While no two successful companies are exactly alike, they all have one thing in common: an employee retention strategy. Happy employees make productive employees, and smart businesses know that high employee turnover can harm a company financially and affect company morale. While the hiring process can have a large impact on retention rates, the real challenge for HR departments is keeping up with evolving employee expectations. How does a company go about retaining employees?
In today’s article, we’ll start by looking at employee retention statistics-both good and bad- and how an employee retention plan can help. Let's get started!
Why is employee retention important?
Regardless of why a company and employee choose to part ways, staff retention has a number of effects on a business. Let's take a look at some employee retention statistics.
The most painful effects tend to be employee turnover costs. Findings from a 2019 Retention Report by Work Institute reveal the following statistics:
- Costs for employee turnover have doubled since 2010 and continue to rise.
- In 2018, a combined $617 billion was spent on voluntary employee turnover.
- 33% of a worker’s annual salary is spent on hiring a new employee, or 15K for a median salary rate of 45K.
- 36% of employees quit within the first year.
- 43% of employees quit within the first 90 days.
With a third of employees leaving within the first year, and an even larger percentage leaving within the first 90 days, the cost of re-hiring racks up a hefty bill. Recruitment, new hire training, and an overall loss in productivity were voted as just three of the most costly aspects of employee turnover by 63% of CFO’s. Furthermore, according to Betterteam, “it takes about 1 to 2 years before an employee is ‘fully productive’ in their role,” leaving projects undone and current employees to take on a larger workload. Between missed opportunities for profit alongside employee burnout, your business is losing money and increasing the risk for an even higher employee turnover rate.
Now that we’ve reviewed the downsides, let’s dig into the more uplifting statistics and the benefits of employee retention practices.
- 75% of causes for employee turnover are preventable. (HR Dive)
- Companies with high employee-retention rates bring in 4X the amount of profits. (Built In).
- Organizations with high turnover rates saw a 25% reduction after improving employee engagement efforts. (HBR)
Besides the unavoidable reasons for losing employees (retirement, etc.), the majority of voluntary employee turnover is identified as preventable. The ultimate prevention key? An employee retention plan.
What is an employee retention plan?
An employee retention plan is a strategy or program dedicated to the recognition and reward of employees, fostering an environment of inclusion, engagement, and high performance. The more committed an employee is to its organization, the longer they remain at the company. Companies show their commitment by giving back to their employees.
There are a variety of ways in which a company can recognize and reward their employees. The best employee retention plans include them all, with the added bonus of increasing productivity and profitability. Top employee recognition programs include:
- Public acknowledgement for collaboration, innovation, and work that exceeds expectation.
- Reward options, such as gift cards or reward points with an online catalog for demonstrating preferred behaviors.
- On-the-spot reward opportunities to increase manager-to-peer relationships.
- An online social platform to foster peer-to-peer recognition
- A system to track and reward major milestones for a personalized employee experience.
- Interactive quizzes to educate employees on company values.
- An established survey system to provide a route for employee feedback.
- Scheduled corporate events to celebrate employee achievement.
With the right employee retention program provider, you will not only be able to enhance company culture, you will be able to identify key motivators and drivers of your desired culture and implement new ideas to continually enhance the employee experience.
Employee Retention in Your Place of Work
If you’re reading this article, there is a good chance you are an employee acting as part of a larger company culture. Whether you're a manager, an HR department professional, or CEO, you have an understanding of where your company excels as well as where it could stand to enhance company culture. Investing in your greatest asset- your employees! - is not only a preventative measure when combating employee turnover; it confirms company values and inspires employees to reflect your brand proudly.
Looking to enhance your employee retention strategy? Our sales team is ready to help with free consultations!