The business and labor landscape is constantly changing and evolving, and so is the human resources department of any agency. In this article, we will be discussing who and what to prioritize whether you are running a small business or a large company.
The economy has opened up all over the world since the outbreak of the pandemic in 2020, companies and agencies have grown again. While this welcome situation is all very well, many industries are facing a new challenge: staff turnover and a shortage of qualified personnel. Staff turnover rates are increasing and providing flexible work alternatives and wellness programs is not enough. HR managers, just to give you an idea, are now focusing on mental health as a top priority. Employee job satisfaction incentives are a must in a healthy modern job market, and that’s good news.
Undoubtedly, the shortage of qualified personnel will continue to be a key issue in the coming years and months. Therefore, the investment in the search for personnel to address this matter will be very important. It takes time to fill vacancies and training good employees also takes time. In addition, there is always uncertainty about the rotation, which is lurking.
Managing your top talent should become the number one priority, as they will give you confidence and play an important role in helping your agency flourish and also fight through more difficult times.
Why staff retention should be your top priority
Here are 9 reasons why staff retention should be your top priority right now, even above hiring new team members.
Endless options
In desperate times, recruiters unfold incredible job opportunities in front of your best employees. Companies increase salaries, incentives and benefits to attract new talent. There is a high risk that employees who are not paid well, treated well, appreciated, trained, listened to, encouraged to grow, smiled and recognized as valuable will switch to a job with many opportunities available. So keep in mind that you need to create an ideal work environment where your talents feel comfortable and safe, a place where they want to hone their skills.
Mind the Gap
Existing employees can temporarily fill some of the gaps during worker shortages. Loyalty is one of the advantages of satisfied employees, who will be happy to put in extra hours. Good employees will collaborate to make the team successful. That’s especially true if they know you’re actively working to fill open positions, that the extra work is temporary, and that you’re showing them how much you appreciate them.
Institutional knowledge
The retention of personnel supposes an important saving in the general expenses of the company. Hiring and training costs aren’t the only expenses when you replace a team member. Existing employees have institutional knowledge and experience that new hires won’t quickly or easily replace; it may take months or even years.
Consistency with customers
Employee retention builds consistency with customers. The relationship employees develop with customers can be critical if you need to adjust business practices to respond to labor shortages. In uncertain times, people turn to those they know and trust.
Workplace satisfaction
Retention creates a happier workplace When employees leave, it can create an atmosphere of instability in your company and cause others to question their own desire to stay. Therefore, new hires should be treated with some sort of time gap between them to ensure commitment from all parties, both new and experienced.
Identify the super stars
Times of change can bring out the best in everyone. Potential leaders in your company could step up and prove their worth. Whether you can retain your future superstars depends on your ability to put them on the path of growth. Employee expertise in the field should always be welcomed and recognized.
Turnover expenses
Employee replacement is expensive with costs ranging from 16% to 213% of their salary. Companies pay up to $1 trillion in turnover costs annually.
Posting notices for prospective candidates, interviewing, onboarding, and training can take many hours. This generates a high cost for your company.
Lost knowledge
When veteran employees leave, they take their knowledge with them. When employees fail to pass on their institutional knowledge to their peers, their information and skills can be lost forever. This can lead to low productivity and confusion among your team members who get left behind.
Blocks to productivity
As soon as a position goes unfilled, hours of lost productivity add up. When other employees take over vacant positions, they can burn out and overall productivity will plummet.
On top of that, it takes a long time for a new employee to reach peak levels of productivity. Research states that it takes one to two years for employees to reach the productivity levels of an existing employee.
In short, employee retention promotes the healthy and success of your organization. The time, stress, and cost of hiring and training new employees are significant, and turnover can negatively impact your business bottom line. High staff turnover leads to multiple problems, such as high costs, loss of knowledge, and low productivity.
Leaving Employee Costs
Turnover costs can impact employee morale and productivity, but there is a longer period of impact on company revenue. Recruiting and training new team members takes time and money, and that expense only increases if you don’t have an effective knowledge management tool to retain company information.
Staff turnover refers to the rate at which employees leave your organization and are replaced by new workers. To calculate the turnover rate, you have to count the total number of workers who leave the company during a given period of time. Then, you have to divide that number by the total number of workers working in the company during that period and multiply it by one hundred to obtain a percentage
Studies revealed that the average expense to replace a new employee can represent up to 50% of that worker’s salary. For the role of a supervisor, such a replacement cost could reach up to 150% of the annual salary.
Many factors contribute to this high cost, including the recruitment fees paid to recruiters, the time it takes to interview and hire, and the possibility of a pay raise being required.
