More than 70% of American workers admitted to being disengaged at work in 2016, and less than 50% of employees were pleased with their jobs. Making matters worse was the millennial generation who switched companies at alarming rates in 2016, which cost the United States economy a whopping $30.5 billion. “Why are all of these numbers important?” you ask. The stats are significant because they point to the issue of employee retention and the importance of employers hiring the right talent and retaining workers for the long haul.
What is employee retention?
Employee retention is a company’s ability to keep its workers. Whereas a business that maintains the same employee base for twenty years has a high retention rate, the organization that loses workers every six months has a considerably small number in the area of conserving laborers. A single statistic usually represents employee retention, but many experts look beyond the numbers and into the reasons why workers leave and stay to explain the matter.
Many believe that low pay is the central reason why employees leave a company, but the truth is that morale factors into the compensation aspect of the job as well. Workers continually recognized for going above and beyond the call of duty may remain loyal to a company despite receiving pay that is not commensurate with their labor. On the other hand, employees receiving high salaries may leave a job for greater opportunities to advance their knowledge in the field if they feel that the career path they are on is going nowhere fast. Such trends reveal that retention is often a balancing act that employers must conquer to have successful businesses.
Why is employee retention important?
Perhaps the greatest reason why low employee turnover rates are necessary is that of consistency. Studies show that businesses with good camaraderie among workers are more productive and have better chances for growth than those with employees who share little to no relations in the job sphere. There is no way for workers to build meaningful relationships if they are always introduced to new colleagues.
Low employee retention also costs the company money and knowledge every year. Managers have to take time away from other tasks to ensure that new hires understand their responsibilities and the overall nature of the company. At the same time, knowledge from former workers who perhaps had special education and years of experience in the field leaves with the laborers. Companies with low retention rates may spend up to 200% of a former employee’s salary to fill the position with a new worker.
Keeping employees begins with the hiring process
The best way to combat low employee retention is through the hiring process. Many human resources representatives believe that selecting the right candidate begins when prospective employees respond to job openings with their applications. The truth, however, is that the process to find the right person starts with a uniquely crafted job description that invites qualified individuals.
Studies show that employers who list too many job responsibilities inadvertently turn away what could be the ideal laborer. It’s not that such potential candidates do not want to work, but rather a matter of the company expecting too much for what they are willing to pay. Why would a highly skilled worker lower the bar for a business that shows them how little they value them through a poorly written or overly demanding job description? They won’t.
Those willing to take abuse for below average pay are workers with less education and experience in the field. Such individuals will either remain with the company long enough to find something better or provide sub par work that forces managers to fire them. In both cases, the employee retention of the company suffers.
Lowering employee turnover has a lot to do with the job description and overall hiring process. The best way to vet during interviews is by doing the following:
- Leave out trick questions and inquire about skills needed for success in the prospective position.
- Get an understanding of the candidate’s personality and interest in the job by having them interview you. The easiest way to do this is by asking the interviewee if they have questions at the end of the session.
- Understand time constraints. You have, at most, 30 minutes to get to know a candidate enough to make a decision that will forever impact her life and the company’s success. Make the most of your time by being prepared.
Managing low employee turnover with incentives and training
Money isn’t everything, but it helps to be offered more of it when you’re a laborer working day and night for the success of the company. Employees who are given stock options as part of their compensation package will more than likely choose to remain with a company more than five years. Those presented with a clear path of upward mobility along with incentives for exceeding performance goals are very likely to remain loyal for the lifetime of their career.
It is also important that employees understand their role in the company before the probationary period comes to an end. Many companies have a thorough onboarding process that walks new hires through daily tasks and technology systems, so there is little confusion as to the enterprise’s policies and procedures. Such detailed undertaking eliminates chaos that sometimes leads to employees searching for new employment sooner rather than later.
Understanding the “Join, Stay, Leave” Model
Understanding why employees pursue positions in the first place gives employers better insight for retention. Many employers are catching on to the practice of conducting exit interviews in which former employees share their likes and dislikes about the company. While such sessions may seem intimidating, they help businesses improve working conditions to achieve higher retention rates. Regardless of the methods organizations choose, it is important to understand the value of low employee turnover rates and strive to have an annual percentage of zero in this field.
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