- Career development
- 10 Benefits of Employee Retention
By Indeed Editorial Team
Updated August 6, 2021 | Published April 13, 2021
Updated August 6, 2021
Published April 13, 2021
In order to build a strong workforce, companies need to implement ways to keep their employees happy. By increasing the longevity of each employee, you can have a more skilled team. Employees who grow with the company know the goals and expectations they need to work toward. In this article, we define employee retention and share the major benefits of employee retention strategies.
Related: 20 Strategies for Employee Retention
What is employee retention?
Employee retention is how well companies can keep their employees around. Companies that have low turnover rates tend to use employee retention strategies to encourage team members to stay with the company for a long time. When you have a high employee retention rate, this can indicate that employee morale and job satisfaction are high at your company. It can also signify that the company is making your workplace an enjoyable environment to work in every day.
Related: How To Calculate Employee Turnover Rate
10 benefits of employee retention
Here are the top ten benefits of employee retention:
Increased employee loyalty
When employees feel that their employer supports and values them, they may feel more loyal to the goals of their company. Finding ways to keep employees around longer can also improve loyalty since long-term employees have invested a lot of time and effort into their job. With increased employee loyalty comes more productivity and ethical work. For instance, an employee who genuinely cares about the company may feel more inclined to finish their work on time and be honest about the hours they report.
Decreased hiring costs
Finding new team members can get quite costly. Things like hiring recruiters, training staff, giving sign-on bonuses can add up. By keeping their employees around, companies can limit these costs. When managers are constantly hiring new people, this can take up a lot of time and money. Companies can save money by investing in their current staff rather than looking for new candidates.
Related: The Real Turnover Cost of Losing an Employee (And Ways To Retain More Talent)
Highly skilled workforce
When an employee is with the company for a while, they can build their skill set and relevant experience. Rather than starting over with a new employee, employers can build an effective workforce by using their resources for continued training and career development among current team members. When filling a high-level position, employers can benefit from promoting internally since their current employees already know the company and may have the right set of skills.
Related: How Managers Can Retain More Employees (With Tips)
Fewer transitions and employment gaps
High turnover rates can lead to a decrease in productivity. That's because when an employee resigns, it can take some time to fill their role. If they leave before your company replaces them, there is a gap in their position. This means that either no one is doing this work or other employees have to work extra hard to make up for this absence. Along with employment gaps, low employee retention means that you need to hire new people. Between the hiring and training process, this transition can take up a lot of valuable time.
Improved customer relations
Clients can notice when companies have high turnover rates. This might be concerning to customers who want to support businesses with positive company cultures. When companies keep their employees around, clients have the chance to get to know employees. This familiarity can benefit businesses since clients may feel brand loyalty due to working with a favorite staff member. Creating relationships and rapport with customers is an important part of making repeat sales.
Related: Q&A: What Are Employee Retention Rates?
Positive company culture
High turnover rates can lead to lower employer morale. It can be challenging for employees to feel excited about work if their coworkers are always resigning. When employees want to stay around, the company culture can benefit. Everyone is an integral part of the company culture, so when employees feel happy and committed to their work, this can help contribute to a positive culture at work. Along with benefiting current employees, good company culture can attract top talent and improve customer relations.
Better brand reputation
When companies are able to keep employees around, this can reflect positively on the way they operate. This can be good public relations for a brand. When employees only have good things to say about their company, this can boost a brand's reputation. This can come with all kinds of additional benefits, such as increased profits, positive press, competitive hiring edge and brand familiarity.
Deeper connections among staff
The longer colleagues work together, the better they can get to know each other. By working with the same people for years, you can get to know each other's personalities and working styles. This can lead to better teamwork and collaboration in the workplace. It can also lead to more camaraderie among staff, which can contribute to more job satisfaction.
More competitive staff
When news spreads about a company's high retention rates, this can help the company attract the very best talent. Companies that lack employee retention strategies may lose staff members to their greatest competitors. When your company is a good place to work, it can attract the people who wish to leave their competitors. This is useful for companies looking to gain a competitive edge by having a talented staff.
Consistent processes and systems
Having the same employees around makes it easier to keep your processes and systems consistent. Each time an employer takes on a new hire, they may experience a gap in the way their systems work. For example, a company with a small customer service department may fall behind on work if they lose one staff member. Likewise, a new team member may not be aware of all the company's policies and protocols, which can hinder efficiency. By having employees around for a while, employers can ensure their team fully understands how the company operates.
Published: Nov 09, 2021 By Bob Helbig
Businesses with a high employee retention rate are more likely to earn a reputation as a great place to work. They also are better able to focus on growing the business and developing employees instead of finding and training replacements.
1. Improved productivity: It usually takes a new employee a year or two to build relationships and productivity. Often, seasoned employees have to bring new employees up to speed, which takes them away from their usual productivity. And when employees have to cover for employees who quit or frequently train others, it can lead to burnout, frustration, lower quality work and lower morale.
2. Reduced cost: Consider all of the costs of advertising for new employees, from interviewing and onboarding to training and development. Expenses add up. High turnover is associated with loss of productivity, customer service issues, impact on company culture and lower engagement. All of these can contribute to rising costs on top of finding and training new hires. Retaining employees reduces or eliminates these costs. With increased productivity and quality of work from long-term employees, your business can become more profitable.
3. Improve morale and team cohesion: Higher employee retention boosts employee morale and builds team cohesion. It takes time to build a team and coalesce team synergy into something beneficial. Retaining employees makes this more likely, enabling greater connectedness and generating positive synergy.
4. More skilled employees: Higher retention rates mean your employees can become more skilled. After all, this development and institutional knowledge take time to learn, develop, and perfect. Skilled employees are crucial to succession planning and solving complex problems. Trained team members can help mentor other employees to improve your organization’s overall quality of work.
5. Reduced training time and costs: With higher employee retention, you can invest time and resources to help your veteran employees learn new skills and improve their existing ones. Professional development has long-term benefits to growing your business.
6. Better customer experience: Newly hired employees aren’t as knowledgeable as seasoned employees, and customers are likely to notice. Experienced employees develop relationships with customers, and they can be part of why customers keep coming back. With more experience and deeper organizational knowledge, veteran employees are often more capable and confident when solving unique or complex customer issues.
7. Improved employee engagement: It takes time for new hires to become fully engaged with the company. Long-term employees are more likely to be more loyal to the company and more engaged. Employee engagement is the outcome of employees who bring their best to work every day, feel committed, and want to refer your company to others.
Bob Helbig is media partnerships director at Energage, a Philadelphia-based employee survey firm. Energage is The Washington Post’s partner for Top Workplaces.
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