6 Reasons Why Employee Retention Is Important

No com­pa­ny cel­e­brates the loss of an employ­ee. The turnover process is a drain on a company’s time and resources and can wreak hav­oc on a team’s morale and productivity.

Employ­ee reten­tion strate­gies have tak­en up per­ma­nent res­i­dence in the brains of almost every exec­u­tive, human resource man­ag­er and team leader in the world. They get it. This isn’t new information. 

Three mil­lion peo­ple quit their jobs every month, and 30% of employ­ees leave with­in three months of start­ing. Reten­tion is ever-present in the minds of com­pa­ny lead­ers, but many com­pa­nies still haven’t fig­ured it out. The key to this issue starts with answer­ing two sim­ple ques­tions. Why do employ­ees leave? Why do they stay?

The Generation Gap

Every new gen­er­a­tion of employ­ees enter­ing the work­force is moti­vat­ed by some­thing dif­fer­ent. There may be some crossover; there may be out­liers in every group. Let’s look at what each group is most inter­est­ed in. 

Baby Boomers (1946 – 1964) 

Baby Boomers are most inter­est­ed in job secu­ri­ty. They are famous­ly hard-work­ing, goal-ori­ent­ed and tra­di­tion­al in their jobs. This gen­er­a­tion wants to be rec­og­nized for their skills and productivity.

Gen X (1965 – 1980)

Gen­er­a­tion X employ­ees are most inter­est­ed in work-life bal­ance. They pre­fer greater auton­o­my from their employ­ers and want to be trust­ed to do their jobs since they bring decades of expe­ri­ence to the table.

Millennials (1981 – 1996)

Mil­len­ni­als are most inter­est­ed in free­dom and flex­i­bil­i­ty. They have a deep long­ing to do work that is mean­ing­ful and ful­fills a sense of pur­pose. They love to know that the work they do might one day change the world. They pre­fer to be judged for the qual­i­ty of their work, not the num­ber of hours they put in.

Gen Z (1997 – 2012)

New to the work­force, Gen­er­a­tion Z employ­ees are most inter­est­ed in sta­bil­i­ty and secu­ri­ty. As a gen­er­a­tion that was raised on social plat­forms, they pre­fer equal and col­lab­o­ra­tive man­age­ment styles. They also val­ue diver­si­ty and social responsibility.

Why the Generation Gap Matters

The top com­pa­nies in the world know a secret. No mat­ter their gen­er­a­tion or how they’re moti­vat­ed, peo­ple have a deep desire to derive mean­ing and ful­fill­ment from their work. What that means depends on the indi­vid­ual. If a com­pa­ny wants to be suc­cess­ful, it must adopt a diver­si­fied and per­son­al­ized approach to employ­ee reten­tion strate­gies.
The job mar­ket is not over­flow­ing with tal­ent­ed, job­less peo­ple des­per­ate enough to work for any com­pa­ny with a job open­ing. In fact, it’s the oppo­site. Mod­ern employ­ees are empow­ered enough that if they don’t want to work some­where, they won’t. So, improv­ing employ­ee reten­tion should be one of the pri­ma­ry goals of every organization. 

Com­pa­nies sim­ply can’t afford to lose valu­able team mem­bers. To fur­ther illus­trate that point, here are six rea­sons why com­pa­nies must pri­or­i­tize employ­ee retention:

6 Reasons Why Employee Retention Is Important

1. Employee Well-Being

Employ­ee turnover may harm the busi­ness, but it also hurts the employ­ee. When there aren’t enough peo­ple to accom­plish a goal, loy­al employ­ees are forced to work hard­er to pick up the slack. As a result, they’re stretched thin, unable to work on the projects that make them excit­ed and are pos­si­bly upset about los­ing their friends.

When employ­ees are unhap­py, it bleeds into every aspect of the busi­ness. High employ­ee reten­tion ulti­mate­ly results in high­er team morale, which is excel­lent for busi­ness. With mil­len­ni­al and Gen Z employ­ees, emo­tion­al, phys­i­cal and finan­cial well-being is essential.

2. Training, Talent and Experience

Every time an employ­ee leaves, they may take months or even years of train­ing and expe­ri­ence with them. Gen Z and Boomer employ­ees, for instance, have decades of expe­ri­ence. Too many com­pa­nies spend resources on recruit­ment and train­ing, which costs them time and money.

