Employee retention is defined as the organization’s potential to reduce employee turnover or the number of employees leaving their position and organization after a certain period of their employment, either voluntarily or involuntarily.
In this glossary, we will dive deep and explore more about Employee Retention:
- Employee Retention Definition
- Employee Retention Rate
- Employee Retention Benefits
- Employee Retention Techniques
- Employee Retention Importance
Employee Retention Definition
Employee retention can be categorized under the list of goals or potentials of any organization that aims to retain the interests of employees within the organization by maintaining healthy and happy workplaces as well as work culture. If employees’ interests stay intact, then besides the exceptional reasons they will stay happily in the organization, thereby increasing the employee retention rate.
Employee Retention Rate
Employee retention rate refers to the percentage of total employees who continue to be employed under the payroll of the particular organization over a given period of time. This rate is mostly calculated on an annual basis.
To calculate retention rate, determine the number of employees on the first and last day of the pre-defined time period for calculating the retention rate. For correct calculations, subtract the number of new employees hired from the number of employees on the last day of the defined time period, i.e.
Number of employees retained= Total number of employees on last day- Number of new joiners
The formula for employee retention rate is = (Number of employees retained/ Number of employees on the first day) x 100
Employee Retention Benefits
Employee retention is not only about achieving turnover rate but it has many other benefits:
- Cost-Effective: Retaining employees helps in maintaining the budget of the organization as higher retention means zero cost spend on advertising, interviewing, and onboarding of new employees
- Work Balance: If employees frequently dive in and out of the organization, then a few employees take on the load and work hard to maintain the consistency or timeline of projects to achieve pre-defined goals
- Productivity: Lower employee retention rate will affect the productivity of an organization at a large scale as time will be wasted in hiring, onboarding, training, and various other processes
- Customer Experience: If the employee retention rate is high, it means happier workplaces that will be directly reflected in customers’ experience as happier employees result in happier customers.
- Employee Branding: Employee speaks a lot about the brand image and their values. Maintaining the retention rate will impact on enhancing brand image through satisfied employees
If companies are unable to retain their employees for the long run then they have to spend money on employing new recruits, the annual budget will be shaken, the workplace will have negative energy, and rather than focusing on revenue-making employer’s energy will be diverted in re-settling their workspace.
Employee Retention Techniques
There are certain reasons behind employees’ high turnover or lower retention rate:
- Personal reasons related to relocation, career change, family health, and others
- A work-life imbalance like long working hours, mismanaged shift timings, and lack of flexible timings
- Unhealthy relationships at the workplace with managers, team members, or with other colleagues
- Lack of growth opportunities due to stagnant progress in the company’s revenues, limited knowledge, and others like office politics or lack of reskilling
- Financial reasons like average pay benefits, compensations, and bonuses
- Monotonous work schedules and least employee engagement initiatives
To improve employee retention rates in your organization, you can learn and apply the following techniques:
- Motivate your employees frequently by giving constructive feedback, recognizing their work, appreciating among team members, and offering reward points
- Encourage employees by providing them health insurance, education debt repayment plans, legal counseling, etc.
- Maintain a work-life balance of employees by allowing them flexible working hours, time-off, goal completion vacations, telecommuting, etc.
- Extra office amenities like suitable furniture, subsidized meals, relaxation rooms for power naps, gaming facilities such as ping pong, video games, and gym can help create positive workplaces
- Plan outings, impromptu lunches, annual fun meets, cricket tournaments to maintain the happier workplaces of happy employees
Employee Retention Importance
A high employee retention rate increases the negative impact on the organization’s productivity and overall efficiency. Regaining lost efficiency and gaining a company’s knowledge becomes difficult after the continuous lower retention rate.
A low employee retention rate promotes growth, revenue, and development of the organization. The cost incurred in hiring, onboarding, and training new joiners becomes low, and thereby investments route for better opportunities. Along with cost efficiency, knowledge retention and experience of employees help in building better workplaces and happier employees.
It’s like taking care of your employees well being like a family.
If companies are unable to retain their staff then they have to spend money on finding new recruits, pay the bills during separation, workplace has negative energy when someone from the team resigns or quits, and rather than focusing on revenue making the employers energy is diverted in settling his workspace.