Employee retention refers to the extent an organisation keeps its
employees. It can be measured as the proportion of employees who remain
within the employ of an organisation and is expressed as a percentage
of overall workforce numbers.
Employee turnover refers to the proportion of employees who leave an
organisation over a set period (often on a year-on-year basis). At its
broadest, the term is used to encompass all leavers, both voluntary and
involuntary, including those who resign, retire or are made redundant.
Recent trends show that while voluntary turnover rates have decreased
recently as a result of challenging economic conditions, the flip side
of this coin is that redundancy-related turnover has become more common.
Turnover levels can vary widely between occupations and industries. The
highest levels are typically found in retailing, hotels, catering and
leisure, manufacturing, call centres and among other lower paid private
sector services groups.
Why is Employee Retention So Important?
Savings on Turnover Cost
The alternative to employee retention is employee turnover. A high
turnover can prove to be very costly. This is because companies lose out
on investments made in employees. For instance, hiring costs, training
costs and material cost go down the drains when an employee walks out
the door. According to the Society for Human Resources Management,
“employee replacement costs can reach as high as 50 to 60 percent of an
employee’s annual salary.”
Prevent loss of valuable knowledge and experience
When an employee leaves, they take with them valuable knowledge about
your company, your customers, current projects and past history
(sometimes to competitors). Often much time and money has been spent on
the employee in expectation of a future return. When the employee
leaves, the investment is not realized.
Increases Morale & Productivity
Employee turnover
can spiral into more turnover as employees are left feeling disenchanted
and apathetic; uninterested in the overall growth of the company.
Rather than enjoy what they do and the atmosphere in which they work,
employees are likely to seek alternate employment and this leads to a
dip in morale and performance.
Disruption of Customer Service
Clients do business with a company in part because of the people.
Relationships are developed that encourage continued patronage of the
business. When an employee leaves, the relationships that employee built
for the company are severed, which could lead to potential customer
loss.
Reputation Risk & Attraction to Potential Employees
Companies with high employee retention rates often enjoy good
reputation, and this perception reflects on the goodwill such an
organisation enjoys from the public. An organisation that has a
notorious reputation for losing employees is more likely to have an
unfavourable reputation, either among clients or potential employees.
Companies with strong reputation for retaining its work force are often
an applicant’s delight.
Strategies for Retaining Talent
According to the Industrial Accident Prevention Association, moderate
workplace interventions can make significant improvements and shave off
at least 20% of the costs associated with replacing lost staff.
Implementing intervention strategies that target employee engagement
and encourage work-life balance will create positive work environment
and strengthen employee’s commitment to the organization. Activities
like team-builders and community involvement also increases morale and
give employees a sense of unity. These strategies also prevent the need
to offset employee replacement costs and reduces the indirect costs
associated with decreased productivity and lost clients.
Talent-base Employee Benefits Option
Employees on TalentBase platform can purchase a wide variety of
products at deep discounts and also enjoy the benefit of paying in
instalments. This is another way of creating value to employees and
avoid the exodus of good talent.
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