Not the least of these is the growing importance of establishing healthy employee retention. Companies are re-examining ways in which to minimize expenditure without compromising the integrity of the business, and this has put an inevitable (and necessary) spotlight on the area of employee costs. Employee turnover has always been a vital factor, and rates between 30-40% are not uncommon in a number of industries, and the average cost of losing an employee can exceed their annual salary but 1.5 to 2 times.
Many businesses in the past have attempted to decrease turnover by taking into account a potentially high rate, and compensating by allowing for shorter hiring and training periods, however this technique does little to increase workplace morale or curtail high turnover rates. As it stands, the average cost of losing an employee rests between 1.5 and 2 times their annual salary.
Understanding Employee Retention
Retention essentially means that, over time, as an employee becomes more comfortable with the job functions, operations and staff interaction, the company’s period of “investment” in the individual (interviewing, hiring, training and subsequent period of slightly decreased productivity) gives way to a “return” period, during which an employee reaches and maintains a satisfactory level of productivity. (In this sense, employees are “appreciating assets.”) Ideally, the “investment” period should be minimized in order to ensure a greater return. Retention is achieved by achieving a healthy balance between employee compensation and incentive, healthy/productive work and environment and, most importantly, establishing strong communication.
The key element which helps cultivate a good work environment and contribute to retention is communication. Encouraging employees to share personal observations and concerns pertaining to the job in addition to feedback on tasks or assignments can help gauge both job performance as well as morale, and meeting with employees regularly (weekly or semi-weekly) as opposed to only touching base in cases of mistakes, issues or crises presents communication as a tool rather than a disciplinary measure or a chore. When weekly communication has increased, create employee appreciation programs that reward your employees for being vocal about their job and accomplishing goals.
In addition, keeping dialogue informal and eliminating buzzwords can make employees feel more at ease when communicating, and conducting exit interviews is an excellent way to gain insight into which aspects of the workplace and/or company would benefit from improvement.
Driving retention is a multi-faceted effort which begins with the interview process. Concisely advertising a job opportunity and offering detail regarding the job’s functions and demands can keep turnover low. Another by-product of the recession is a younger workforce in search of growth potential. Rather than merely seeking “jobs,” employees are preparing for careers, and companies are seeing a shift to younger management which indicates a real growth potential to candidates. Combined with regular and in depth communication, a thorough interview process, including exit interviews, can create significantly improve retention and contribute to a thriving business.