What is Employee Retention and Why Is it Important?
Employee retention refers to practices, policies, and the overall strategy designed to retain an organization's best employees, thus reducing the turnover rate. Employee retention is often a company's HR department's main focus.
How do you calculate Employee Retention Rate?
Retention rate is calculated by dividing the number of employees on the last day of a given time period by the number of employees on the first day.
Employees are undoubtedly essential and help keep any organization running. Finding the ideal talent to fit your company is a huge step towards facilitating its growth. However, the challenge comes with retaining the top talent. So, how should you strive to retain top employees and which strategies can help you succeed in your quest?
Improving Employee Retention + Effective Strategies
There are various strategies companies adopt to retain their employees. Remember, the goal of retaining employees is for both parties to benefit. Cultural changes in the work environment have triggered unique ways of retaining talent.
Nowadays, employees are not only looking at the money factor. They are looking for an all-rounded package that assures them growth in various aspects of their personal and career lives. So, how do you build a rapport that ensures your employees stick with you?
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Provide Opportunities for Growth
The modern employee does not only consider increasing their bank account but also career development. To achieve this, allow your employees to reap maximum benefits from their skills. This way they can learn to make the best use of their skills to advance in the company. You can enable employees to scale up the ladder by creating new positions that allow them to handle bigger responsibilities and enjoy privileges.
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Acknowledge Stellar Performances with Employee Recognition Awards
Employees need to feel that their employer appreciates their efforts. Recognizing the efforts of your employees goes a long way towards improving their morale and loyalty to the company. It does not take much to show appreciation. A simple office lunch/party or award ceremony has proven to be effective. Employee recognition awards are perfect to recognize an employee of the month or celebrate years of service.
When you hit a milestone (say 5, 10 or 20 years), then you certainly have a case for a celebration and the right to be recognized for service. Those that have worked at your company for 10 years or more prove to be an enormously valuable asset that cannot simply be replaced by someone else if they were to quit. This is evident in most baby boomers which hold valuable knowledge and information that will likely cause a lot of “brain drain” when they begin retiring in large numbers. They have extensive knowledge of the inner-workings of your company and it is almost always in your best interest to keep them onboard whenever and for as long as possible. Their ability to train and transition their knowledge to fresh new employees is crucial to future success.
Check out our full Guide with 100+ Employee Recognition/Appreciation Awards Ideas + Wording for more inspiration.
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Increase their Perks
Career development creates the best opportunity to increase wages. A promoted employee expects to be well compensated. There are various options that you can embrace to increase employee perks. You might consider improved allowances and commissions.
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Create a Friendly Environment
The type of environment your employees work in is an important factor in retaining them. An employee requires an environment where they feel their welfare is addressed. To improve the working environment, you should consider: proper safety regulations and equipment, social amenities and respectful treatment. Awards also help create a welcoming environment. For example, fun employee awards are unique and recognize employees on the spot for all their hard work.
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Mentorship
Becoming the perfect employer is all about your interpersonal skills. By forming personal relationships with your employees, you show that you care about their well being. This will prove to be the golden touch as the employee will offer their full loyalty to your company. Most institutions mainly focus on appreciating the top leadership. This drives a wedge between the junior and senior employees hence affecting the performance of the entity. When it comes to employee retaining, companies ought to treat all employees with equity. Businesses stand to gain a lot by simply recognizing the efforts of their employees and rewarding them accordingly. This is the easiest way to brew harmony that brings unity of purpose in an organization.
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Avoid the Hiring Process
Finding a new replacement for the lost talent can prove to be a hectic affair. You are certainly looking to hire someone with a skill set that matches the previous employee. Well, finding someone with a matching set of skills is nearly impossible. Apart from the uphill task of finding the perfect replacement, the organization is bound to experience increased turnover expenses. The expenses will further increase when replacing employees in senior leadership positions. The key reason for the inflated expenses is the cost of conducting training on the new employees.
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Retain Knowledge
Losing employees translates to losing crucial knowledge and skills. This can be lost forever in cases where highly experienced workers leave abruptly without inculcating their expertise to other employees. Additionally, if an employee with valuable skills and knowledge is acquired by a rival company, your company is likely to face the uphill task of wading off competition.
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Enhance Teamwork
Employees will only work as a team if they develop personal bonds. When members of a team keep leaving, it will take a long time before the team regroups and works together. To enhance teamwork, consider awarding your employees to improve and motivate team performance.
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Boost Revenues
An employee can only stay at their place of work if they are happy. Keeping your employees happy fosters the spirit of teamwork which translates to improved productivity. With a highly productive team, your company enjoys improved revenues. The improved revenues should trickle down to the employees to provide an enabling environment that keeps them in the company.