Replacing a knowledge worker when they leave the company can take anywhere from eight to twelve weeks. Additionally, when a new person joins the team, you will face another four to eight week window until your new hire is fully trained, comfortable, and productive in their new role.
During those first few months of onboarding a new team member, one of your best employees will typically handle the training. Commissioning top talent to train can guarantee great results for your new hire, but you’ll also run into hidden labor costs that can quickly add up to tens of thousands of dollars.
During their tenure, employees develop knowledge and gather ideas that are beneficial to the continued success of the organization. However, in many cases, if your agency or company does not have a way to record or retain that information, that knowledge only lives in their minds. When an employee leaves the company, they take knowledge with them.
Beyond the intangible costs that this entails, staff turnover can impact companies in many other ways:
Interruptions in customer services
Staff turnover can cause gaps in customer service. For example, if the customer service request ticket is not immediately transferred to a new representative, they may experience delays in addressing the issue. Considering the fact that customer service is the direct expression of a company, a drop in customer service can cause a company to lose a competitive advantage.
Low employee morale
Rotation can create uncertainty for the rest of the staff. Workers may begin to wonder why other employees left for other jobs, or, in the case of involuntary turnover, whether their own job is at risk. This can create drops in morale, motivation, and loss of productivity.
Lower company profits
When morale suffers, so does the entire company. Lack of employee confidence and low morale is associated with lower company profits.
Employee Retention Benefits
1) Reduced costs
Rotation is an expensive period. The selection and onboarding process for new hires is time consuming and particularly detrimental when compared to the costs of severance pay. Additionally, inexperienced employees can reduce the quality of your customer experience, resulting in lost revenue. Have your company save time and money with a strong retention strategy.
2) Improved morale
When valuable employees leave, it’s depressing for your team members. Effective retention strategies can boost morale.
When employee morale is high, the workplace becomes a more positive place. The positivity rubs off on employees, making them believe that your company is a great place to work. Happy employees are likely to stick around and become strong advocates for your agency.
3) Increased productivity
Productivity and engagement tend to be higher among permanent employees.
Long-term employees have had time to develop their skills, can complete tasks in less time, and are more committed to the success of the company.
Studies also show that high levels of engagement lead to increased productivity and better job quality. When you focus on engagement and retention, employees notice and perform better.
4) Increased customer experience
Focusing on retention makes employees happier. Also, happy employees radiate sentiment to customers. Employee happiness is correlated with high engagement, and high engagement leads to better customer service.
In addition, employees who have been with their companies for a long time can solve difficult problems to promote customer satisfaction.
5) Less time in the selection of personnel and their training
As an HR leader, you already have a lot going for you. When your organization has a need to search for talent, recruiting efforts can be disrupted and time consuming. By reducing the amount of time spent in the interview and onboarding process for new hires, you can spend more time investing in strategic initiatives that improve the employee experience and prevent churn.
6) Improved company culture
Company culture influences whether your employees leave or stay. If they experience high retention rates, it may be thanks to your cultural initiatives. In fact, 72 percent of workers cited workplace culture as a determining factor in whether or not they stayed with the company.
When you can engage and retain your employees, they feel more connected to their work, team, and your company culture. Ideal company cultures celebrate employees, take advantage of great benefits, and prioritize inclusion. With low turnover, your standards will be adopted naturally and remain in the daily experience of employees.
7) Superior Employee Engagement
Studies show that there is a direct relationship between employee engagement and retention. Highly engaged employees are 1.8 more likely to say they will still be working at their current organization a year from now.
So it’s no surprise that organizations that prioritize retention efforts have highly engaged employees. Additionally, organizations that have highly engaged employees reap many benefits, including:
- Better employee health
- Happy and satisfied employees
- Less absenteeism
- Increased employee loyalty
- best customer service
- higher profitability
8) Improved income and rate of return
Retention issues reduce the ROI of your talent strategies. Between hiring costs, training investments, and lost sales and productivity, it’s costly to lose and replace a departing employee. These costs have a direct and indirect impact on your bottom line.
9) Greater employee experience
The longer an employee stays, the more time they have to develop their expertise. They have the ability to understand the nuances and procedures of the organization that new employees cannot yet grasp.
The longer an employee stays, the more value they provide to the company. As employees stay, their dedication to driving business results increases.
Conclusion
Staff retention has become a top priority for Human resources leaders around the world. While companies and agencies can look at various ways to retain employees, the latter have already said what motivates them to stay. So, work to create a culture where employees feel they have everything they need in the workplace, a place where they can belong, a second home, after all, your employees are your best advocates.