Employee Retention and Why It’s Important

Business success is primarily anchored to an effective recruitment process. However, recruitment aside, employee retention is also important as it reduces business costs and diminished productivity. HR managers should continually assess retention and turnover rates to gain insights into employee satisfaction levels.

Simply put, employee turnover refers to the number of people resigning from their positions. Retention is how long employees stay in a company. Understanding both terms is crucial for HR managers in many ways.

Why Employee Retention and Turnover Rates Are Important?

Employee retention and turnover rates directly affect business success and employer performance. High retention and low turnover rates mean:

  • The business has engaged and loyal employees
  • Employees are happy and satisfied
  • Wages and worker benefits are competitive
  • Employees enjoy a good work-life balance and positive wellbeing
  • HR managers and departmental heads are doing a great job

On the other hand, if the business has a high turnover and low retention rates:

  • Employees are stressed and don’t feel challenged enough by their assignments
  • The recruitment process doesn’t reflect the company’s needs
  • Employees are disengaged
  • Management is less concerned about employee problems and feedback
  • Salary and other benefits aren’t satisfactory

Organizations and HR managers can only derive such information by monitoring employee retention and turnover rates. An ideal business should have high retention and low turnover rates.

How Companies Can Improve Employee Retention Rates

If your company’s retention rates are on the decline, you should re-evaluate the following:

1. Onboarding and training practices

How you recruit, train, and onboard your employees influence employee turnover. Employing recruitment practices that don’t reflect your business’s needs attracts the wrong hires. You should suspect this as the main reason if you are losing employees within the first six months after hiring.

The best way to address this is by refining your hiring practices right from job descriptions. Ensure that candidates understand your expectations before coming on board.

2. People and Culture

Like other humans, employees are social beings who crave emotional connection and engagement. Most employees in your business want to feel they belong in that workplace. As such, creating a favorable work environment can significantly boost retention. You should encourage the culture of engaging employees and demonstrate that you care by acting on their feedback.

3. Relevant benefits

Nothing motivates employees better than competitive compensation. Apart from hourly wages, additional benefits, such as paid time off and healthcare coverage, are very motivating.

The Bottom Line

A high employee turnover negatively affects your business’s productivity and the morale of other employees. If your business faces such challenges, you should adopt various retention strategies to reduce costly hiring rates and boost productivity.

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