What is employee retention, and why is it so important?

A few years ago, the employee retention concept was understood as a practice of the HR department; nevertheless, this concept is currently associated with a business strategy.

So let’s start defining what it is and its scope!

Employee retention is the organizational goal of maintaining productive and talented workers while reducing turnover.

Increasing employee retention is framed by four main fronts: a positive work atmosphere to promote engagement, showing appreciation to employees, providing competitive pay and benefits, and encouraging a healthy work-life balance.

It needs to start with a strategy focused on the long-term, followed by an action plan carefully tailored to the company’s needs.

A comprehensive human capital management strategy includes a well-thought-out plan for retaining valuable employees that the organization took time to recruit, onboard, and train.

Why? Because replacing an employee can be expensive without mentioning other related expenses, such as emotional ones.

It has been demonstrated that companies that have decided to improve employee retention programs while addressing turnover risks get healthier productivity.

The first step a company needs to take to have excellent employee retention is to know and face their reality. It demands a diagnosis of the employee retention rate.

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Then, evaluating processes is required, followed by human resource planning. Considering the hard and soft skills the company finds valuable for developing its business is essential.

The employee retention strategy needs a plan that strengthens, empowers and retains professionals with the required skills, competencies, and capabilities.

So why is keeping an eye on employee retention so critical?

Employee retention promotes the organization’s health and success. It is reflected directly in avoiding unnecessary costs, reducing roadblocks to growth, and optimizing time. By creating a strong employee retention strategy, the company will combat voluntary employee turnover bringing benefits to the company.

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Let’s go over some of those benefits:

1) Cost & Time Reduction

Finding and recruiting replacement workers represent thousands of dollars for a company. Costs and time go beyond the apparent items as the replacement process include advertising, interviewing, screening, onboarding & training, etc.

By creating a structured employee retention strategy, the company will avoid significant productivity loss, engagement loss, customer service problems, and a negative company culture impact.

2) Keeping experienced employees brings productivity

A significant compound of high turnover is the loss of knowledge, skills, and relationships within the organization, stakeholders, and customers. When senior employees depart, the loss can have a considerable impact as these professionals are excellent fits for solving complex issues and leading teams.

3) Superior Customer Experience

One of the critical factors of customer experience is that it comes from their interactions with a business, which ends up being a perception. These exchanges depend on employees whose experiences can impact how they engage with customers.

New employees require time to do the learning curve. So, when the turnover rate is high, the perception of the customer can be at stake.

When a high percentage of the staff is constantly rotating, there is a big chance customers can perceive it and even create negative experiences for them. In addition, if the company has a high employee rotation rate, employees are less likely to feel secure and safe, and it impacts when working with customers.

4) Superior Employee Experience

Happy and committed employees equal better performance, which directly impacts productivity! Remember that employees also get opinions about the company!

By knowing your employees and acting toward what they want, companies can deliver a better employee experience, which drives retention.