Employees are undoubtedly the foundation of every organization. They sustain the functionality of the organization by performing day to day operations and maintaining client relationships. It is nearly impossible for an organization to be successful without hardworking and dedicated employees. It comes as no surprise that organizations focus a considerable amount of time on recruiting the best employees. Organizations put great effort into creating these employees with hopes of a high return on investment. But what happens to an organization once an employee leaves? To provide perspective on the importance of employee retention, we have compiled a list of five reasons why organizations should retain employees:
- Cost- Organizations with a high employee turnover rate typically incur higher costs. Between advertising, training, and other organizational operations, the cost of replacing an employee can heavily impact the operational budget. A recent study shows that the cost of replacing lost talent is 70 to 200 percent of that employee’s annual salary. By retaining employees, the organization will be able to keep overall costs to a minimum.
- Productivity- Once a new employee is hired, it takes significant time and energy from HR and management to help the new hire learn and adapt to the organization. Time spent on training and orientation is time taken away from focusing on clients and the overall goal of the organization.
- Competitors- Once an employee leaves an organization, they are placed back into the vast job market. In many cases, employees may begin to work for a competitor and apply knowledge from their previous employment to their new one.
- Positive work culture– Employees that work with each other for a long time eventually adopt traits from each other. Whether it’s their strengths or weaknesses, continuous collaboration will eventually lead to adopted qualities from one another. Long time employees can become so in sync with each other, that they can develop a shared process for accomplishing tasks in an efficient manner.
- Client satisfaction- An organization’s success is largely determined by its client satisfaction, loyalty, and perception. An organization with a high employee turnover rate, runs the risk of giving the organization a bad perception. On the other hand, if a loyal client develops a strong relationship with an employee that leaves, the client may leave with that employee to their new place of employment. Thus resulting in a loss of revenue for the organization.
Overall, by retaining employees, an organization cuts costs, creates a great work culture, and increases efficiencies. Usually employees that stick around an organization for a lengthy time are treated well by employers. A tight niche organization that is based off of loyalty is looked fondly upon by outsiders and can therefore promote an organization as a top workplace. Keep your employees happy by getting to know each one as an individual. It’s not just about investing time and money in your employees, but a bit of a personal relation as well. By making your employees feel comfortable in the workplace, retention rate will go up and so will the overall success of the organization.