Calculating the return on investment of effective employee retention strategies

There’s no way around it — a high employee turnover costs businesses money, resources and can negatively impact reputation. If you're reading this it's probably because you know that already, and you're looking for tips and advice on retaining top talent and an understanding of how much value retention can offer your business. We've got you covered in this blog.

By implementing effective employee retention strategies, businesses and employees can both benefit. Here’s what you need to know:

What can negatively affect employee retention?

Various things can negatively affect employee retention and result in a revolving door of employees. This can include a bad work environment and culture, harassment, bullying and overworking employees. 

Poor work culture is a result of a mix of things. For example it could be that you haven’t defined your company values, which in turn prevents you from attracting candidates that align with your values and are happy to sign up to them. Variety is certainly the spice of life, and having a diverse mix of people is conducive to an effective business, however if you don't bring people into your business that want to contribute to a positive work environment then you’ll experience problems from the start. This is because your culture will progress without a sense of direction, as core values drive a company.

Without these values, subcultures form which can undermine the company’s success. 

Many employers believe that employees staying behind after work or continuing to work through breaks is a good sign as it shows commitment. Although this can be true, it’s more likely an indication of more sinister circumstances; the employee might not have enough time to stop working, they might fear repercussions if they don't appear committed, or the pressure to perform highly means a lack of prioritisation and a dismissal of an essential work-life balance. In turn, this is poor for productivity as the employee may overwork themselves, causing them to make more errors and build resentment for the company. 

Tired employees and overworked employees seldom make happy employees. Unhappy employees are less likely to stick around, meaning you'll be left to deal with recruitment drives, the need to retrain staff and all of the associated financial costs.

Another reason an employee may choose to leave is due to harassment or bullying. Even if the employer gets involved, if it isn’t handled appropriately, the employee may feel like they have no other choice than to leave.

The cost of high employee turnover

Losing staff and hiring a replacement is an expensive process, often costing businesses thousands per hire. This cost includes everything from recruitment and hiring to onboarding and training. The new starter will need assistance from their colleagues in their first few months to ensure they’re doing the job correctly, which will cause a decrease in productivity from multiple staff members.

With gaps in staffing, morale can become low, again causing a decrease in productivity. This can cause a negative impact on the working environment while also affecting staff wellbeing and happiness working with the company. As a result, this creates a cycle that may lead to more staff leaving the company. 

All of this will negatively impact finances and the business’ reputation. If the business becomes known for a high turnover, it'll struggle to replace the employees they've lost.

Don't worry though, there's still a lot you can do to lower employee turnover through using effective employee retention strategies.

Effective employee retention strategies

1. Offer competitive salary and benefits

A known contributing factor as to why employees quit is salary. Often, employees leave a business to find better opportunities and benefits. Financial stability motivates a person to stay in a job, so it’s important not to simply offer the minimum, but what the role and employee are worth. 

2. Hire the right person from the start

Although it’s nearly impossible to always hire the perfect person for a role, you can adapt to reduce the chances of a wrong fit. To ensure this doesn’t happen, invest time in defining your company’s core values and identifying the kind of person who would be the right fit for the role, both on a personal and professional level. Identify what personality traits would serve the role well, and the qualifications and skills they should have. 

Remember to be honest with candidates throughout the hiring process. Don’t oversell the role or mislead them. The more honest you are with what the job entails, the more likely you’ll hire a candidate that fits requirements culturally and professionally.

3. Promote positive employee wellbeing

If an employee’s work and personal life are unbalanced, it'll negatively affect their wellbeing. When an employee feels their work life is taking over their personal life, their workplace becomes the bad guy. 

To combat this, you need to find the pain point. Is the team understaffed? Has one person been given too much responsibility or do they need more training? Next, work on alleviating the pain point. 

This could be providing guidance on how to manage their workload or increasing their salary to match the amount of work they’re completing. You may wish to promote them and hire another person on a lower salary to take away menial tasks from the affected employee. 

Benefits of employee retention strategies

By implementing these effective employee retention strategies, your business will experience the following benefits:

  • Reduced turnover hassle
  • Improved morale
  • Reduced acquisition and training time
  • Dedicated company experts
  • Increased overall productivity
  • Better customer experience
  • Reduced costs

To learn about Culture Shift's reporting system and how it could benefit your business, book a demo today.

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