09 Jun Why is Employee Retention Important?
Employee retention is perhaps one of the most important factors that contributes to the growth and success of a company. The dynamics between an employee and his work place is a delicate balance of give and take. Without the right amount of involvement and support, employees can feel undervalued and ignored. The answer to boosting employee retention lies in engagement!
Negative Impacts of Employee Turnover:
- A mid-level employee that leaves a company can cost up to 150% of the worker’s annual salary to be replaced. If the situation requires contingency hiring, the recruitment costs alone can be exceptionally steep. In contrast, most employees are happy with a 5% raise every year.
- Loss of enterprise knowledge. A seasoned employee is not only well versed with the policies and guidelines that govern the company, he is also aware of the internal ‘pulse’ of the workforce and management. He understands what to expect and where to expect it. He has an idea of the responsiveness of his peers and can adjust his work to align with these intangible and often unwritten mandates.
- When an employee leaves, a fresh candidate has to step into his shoes. It doesn’t really matter how experienced this individual is, he needs anywhere from a month to three months to reach optimal productivity.
- Frequent turnover not only impacts the morale of a company, it also undermines the loyalty of the company. Employees who hop from one job to another gradually lose their ability to connect with the goals of an organization deeply and ‘care’ about the outcome.
If a position requires very specialized knowledge, turnover is even more expensive and damaging. Essentially, employee retention is the life-blood of a company. With an employee retention strategy, you can begin cutting your turnover rate by 20% or more within the first year.