In today's highly competitive hiring market, it's increasingly difficult to retain top-performing talent. Fewer job seekers, combined with more jobs, means there's no shortage of opportunity for dissatisfied workers looking to leave — and when they do, it's employers who absorb the cost. Across jobs, the cost of replacing an employee generally costs about a fifth of an employee’s annual salary. Plus, when you factor in other, not-so-easily quantifiable side effects — like lower morale and reduced productivity — prioritizing your employee retention program becomes all the more important.
the high cost of turnover
A large part of what makes low employee retention so costly is that employers incur charges at both ends of the hiring process. When employees vacate their positions, there's an immediate loss of productivity as existing staff take on additional responsibilities to compensate. While the work may get done, quality and morale suffer. And overworking employees only perpetuates the cycle of turnover as workers become increasingly burned out and dissatisfied. At this stage, employers must also spend money securing job board placements in order to make sure their open positions are broadcast across enough channels to gain traction.
And once candidates have been selected, interviewing takes time and pulls hiring managers and HR personnel away from other duties. With a new hire finally selected, even more resources are allocated to training and onboarding. Finally, new hires generally undergo a period of adjustment before they're able to reach peak productivity.
increasing retention is a must
If retention is low, it means employees are disengaged. And if they're disengaged, performance suffers. For businesses that want to grow — or even just maintain profitability — prioritizing initiatives centered on increasing retention is a must. When employers look to increase retention, they typically do so by offering better benefits, more flexible work arrangements and new incentives that improve work-life balance for staff members. In fact, Randstad's research has found that the top factors that influence an employee's decision to leave are low compensation, limited career path, work-life balance issues, insufficient challenges and poor leadership.
Rest assured, investments in human capital don't go unnoticed, and they can go a long way toward reigniting employees' sense of commitment. Besides, a workforce of tenured professionals who feel valued are liable to not only stick around for the long haul, but to make better business decisions, too.
Concerned your business may have an employee retention issue? To learn how to spot the signs of a retention problem, click here.