for the company are severed, leading to potential customer loss. Retaining experienced staff creates a positive impact on customer services.
- Turnover spirals into more turnover. When an employee terminates, the effect is felt throughout the organization. Coworkers are often required to pick up the slack. The unspoken negativity often intensifies for the remaining staff.
- Employee retention encourages a friendly environment and fosters bonding among the employees.
- It increases revenue for the organization.
Disadvantages of employee Retention
- It promotes groups amongst the old employees, which creates an insecure environment for new employees.
- Improper mixing of staff affects productivity and ensures a poor quality of work.
- Excessive liberty to staff to maintain workflow affects the quantity and quality.
- Flexible work timings rarely justify the work delivered.
- Retaining the non-delivering staff kills the productivity and creativity of knowledgeable employees.
- Retaining spoon-fed and complaining employees add to the cost of the organization.
- Affluent employees who do not require a job rarely add value to the employee’s strength.
These are just a few advantages and disadvantages of employee retention. There is always a chance there can be more relevant examples.
Corporations today are working toward increasing their profit margins and reducing costs. They employ the latest measures to sustain competition, and employee retention is one of the most important tools to ensure stability in the market.
Directors, Senior Management, and Consultants would advise or suggest various techniques to reach results, but middle management is solely responsible for achieving desired goals.
Employee Retention Techniques (How to Retain Employees)
Organizations require time, capital, and resources to attract and recruit top talent.
However, these are all wasted if employees are not appropriately placed to succeed within the company.
Research has shown that an employee’s first few days are critical because the employee is still adjusting and getting accustomed to the organization. Experts suggest that HR managers should follow many tactics and ways to retain employees with high performance.
Offer a competitive benefits package, including health and life insurance, stock option, financial incentives, and a retirement plan. Provide employees with financial incentives such as pay raises, bonuses, and stock options.
Pay levels and satisfaction are only modest predictors of an employee’s decision to leave the organization; however, organizations can lead the market with a strong compensation and reward package.
Many employees often look elsewhere because of poor compensation and benefits.
Consider hiring a human-resources manager to manage employee benefits, perks, reviews, and related tasks and ensure employees are treated fairly.
Ensure employees know what’s expected of them and how they can grow within the company. Use contests and incentives to help keep workers motivated and feeling rewarded—conduct “stays” interviews.
Socialization practices delivered via a strategic onboarding and assimilation program can help new employees become embedded in the company and, thus, more likely to stay.
These practices include shared and individualized learning experiences and activities that allow people to get to know one another.
Such practices may include providing employees with a role model, mentor, or trainer or providing timely and adequate feedback.
Promote from within whenever possible
It gives employees a clear path to advancement. Employees will become frustrated and stop trying if they see no clear future.
Foster employee development
This could be training to learn a new job or tuition reimbursement to help further your employee’s education. Providing ample training and development opportunities can discourage turnover by keeping employees satisfied and well-positioned for future growth opportunities.
Create open communication between employees and management.
Hold regular meetings in which employees can offer ideas and ask questions. Have an open-door policy that encourages employees to speak frankly with their managers without fear of repercussion.
Get managers involved
HR managers need to spend time coaching employees, helping good performers move to new positions, and minimizing poor performance.
Employees who are satisfied with their jobs, enjoy their work and the organization, believe their job to be more important, take pride in the company, and feel their contributions are impactful are five times less likely to quit than employees who were not engaged.
Engaged employees give their companies crucial competitive advantages, including higher productivity and lower employee turnover.
Effective Leaders
An employee’s relationship with his/her immediate supervisor or manager is equally important to satisfy the employee.
Supervisors need to know how to motivate their employees and reduce costs while building loyalty in their key people. Satisfied employees usually will not quit their organization.
Intrinsic rewards
Organizations can also look for intrinsic rewards such as increased decision-making autonomy, timely feedback, and recognition. Though this is important, employers often overlook these matters.
Career development
Employees need to understand their career path to motivate them to remain in the organization to achieve their personal career goals.
Employees can better understand their personal development goals through surveys, discussion, and classroom instruction. With these developmental goals in mind, organizations can offer tailored career development opportunities to their employees.
A fair performance appraisal
Fair appraisal enhances the sense of belongings of employees and influences them to remain in the organization.
Give Employees Ownership
People work best, and they are happiest when they have ownership, when they can solve problems their way and express their individuality. By “ownership,” we don’t necessarily mean equity.
Communicate the business’s mission
Feeling connected to the organization’s goals is one way to keep employees mentally and emotionally tied to the company.
Get people talking to each other.
Encouraging teammates to interact will make employees feel more connected to and informed about their company and one another.
They get a chance to see what other departments are working on and how everyone’s contributing to the overall mission.
Drell argued, “By creating a culture where employees know and respect each other, small businesses can boost employee morale, create better communication and collaboration and improve long-term results.
Place a Premium on Employee Health
It’s not healthy to work like a dog.
Companies with superior retention rates are the ones that recognize that wellness is essential to productivity. Wellness isn’t just physical; it’s mental, too.
Employee Retention Tools and Resources
Cascio, W.F. (2006) suggests few tools retain talented employees
Employee Surveys
Organizations can survey employees to gain insight into their employees’ motivation, engagement, and satisfaction. Organizations need to understand the employee’s perspective to create programs targeting any particular issues that may impact employee retention.
Exit Interviews
Organizations can gain valuable insight into the workplace experience by conducting an exit interview.
Exit interviews allow the organization to understand the triggers of the employee’s desire to leave and the aspects of the work they enjoyed. The organization can then use this information to make necessary changes to its company to retain top talent.
Employee Retention Consultants
An employee retention consultant can assist organizations in retaining top employees. Consultants can provide expertise in identifying the issues within an organization related to turnover.
Once identified, a consultant can suggest programs or organizational changes that address these issues and assist in implementing these programs or changes.
