Employee Retention – Critical to Business Success

“It takes great customers to create a great business, and it takes great people to have great customers.” – Todd Eber

The quote above would hold true for any company. Is there any company that functions without employees? The employees carry the mission and vision of the company and it is through their efforts (or lack of it) that customers receive great (or shoddy) service. What this means for a company is that not only should they put together a strong and committed workforce, but put as much effort into their employee retention practices. This is critical to business success since it is proven that employee attrition is a huge cost for owners from time, cost and productivity aspects and in the current competitive scenario; it would be imprudent to waste the already limited resources. As new companies emerge, the race to get the best talent in the market has become fiercer. A report reveals that the cost of replacing employees is at least 1.5 to 2 times more than the last employee’s salary and there are the additional ‘punishments’ of lowered staff morale, decrease in productivity, stress in the workplace leading to disgruntled employees, who in turn will mete out the same treatment to the customers. This is the vicious cycle, which companies must stay away from if they expect to have a strong customer base, make profits and succeed.

Just like with customers, a company must make every effort to retain its top performers and must remain aware of any problems their employees face. Waiting to resolve issues until the time the employee has decided to leave would cause problems for the company – they would lose a contributing member of the company, who could potentially influence others as well to leave. Most employees that decide to exit the company are not very forthcoming on the reasons, which in turn mean that the company will be unable to fix the challenges and this could mean that others would follow suit. Employee retention practices are extremely critical for any company if they want to focus on their customers as well. Retention of employees must not be a reaction to exits, but rather must be part of the company’s long-term employee policies and strategies. At the time of recruiting, a company must ensure that they hire people with similar values, cultures and relevant experience – it is important to hire for attitude and then train the persons to fit the job role. A group conducted a research involving at least 20,000 new employees. The research revealed that 46% failed in the company in a short span of 18 months and 89% of these failed because of the lack of the right attitude and only 11% failed because they did not have the requisite skills.

It is a known fact that the longer customers stay with a company, the likelihood of them becoming successful increases. However, for customers to remain satisfied with a company for long they must be served with increasingly high standards and get products that are unique and serve their needs. Serving customers and churning out products can only happen when a company has employees and for high quality in both these aspects, long-standing employees are critical. Employee retention should be a major concern for a company and ensuring that employees remain engaged and happy is one of the prime responsibilities of any company.

What practices does your company follow to ensure maximum employee retention? How does your company counter employee attrition especially given the many ‘temptations’ some of the top performers have in the market today? There is no doubt that a person works to earn a salary to meet their needs. To maximise the employee retention percentage, ensure that employees receive a salary that is competitive and is a perfect match to their needs, skills, knowledge and experience. The fact remains that if the compensation offered by the company is not adequate a person will not stick around for long and would give in to better offers in another company. It is surprising that companies let their employees go rather than pay them a bit extra and then spend in excess of at least twice to hire another employee. This does not make for good business sense.

In addition, to a competitive salary (which will not remain adequate for long), companies must provide benefits such as health and life insurance, retirement planning, flexi-time and work from home options, shorter work weeks, group conveyance to and from work, adequate number of paid leave days and other such benefits. These methods would amply reflect the commitment of the company towards its people – leading to a satisfied workforce and in turn raising the levels of employee retention.

Employee retention is a ‘by-product’ of a cohesive and united workforce. This can be achieved through employee get-togethers, team meetings, lunch or dinner coupons, movie tickets and other such incentives, that will keep the employees interested and engaged with the company. Such methods help employees to unwind and interact with their co-workers in an informal environment, raising the understanding and sensitivity towards each other.

Nothing spells employee retention as a structured rewards and recognition program. Human nature dictates that efforts and good work is duly recognized and rewarded. It is crucial for any company to have such a program in place such that employees know that their efforts and contribution are seen as valuable to the company. Recognizing the efforts of employees makes them feel important and remain excited about their job, which are prime contributors towards employee retention.

If an employee does decide to leave, it would be the responsibility of the company to conduct an ‘exit interview’. This helps a company to ascertain the causes that led to the employees’ decision and in case the company can retain them, they should do so. Even if the employee does not change the decision, they could provide invaluable insights into some of the problems that the company could rectify thereby ensuring that employee retention does not remain a challenge. However, it would be better for a company to gain employee feedback such that they can rectify the issues before they lead to employee attrition. Asking for feedback is a proactive response to possible issues and lends a feeling of being important and valued to the employees. Using employee feedback would enable a company to strengthen and enhance their employee retention strategies and policies.

Companies that offer chances of personal and professional development would have a better hold on employee retention. A clear development and promotion path would allow employees to move upwards in their career within the same company, ensuring that they remain with the company for longer. Promoting from within the ranks is a clear signal that the company considers its employees as valuable and critical to its success and will lay the path for all employees to work better and ‘grab’ those internal opportunities that would spiral their compensation and benefits.

There are many more employee retention strategies and it is the duty of the company to ensure that its employees receive care and empathy, have opportunities to communicate openly and are free from fear and stress. Employee retention is all about keeping the employees excited, feeling valued and energized about working in the company, such that they never want to leave. Excitement, enthusiasm and empathy are contagious – as employees experience them, so shall they pass it on to the customers and other stakeholders of the company, leading to sustainable success of the business.

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