Employee retention: its importance and how to improve it
Retention is key for running a successful business – beyond the cost of losing talent to competitors and the investment it takes to continually hire and replace employees, maintaining a loyal employee base is what helps to create a strong company culture.
Here, we’ll take a closer look at employee retention and explore why it’s a crucial element to pay attention to, as well as discuss strategies and ways you can increase retention in your workplace.
One way to show your employees that you value them is through personalised rewards, which offer recognition while showing that you really care about what your team cares about – get in touch to find out how we can help improve the employee experience.
Why Employee Retention Matters
From the finances to the overall atmosphere, retention is a factor that should be considered when trying to build a strong and successful workplace environment.
The numbers speak for themselves – low retention has a high upfront cost. Advertising, recruitment, screening, interviewing, and hiring are expensive: studies suggest this can cost an estimated 30%-400% of an employees’ annual salary depending on the level of experience and the gaps you need to fill.
There is also a high longer-term cost for low retention that impacts company culture, productivity, and morale. Retaining experienced employees means you get to hold onto the skills and knowledge that have been cultivated within your organisation. These employees create a solid foundation for information and operations, helping to support and lead newer team members.
Maintaining a core team is also essential for productivity, to ensure you have the resources and skills required to accomplish regular tasks, as well as grow and achieve larger goals. Having a productive workforce impacts everything from profits to customer experience.
The Business Benefits of Improving Employee Retention
Retention should be a key consideration that is built into your overall business strategy, as it affects virtually all key business functions. By developing a strong culture of retention, businesses are more likely to achieve targets and grow.
Increased Employee Productivity
By retaining employees for longer, you can maintain a bank of knowledge and expertise within your company. As well as holding onto information and skills that other team members rely on, it means that the top talent in this sector belongs to your organisation (and not to your competitors).
Losing employees and having empty positions slows down processes and take a huge toll on productivity:
All of these factors can have a negative impact on revenue and profit. It can also stall growth, as you may lose opportunities to competitors due to low reactivity and lack of resources. This can easily turn into a negative spiral that affects company culture – and potentially leads to even lower retention levels.
On the other hand, a good level of retention means that you get to keep the knowledge and expertise that helps to drive productivity, inspire your teams, and achieve goals – which gives you a competitive edge and leads to better financial success.
More Engaged Employees
High retention can drive positive momentum and create a workspace vibe where your team feels connected to the work they’re doing and the overall mission and performance of the company. This overall sense of wellbeing encourages retention – employees who feel engaged and thriving are 59% less likely to look for another job in the next year.
When workers have built relationships with each other and have established a history of value in their role, they’re more likely to feel comfortable and confident at work. The impact of this can be felt beyond the internal company walls – clients and customers are more likely to be satisfied when their service is delivered by a team that is engaged with the product and believes in the brand.
A More Positive Work Environment
Retaining the right staff is crucial for creating a positive work environment. Loyal employees who care for the work they do and for each other can become a key distinguishing factor for a company, and help to attract and retain like-minded people.
This, in turn, can help to drive performance – studies have found that having fun at work can increase retention and reduce turnover, all while boosting engagement, encouraging creativity, and providing purpose.
Prioritising positive values in which employees feel respected and balanced is key for achieving this goal – a Pew Research study revealed that 57% of people quit their jobs because they felt disrespected at work and 39% left as they felt they were required to work too many hours.
Learn more about how to promote employee wellbeing and create a positive workplace culture where your team can thrive.
How to Improve Employee Retention
Retention and employee engagement are inherently connected – 90% of engaged employees report that they intend to stay with their company for the next year. There are many ways to drive engagement to support employee satisfaction and retention.
Recognition and Rewards
Lack of recognition has been directly tied to loss of retention – one in five employees that don’t feel recognized for their work have gone for a job interview in the last 3 months and 79% of people who leave their jobs say ‘lack of appreciation’ was a reason for exiting. On the other hand, a recognition-led approach has been shown to reduce burnout and increase positivity.
Rewards and recognition should be built into your overall company strategy, from day-to-day moments to performance-related celebrations. Providing meaningful employee rewards is a great way to show appreciation and demonstrate that you value your team and care about their wellbeing.
Competitive Compensation and Benefits
Offering employees a salary and benefits package that captures their value and incentivises them to stay is crucial for retention.
Compensation and benefits are one of the main reasons people leave their current role – according to a Pew Research study, 63% of people left their jobs due to low pay and 45% cited not having good benefits as a reason for moving on. Recent data indicates that 78% of people believe they can get better pay by changing jobs (and at least 56% of them do).
As well as offering a competitive salary, maintaining a comprehensive benefits package is crucial for maintaining a loyal team. To do so, you must understand what sort of benefits your team actually wants and find ways to deliver perks that add value to their lives.
Find out more about how to implement a meaningful benefits scheme and introduce flexible benefits to your team.
Opportunities for Skill Development and Career Progression
Giving your employees a sense of purpose and direction for their overall career goals is a great way to increase retention.
63% of people who quit their jobs say they do so due to no opportunities for advancement, whereas surveyed employees who feel as if they’re progressing on their career path are 20% more likely to still be working for the same employer a year later.
Depending on the industry, role, and structure of the company, there are many ways to offer skill development and career progression. Transparency and regular communication with managers will ensure that employees know where they are at and what they’re working towards, as well as giving them the opportunity to express their goals and desires within the company.
A Positive Workplace Culture
Creating a positive workplace culture is key to attracting and retaining talent – 77% of applicants say that they take culture into consideration before applying, whereas 26% of employees who experience a low level of respect in the workplace are more likely to quit.
Workplace culture includes a wide variety of aspects, such as:
- Day-to-day atmosphere and how welcomed and comfortable employees feel within the workplace
- The company’s stance on work-life balance and how this is reflected through flexible working policies
- Relationships (within teams, across departments, and between individual employees and their managers)
- Overall company values – 27% of employees who believe their company has a higher purpose are more likely to stay
- Incentives and rewards for good performance
By paying attention to these aspects and looking for ways to grow and enhance them, you can develop a positive workplace culture that your existing employees are more likely to engage with.
Communication and Employee Feedback
Prioritising communication and feedback will help you to establish a workplace environment where employees feel they can speak openly – and where they feel they are listened to. This can take shape in a few different ways.
Good management is key to retention – almost half of employees have quit a job because of a bad manager and 60% agree that their managers need more training. Look for ways to implement a management structure that encourages strong communication between team members and is open to feedback on both sides of a manager-employee relationship. As well as increasing retention, strong managers will drive performance and increase employee engagement.
How Red Letter Days Products Can Help Improve Employee Retention
Retention is crucial for business success, and it’s something that can be actioned in different ways across your organisation. From the overall workplace environment and atmosphere to benefits and individual rewards, it’s all about building a company culture that your employees feel connected to.
Our team can help you boost employee satisfaction through personalised experiences, which can be used to motivate teams, recognise performance, and celebrate the people who drive your success. Get in touch to find out how we can help support your retention strategy and boost employee loyalty.