How affect employee retention to the Organization.

 

What is Employee Retention? 

Employee retention is considered an organizational goal of keeping employees and their contributions for the long term. It describes the situation where employees aren’t actively seeking other job opportunities and choose to grow and stay with their current company.

A lot of the times, lots of companies find out why people leave or reason for leaving during the exit interviews.

 

 In addressing the multi-dimensional concept of retention, Cascio (2003) perceived retention as initiatives which the management takes to prevent employees from leaving the organization. The issues which the latter further proposed are employees being rewarded for doing their jobs effectively, ensuring that the relationship between employees and managers are harmonious, and maintaining a working atmosphere which is safe and healthy.

Frank et al. (2004, p. 13) defined retention as the "effort by an employer to keep desirable workers in order to meet business objectives”.

What is Employee Turnover?

Employee turnover refers to the total number of workers who leave a company over a certain time period. It includes those who exit voluntarily as well as employees who are fired or laid off—that is, involuntary turnover.

Turnover is different from attrition. When calculating attrition, force reductions and terminations are not counted.

Gberevbie (2008) referred to frequent labor turnover as “a state of affairs in an organization” where it is seen that employees tend to leave or resign from their jobs because of best known reasons based on their point of view concerning personnel policies and practice of a firm. Frequent labor turnover at work has been found to be causing harm to performance, especially when employees are going to the direct competitors of the organization It is essential for employers to completely understand their labor turnover and how these affect the organizations’ effectiveness at achieving their overall set of goals. This implies that when the staff turnover in an organization is found to be higher than usual, the performance of that organization would be relatively low because there will be a lack of availability of competent employees arising from frequent turnover of organizational workforce.

“Excessive staff turnover is costly for an organization”. They added that its effect goes above the financial costs inherent in the recruitment, selection and training (new employee). Thereby, Larsen (2000) found that when employees are highly satisfied, they will remain in the organization, and as a result rising the rate of retention of that organization.

 Benefits of employee retention

1. Increased employee loyalty

2. Decreased hiring costs

3. Highly skilled workforce

4. Fewer transitions and employment gaps

5. Improved customer relations

6. Positive company culture

7. Better brand reputation

8. Deeper connections among staff

9. More competitive staff

10. Consistent processes and systems

11. Optimized revenue

Low employee retention is a huge problem.

Organizational performance and output aren’t the only things affected when a talented employee leaves. The broader team culture, morale, and determination of other employees to stay also take a hit.

The real cost of low employee retention 

It takes a considerable amount of resources to replace a departed employee: on average, it takes 94 days to fill a high-skilled role. In addition to lost productivity while filling an opening, add on interview time, on boarding, and training the replacement after recruitment. Perhaps most valuable yet often forgotten is the institutional knowledge (the ins and outs of your company’s dynamics, collaboration styles, and values) and experience on the job that employees take away with them when they leave. And don’t count out the repercussions that extend beyond that particular role; leaders might also face a tank in team morale, meaning more individuals are susceptible to the idea of leaving.  

In sum, here are the main costs of employee turnover: 

• A disruption in projects and deliverables due to vacancy, that can cause lost business
• New employee recruitment costs (interview time and placement fees)
• Training costs (on boarding, mentoring, early errors) 
• Knowledge and institutional memory loss
• Low team morale, trust, and engagement; leading to lower productivity and possibly further turnover

SHRM(2022) Managing for Employee Retention https://www.shrm.org/resourcesandtools/tools-and-samples/toolkits/pages/managingforemployeeretention.aspx

Oracal (2022) What Is Employee Retention? Benefits, Tips & Metricshttps://www.netsuite.com/portal/resource/articles/human-resources/employee-retention.shtml

Indeed Editorial Team (April 13, 2021 )11 Benefits of Employee Retention (Plus Definition) https://www.indeed.com/career-advice/career-development/benefits-of-employee-retention#:~:text=Retaining%20your%20employees%20can%20ultimately,costs%20and%20optimized%20employee%20productivity.