Hiring employee is just a start to creating a strong workforce.
One of the objectives of the HR Department is to retain qualified and committed people.
In a business setting, the goal of the employer is usually 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 (What is Employee Retention?)
Employee retention refers to the ability of an organization to retain its invaluable people. Employee retention means efforts of business organizations to maintain a working environment which supports current staff in remaining with the company.
Many employee retention policies are aimed at addressing the various needs of the employees to enhance their job satisfaction and reduce the costs involved in 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 is able to 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, absence of 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 begin looking for 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 also equally important to discourage employee’s intention to remain in the organization.
Employers can seek “positive turnover” whereby they aim to maintain only those employees whom they consider to be 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 also an employee who could have contributed significantly to the organization.
- If a person employed in a critical role leaves, then it disturbs the functioning of the organization. Also, to replace such an employee involves huge costs.
- Customer Service may be disrupted. Customers and clients do business with a company in part because of the people. Relationships are developed that encourage continued patronage of the business. When an employee leaves, the relationships that employee built for the company are severed, which could lead 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 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 the poor quality of work.
- Excessive liberty to staff just to maintain workflow affects the quantity and quality both.
- 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 strength.
These are just a few examples of advantages and disadvantages related to employee retention. There is always a chance there can be more relevant examples.
Corporations today are working toward increasing their profit margins, reduce costs and are employing 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, it is the middle management which is solely responsible to achieve 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 placed properly 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 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 as many employees often look elsewhere because of poor compensation and benefits.
Consider hiring a human-resources manager in charge of managing employee benefits, perks, reviews, and related tasks and makes sure employees are treated fairly.
Make sure 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, 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 of advancement. Employees will become frustrated and may stop trying if they see no clear future for themselves in the company.
Foster employee development
This could be training to learn a new job skill 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 on 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.
An employee’s relationship with his/her immediate supervisor or manager is equally important to make employee satisfied.
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.
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.
It is important for employees to understand their career path within an organization to motivate them to remain in the organization to achieve their personal career goals.
Through surveys, discussion and classroom instruction, employees can better understand their goals for personal development. 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 an 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.
These are discussed below:
Organizations can make a survey of employees to gain insight into the motivation, engagement, and satisfaction of their employees.
It is important for organizations to understand the perspective of the employee in order to create programs targeting any particular issues that may impact employee retention.
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 as well as the aspects of their work that they enjoyed. The organization can then use this information to make necessary changes to their company to retain top talent.
Employee Retention Consultants
An employee retention consultant can assist organizations in the process of retaining top employees. Consultants can provide expertise on how to identify best the issues within an organization that is related to turnover.
Once identified, a consultant can suggest programs or organizational changes address these issues and may also assist in the implementation of these programs or changes.