Instead, orga­ni­za­tions should cul­ti­vate the tal­ent that already exists. The longer some­one works at a job, the bet­ter they get. Build­ing a long-term rela­tion­ship with an employ­ee opens doors for new train­ing oppor­tu­ni­ties, out-of-the-box ideas and high­er qual­i­ty work. Com­pa­nies must focus less of their effort on recruit­ment and more on retention.

3. Team Building

A con­stant rota­tion of team mem­bers alters the dynam­ic of a group. This requires a team to take pre­cious time adjust­ing and learn­ing how to work togeth­er, which is time they could’ve used to achieve new goals. It’s impos­si­ble to build a sol­id team if the team isn’t able to stay togeth­er. This is par­tic­u­lar­ly impor­tant to employ­ees that val­ue col­lab­o­ra­tion, like Gen­er­a­tion Z. 

Beyond that, low employ­ee reten­tion also hurts a company’s rep­u­ta­tion. If an employ­ee leaves, there’s a chance they will post about their expe­ri­ence on a web­site like Glass­door, which can make it impos­si­ble for com­pa­nies to hide. As a result, com­pa­nies with a bad rep­u­ta­tion can­not recruit the best tal­ent, ulti­mate­ly harm­ing their business. 

4. Customer Experience

Cus­tomers notice when the peo­ple they like to work with sud­den­ly dis­ap­pear. They are also affect­ed when there aren’t enough employ­ees on a shift, and a team is stretched too thin. If an employ­ee isn’t hap­py at their job, cus­tomers will notice.
Once employ­ees have more train­ing and more expe­ri­ence, they’re bet­ter equipped to deal with cus­tomer com­plaints and com­plex issues. Focus­ing on employ­ee reten­tion results in a bet­ter cus­tomer expe­ri­ence, which results in hap­pi­er customers.

5. Productivity

Employ­ee turnover can deliv­er a mas­sive blow to pro­duc­tiv­i­ty. When employ­ees are stretched thin and forced to cov­er shifts, it can be exhaust­ing. If an orga­ni­za­tion employs Mil­len­ni­als, this can be espe­cial­ly dam­ag­ing because they pri­or­i­tize their own phys­i­cal and emo­tion­al well-being.

High employ­ee reten­tion also allows busi­ness­es to build teams that are com­fort­able work­ing togeth­er. Com­fort enables peo­ple to com­mu­ni­cate more open­ly to col­lab­o­rate and share new ideas. When a team isn’t used to work­ing togeth­er, they can expe­ri­ence break­downs in com­mu­ni­ca­tion, which eats up valu­able time and productivity.

6. The Bottom Line

It costs approx­i­mate­ly six to nine months worth of an employee’s salary to replace them in a low- to mid-lev­el posi­tion. Replac­ing an exec­u­tive-lev­el role can cost up to 213% of that executive’s salary. How­ev­er, the true cost of employ­ee turnover goes beyond num­bers on a spreadsheet.

When an orga­ni­za­tion los­es some­one, they lose tal­ent, ideas, intel­lec­tu­al prop­er­ty and expe­ri­ence. They can also lose pro­duc­tiv­i­ty, cus­tomer sat­is­fac­tion and the abil­i­ty to cre­ate a cohe­sive team. Focus­ing time, atten­tion and resources on employ­ee reten­tion saves com­pa­nies money.

Diverse Companies Require Diverse Solutions

Employ­ees want to know that they are aligned with the orga­ni­za­tion they work with and that their employ­er cares for them. If a com­pa­ny is strug­gling with employ­ee turnover, the solu­tion is simple.

The key to employ­ee reten­tion is to con­sid­er every indi­vid­ual with­in an orga­ni­za­tion and under­stand that dif­fer­ent peo­ple have dif­fer­ent needs. How do com­pa­nies deter­mine what those needs are? Open communication.

They should sur­vey their peo­ple to find out what’s impor­tant to them and equip their team lead­ers with the abil­i­ty to work with team mem­bers on their career paths. Com­pa­nies should also con­sid­er cus­tomized ben­e­fits plat­forms to ensure that all of their employ­ees get the ben­e­fits they need in order to thrive.

Not all ben­e­fits pro­grams are suit­able for every­one; the one-size-fits-all approach doesn’t work any­more. If com­pa­nies hope to improve employ­ee reten­tion, they must con­sid­er the spe­cif­ic needs of their employ­ees. The Fringe plat­form is the per­fect way to do that. 

Con­tact our team to sched­ule a free demo today!