What is employee retention?
Good management isn’t just about finding the best people for the job – it’s about keeping them in the company, too. Employee retention is the opposite of employee turnover. It means holding on to your top talent and motivating your employees to stay with your organisation rather than looking elsewhere.
Why is employee retention important?
Recruitment can be time-consuming and costly – so you want to make sure you’re getting the most out of the process. That means finding employees that are going to stay with your company for the long-haul. You also don’t want to have to repeat recruitment for the same positions repeatedly, which is another reason why retaining your best employees is so important.
And it’s not just about the recruitment process – you put time and effort into training your employees and so you want to be able to benefit from their development. The longer your employees have been in the job the more familiar they’ll be with the role and, typically, the better they get at it. Employee retention strategies can help ensure you don’t lose the top performing employees in your team.
You also entrust many important assets to your employees such as company information and client relationships. If you have a high turnover of employees, you risk those connections and that information being passed to competitor companies.
What is a good employee retention rate?
It can be difficult to identify a number that represents a good employee retention rate, since this can vary so much between positions, industries, and even economic climates. For example, when jobs are sparse, it becomes much easier to retain employees. Similarly, high-level positions often see less turnover, whereas entry-level employees will often be looking to progress their careers quickly and so may be more inclined to look around.
Many recruitment agencies advise that employers should aim for 90% employee retention rates, but expect to see a number closer to 80%. You can work out your company’s retention rate by dividing the number of employees who have stayed with the company over a set period by the total number of employees at the start of that period, then multiplying that number by 100.
For example, if you have one hundred employees and ninety-five stay for the entirety of 2020, your employee retention rate for 2020 is 95%. You can use any period that works for you, but many companies choose to look at their figures on an annual basis in either a calendar year or a fiscal year.
Effective employee retention strategies
There are a number of ways you can boost your employee retention rate. It all starts with the hiring process and making sure you put the right people in the right roles. People who feel satisfied, fulfilled, and successful in their jobs are much more likely to stay. It’s also important to look for people who want to build their career within your company rather than seeing it as a stepping stone.
It’s also essential to make sure you help your employees progress and develop during their time with your company. If you don’t offer your employees opportunities for growth, they’re more likely to feel the need to look externally to further their careers. Regular training, internal promotions, and new opportunities are key.
Compensation is, of course, another key factor. Competitive salaries and perks can make a big difference, as can regular pay reviews. Some employers also make use of stock options as an extra incentive to stay with a company.
However, even if the compensation package is great, employees are unlikely to want to stay in an unhappy work environment. It’s important to consider employee wellbeing and how to create a positive work environment. This is especially true in the current climate. Employers need to be more supportive than ever when employees are working remotely (many for the first time) and employers can’t provide a physical workspace.
The Coronavirus Job Retention Scheme
Sometimes, employee retention is out of your hands. The coronavirus pandemic has meant many employers have been forced to downsize their companies and let good staff go. The Coronavirus Job Retention Scheme is designed to help limit the impact of the pandemic and give employers financial support so employees can be kept on. If you’re considering your options as an employer, make sure you check out the details of the scheme on the gov.uk website.
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