In today’s competitive business industry, keeping employees is not an easy task. From Baby Boomers who are heading into retirement to Millennials who are moving in and out of employment searching for the right fit, employee retention remains a challenge.While the tension between finding and retaining top talent is nothing new to most industries, it can be extra difficult for businesses or corporations trying to stick to a tight budget and are not able to offer high salaries, bonuses or insurance coverage.
The impact of losing an employee extends beyond the dollar amount. Not only is there a financial cost to a company when a worker leaves, but there is also a loss of morale among employees and loss of productivity.One study estimates it costs about six to nine months’ salary on average every time an employee needs to be replaced. For the average position earning $40,000, that is $20,000 to $30,000 to recruit and train someone new.Another report, based on case studies, states the cost to replace an exiting worker is about one-fifth of the salary. “For businesses that experience high levels of turnover, this can add up to represent significant costs that can potentially be avoided by implementing workplace flexibility and earned sick days at little or no cost at all,”
The American Progress report stated.For higher skilled, specialized positions or management roles, the cost is even higher.The publication by the Center for American Progress stated: "one-fifth of workers voluntarily leave their job each year and an additional one-sixth are fired or otherwise let go involuntarily."Essentially, this means that employee retention is an important part of a good business strategy and needs to be incorporated.Yet, if you want to understand the true cost of employee turnover consider the expense of losing just one person in your company.
There will be advertising, interviewing, screening and hiring costs to replace the staff member who left. Not to mention the time and cost involved in training and onboarding the new worker. In addition to these expenses, there is also a loss of productivity whenever an employee leaves. One HR analyst notes that it can take up to two years for a new employee to reach the same level of productivity as the one who left. There is also the cost of errors and unsatisfied customers that come with hiring a new employee who is not as experienced in company practices.Essentially, the longer an employee stays with the company, the more valuable they are because they become masters of the system, products, services as well as crucial team players.
Although there is no guarantee that your employees will stay with your company their entire careers, there are some things you can do to improve employee retention. These include:
A key way to improve employee retention rates is through mentorship programs. By connecting new employees to ones that have been with the company for a while, you create a relationship, which can encourage new workers to develop feelings of loyalty to the company. It is also a great way to impart company knowledge to those new to the fold.However, many businesses and managers understandably struggle with organizing and maintaining such a program. Connecting mentors and mentees with one another has been made easier through mentorship software. Basically, this is a computer program that can help match mentors with new employees.
Brands such as Deloitte, Honda and JP Morgan Chase have been using mentorship software to cultivate connections in the workplace.Rather than expect employees to locate and connect with their own mentors, companies can demonstrate their respect and care for employees by connecting them with older workers who can guide the learning process.Mentorship can enhance employee engagement and productivity. What company wouldn’t want to improve their scores on both fronts?
Although there are always going to be employees leaving your company, that doesn’t mean you can’t implement a solid staff retention strategy. With some planning and moderate effort, any organization should be able to reduce their employee turnover. This includes offering incentives to workers, ensure they are paid a decent wage and provide learning or mentorship opportunities to help them grow.Companies that have a solid employee retention plan are able to reduce the cost involved when a worker leaves, which can add up to thousands and thousands of dollars a year.