Employee retention is the ability of an organisation to keep its employees for a specified period.
In today's highly competitive job market, retaining top talent has become a critical concern for employers, it is an important factor for a thriving enterprise. High employee turnover can be costly and negatively impact company morale, productivity, and profitability.
This article will explore the key questions and points related to employee retention, including how to calculate employee retention rate, the importance of employee retention rate, the benefits of employee retention, how to improve employee retention, why workers leave, and key takeaways.
How to Calculate Employee Retention RateRetention rate is often calculated by taking the number of employees who have stayed with the company for a specific period and dividing it by the number of employees who were there at the beginning of that same period. For example, if a company has 100 employees at the start of the year and only loses 10 employees throughout the year, the retention rate would be 90%.
Why is Employee Retention Rate Important?Employee retention rate is important because high turnover can be costly. It can result in increased recruitment and training costs, decreased productivity, and decreased morale. Employers invest a lot of time and resources in hiring and training new employees, and high turnover can undo that investment quickly.
What are the Benefits of Employee Retention?Employee retention strategies have a range of benefits for organizations. Retaining employees helps to maintain institutional knowledge, improve team cohesion, and foster a positive work culture. It can also result in cost savings, as hiring and training new employees is often more expensive than retaining existing ones.
Companies use different strategies to retain their employees, and by doing so this can offer managers and companies an array of advantages such as:
- Employee loyalty
- Reduced hiring costs
- Highly skilled workforce
- Less transitions/employment gaps
- Customer service
- Positive company culture/improved teamwork
- Improved brand reputation
- Consistent processes and systems
- Competitive staff
How to Improve Employee RetentionThere are several strategies that employers can use to improve employee retention. One strategy is to create a positive work environment that fosters a sense of community and belonging. This can be achieved by offering employee recognition programs, providing opportunities for professional development and growth, and offering flexible work arrangements. It is important to ensure that employees feel valued and recognised in the workplace.
Employee remuneration and rewards are great ways to ensure you are recognising your employees hard work and ensuring that they feel valued. Did you know there are various tax-efficient ways to reward employees? Employees are the most important asset in a business and what better way to show your appreciation than with tax-free gifts. Employers can also conduct regular surveys and check-ins with employees to identify and address any areas of dissatisfaction or concern.
Why Are Workers Leaving?Exit interviews can be a valuable tool for employers to understand why employees are leaving. They provide an opportunity for employees to share their experiences and feedback in a constructive and anonymous way. Common reasons for leaving include lack of opportunities for growth and advancement, poor management, low compensation, and poor work-life balance.
To improve employee retention, employers should focus on creating a positive work environment that fosters a sense of community and belonging. Regular surveys and check-ins with employees can help identify areas for improvement and exit interviews can provide valuable insights into why employees are leaving. HR trends for 2023 include a focus on employee wellness, mental health and work-life balance.
For more information on how we can help you and your business please contact our team via info@oldfieldadvisory.com or call 024 7667 3160 for further assistance in this area.
Please note: This report is provided for information only and was correct as at time of writing (14/06/23). Lists and details provided above are not exhaustive and not intended to be full and complete guidance. No action should be taken without consulting detailed legislation or seeking independent professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this article can be accepted.
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