Employee Retention Importance and Strategies
Authors: Jacob Beasley. Blake Phillips Publisher: Magellan Int., LLC Date of Publish: June, 2023
Introduction
The significance of employee retention has steadily risen to make it one of the most critical issues in today's workplace. Studies are increasingly finding that companies have trouble retaining talent. These studies show a decreasing trend in average tenure and a rising average cost of turnover. Fortunately, there are many strategies both HR and managers can employ.
Importance
An organizational focus on employee retention supports hitting revenue goals and minimizing costs. When an employee leaves an organization, it costs the company money and time to find and train a replacement. The cost of recruiting, hiring, and training can be significant, especially for skilled positions. Moreover, the cost of lost productivity during the transition period can also be high.
Many studies show that the cost of replacing an employee can be as much as double the cost of the initial hire. A study by SHRM theorized that the cost of a lost employee to a company can be 90%- 200% of that employee’s annual pay. Another study indicated that the target companies’ average employee earned $70,000, but it would cost $105,000 to replace them, further noting a 150% total cost of replacement estimate as, “conservative.”
Improving employee retention dramatically improves employee morale and job satisfaction. When employees feel valued and appreciated, they are more likely to maintain output level and quality. When employees feel undervalued and unsupported, their performance suffers. A 2006 University of Houston study published by the National Social Science Journal saw a consistent trend between perceived morale in work groups and productivity. The study noted an average 56% productivity difference between the groups with the highest and lowest perceived morales. By providing employees with opportunities for growth, development, recognition, and rewards, organizations can boost employee morale, which in turn leads to higher employee retention and profits.
Typically, an employee’s value to any enterprise takes time to emerge. Employees who are continuously improving their skills, taking on additional responsibilities, and demonstrating leadership qualities will be especially more valuable over time. This value comes when they can consistently meet or exceed their job responsibilities and contribute to the overall synergy of the organization, generating value for the company that greatly exceeds their cost. As indicated by the AIHR figure above, employees come into their full value at the 2-to-3-year mark, but career expert Jonathan Phillips estimates the half-life of jobs, in the US, at 2 years. This means that half have left the position before reaching their full value, and the other half are extremely likely to leave within a year of reaching their full value.
Strategies
The most effective method to ensure high levels of employee retention is to engage in a rigorous recruiting and hiring process. For management, this means collaborative job analysis between hiring authorities and HR, boundless clarity with recruiting teams and candidates, consistent engagement with the process from direct hiring authorities, and timely reactions to changes in the job market.
For recruiting teams, this means extensive market analysis, persistent communication with HR and hiring authorities, clear understanding of hiring and job parameters as well as company values, generation of a talent pipeline, and considerable time spent on resume review and initial screenings.
Investing in employees' careers is likely the best way to promote retention with established employees. Employees who feel that they are learning and growing in their careers are more likely to stay with the organization. According to two LinkedIn studies, one in 2018 and the next in 2019, 94% of employees stated they would stay longer with employers who invested in professional/career development. This can range from work-related classes offering new skills, to ensuring that their employees have longer term career goals, leading to a better understanding and a strengthening of the relationship between employees and employers.
Another effective strategy is recognizing and rewarding employees for their contributions. Recognizing employees' efforts and contributions can show them that they are valued and appreciated, which can increase their job satisfaction and loyalty to the organization. Besides providing a supportive environment, it can also work as the scaffolding for career development. This can be achieved through promotions, bonuses, or other incentives (non-compensation as well as LTI offerings). As reported by CNBC, workers who feel recognized are 56% less likely to be looking for a new job. As mentioned above, employees should have long-term career goals. These include promotions, role changes and possibly even supporting employees changing companies.
All of this facilitates employee retention by
BUSINESS TIPS FROM THE EDITOR
March 2024
Richard T. Hendee, Editor
The Silver Fox Advisor
One of the most valuable things any business owns is often overlooked and may not be considered an asset. It probably isn’t protected or secured, is most likely not covered by insurance and is generally taken for granted. Have you figured out what that item is? Well, I will tell you – It’s your business’s IT, which includes all your accounting, accounts receivable and payables, itemized inventory listing, payroll, billings, banking data, customer database, and much much more.
Can you even imagine walking into your business one morning to discover all your hardware and electric devices (computers, phones, and printers) are gone? Or, you log on to your system(s) and all the data is being held for ransom, or worse yet, missing. Some of your data may be backed up on another server or in the cloud. But what do you do next? Do you have a plan? Do you have an in-house IT department or an outside IT provider? How long will it be before your business can be back up and running? Who do I notify? Do I have to inform my clients, vendors, supplies, my bank? These are questions, if you have not thought about or planned for will age you very fast, if (or should I say when) it happens to you and your business.
Every day we read or hear about hacks or data breaches at some major corporation, and we think ‘well that can never happen to me’ here on Main Street, USA. However, hacks and data breaches like the ones described above are happening to small businesses every day, even though they just don’t make the 5 o’clock news.
‘What can I do to protect this valuable IT piece of my business’ you are probably asking yourself. Well, it is always better to plan ahead before something happens, having procedures in place so your recovery time and capital loss is minimized. But even better, don’t go it alone. Contact a good IT provider, if you don’t already have one, and seek advice and counsel on how to protect your business data. In most businesses capital is always tight, and most small business owners do not want to spend cash unless it can produce something, or they can see immediate results. However, IT is one area that is the life blood for your business, and without access to the data that is critical to operate your business, you don’t have a business to operate!
If you need help or assistance with what is needed to be done to protect and secure your business’ IT in 2024, we encourage you to visit our Web-site at www.silverfox.org and learn more about the Silver Fox Advisors, and how they can assist you with your business needs, as well as discover more about our great programs and community outreach endeavors.
