Turnover and retention are terms employers use to describe the number of employees who leave the company and the number of employees who choose to stay. Both measurements are important, and in fact, turnover is actually a necessary element in the workplace. However, there are substantially greater benefits in employee retention. The benefits range from lower cost-per-hire to higher job satisfaction and employee morale.
Employers who retain employees experience lower cost-per-hire. The fewer employees you have to hire to replace employees who are fired or who resign, the more you save on hiring costs. Cost-per-hire expenses include advertising for recruiting applicants, fees for participation in job fairs and salaries for employment specialists or outside recruiting experts. In addition, employers incur costs in training fees, materials and loss of productivity due to ramp-up time. Some companies have on-the-job training, which costs for each hire in terms of the time and expense of mentoring a new employees. Retaining employees reduces cost-per-hire expenses, which in turn, improves the company's bottom line.
Higher Employee Satisfaction
Retaining employees can be a lot easier than handling terminations and resignation. There is less stress in retaining employees, provided retention efforts are proactive instead of reactive. Proactive retention means maintaining employee satisfaction and morale so your employees don't feel like they have to find employment elsewhere to be happy. Reactive retention occurs when an employer attempts to persuade an employee to stay on only after the employee announces his intent to leave the company. When employers engage in proactive retention, there's a greater likelihood that employees feel the company values and appreciates their work. Employees who feel their expertise is valuable to the company's success are likely to be highly motivated and productive workers.
Greater Productivity and Job Knowledge
Seasoned employees are extremely valuable to your organization. Long-term employees or employees with substantial product and service knowledge are an asset, especially when you have new employees for whom the learning curve slows productivity. Retaining employees who, by virtue of their tenure and experience, understand and appreciate the company's philosophy, processes and policies can become excellent mentors for newly hired employees. In addition, retaining talent boosts your company's ability to provide higher quality products and services. Experienced, high-performing employees who are comfortable with sharing opinions and making suggestions for improvement can help you develop innovative ways to patent new ideas and products.
Improved Succession Planning
Succession planning involves providing training, development and leadership opportunities to employees who want more responsible roles. Another way to define succession planning is creating employee career tracks. Retaining employees who demonstrate skills and capabilities your company needs in its future leaders can make your succession planning more effective and realistic. With respect to succession planning, the importance of retention is that it can make the difference between the short-term and long-term success of your organization. Longevity in the business world is, therefore, another benefit of retention that serves the company's business objectives as well as employees' professional goals.