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Keeps Customers Satisfied
Focusing on retaining employees will not only keep them engaged but also focused. This joy is transferred to the customers who enjoy an improved experience. Happy employees have no problem going the extra mile to protect the company name by ensuring total customer satisfaction. Once your customers are happy and satisfied, not only will they stick to your products/services, but they will also help drive traffic to your business.
Contact EDCO for Employee Recognition Awards
Although employee retention is geared towards benefiting the business, it also provides the chance to take care of the employee’s happiness. Ultimately, employee retention is a win-win situation for both parties. EDCO Awards & Specialities can help your business retain employees by providing customizable, fun, and unique employee recognition awards. Thinking about hosting an in-person or virtual award ceremony? Check out our Virtual Award Ceremony Guide for remote employee recognition!
For more information about our multi-location shipping / dropshipping services, contact us at (800) 377-8646 today!
What is Employee Retention Really Worth?
Why do employees quit?
How much time and money does your company spend on hiring and training new employees? If your turnover rate is anything like the national average of 19%, then you're probably spending a considerable amount of resources. Did you know that employee turnover is one of the highest costs associated with running a business? If you aren't taking measures to effectively combat employee turnover at your company, you are wasting both money and time. By developing a thorough understanding of what drives employees to seek other opportunities, you can potentially save significant capital. Here are the facts you need to create employee retention strategies that will keep you from having to spend a fortune on hiring and training costs.
- Micromanagement: Micromanagement frustrates employees. Not to mention the fact that it hurts your business in many ways. By allowing managers at your company to micromanage their teams, employees will feel as though they are being belittled and not appreciated. Micromanagement also hinders employees’ abilities to develop job-related skills. If managers are frequently doing the jobs of their team members for them or dictating their duties step-by-step, those team members will not be any better at doing their job at the end of the day. Because of this, micromanagement makes it more difficult for companies to train valuable, skills employees. Employees want to feel as though they're progressing in the workplace and that their skills are valued. In fact, employees who feel like they are regularly micromanaged are 28% more likely to look for work elsewhere.
- They're overworked: Overworked employees are less productive and less happy. Employee burnout is a recurring problem within small businesses and large companies. When a business adds to the workload of its staff without hiring additional talent to balance out the workload, it creates stress for existing employees. Around 70% of workers feel like they don't have enough time in their week to complete their job duties. This feeling undermines job satisfaction and demotivates employees. Employees who consistently feel overworked are 31% more likely to look for a new job than employees who are happy with their workload.
- Lack of professional development opportunities: Providing professional development opportunities at your company could boost employee retention by as much as 34%. Employees generally want to expand their skillset and grow their knowledge - professional development programs benefit the employee and the business. Through learning opportunities provided by companies like tuition reimbursement, online courses, in-house solutions and off-site classes, employers can show that they place value in their team members by offering them professional development opportunities.
- Low company culture: Company culture is essentially the personality of a company. Workers are more likely to enjoy working for a company if there is a strong company culture that involves a positive environment and aligns with their values and expectations. When employees feel as though the fit in with their company, they are happier within their roles. Workers who describe their workplace' company culture as weak are 15% more likely to seek employment elsewhere.
- Lack of recognition: Recognizing your employees for their successes and skills is vital to maintaining their job satisfaction. The fact is, people want to feel valued and appreciated at their place of employment. By verbally praising employees when they perform at high standards, accomplish a difficult task, successfully learn a new skill, or skillfully utilize leadership abilities, you're exhibiting that you truly appreciate their efforts. A recent study shows that two out of three employees would leave their position if they did not feel adequately appreciated.
The cost of employees leaving
What are the true costs of employee turnover? This study shows that turnover costs are considerable. For example, replacing a single $10 per hour employee costs around $3,300 on average. As the salary and requirements for a job position increase so do the estimated costs of replacing an employee in that position.
Hiring costs
Costs associated with finding a pool of qualified applicants and screening them depend on what resources and methods you use for recruitment. Your business might use an agency or recruiter to locate and screen applicants for you. You probably invest in advertisements for open positions. Both of these things along with interviewing candidates, performing background checks, checking references, and preparing to make a job offer all involve money and time taken away from other facets of your business.
Costs associated with onboarding a new hire
Depending on the scope of the newly filled job position, onboarding a new hire can take anywhere from three months to three years. During that transition period, businesses spend, on average, 10-20% of the employee's salary for training and other onboarding processes. Consider the costs of the following items when tallying up what it costs for your business to onboard a new hire.
- Training programs
- Wages for any trainers or teachers involved with training and development
- Drug testing
- Paperwork processing
- Equipment and office furniture
- HR and administrative costs
Lost productivity
It's rare to find a job candidate whose skills are on par with a highly skilled, long-term employee who has just left a company. Hiring someone new almost always comes with a loss of productivity until the new hire functions at the same level as the previous employee. Losing a seasoned employee will cause greater productivity loss than the loss of a more recent hire, but most newly-filled positions will mean a loss of productivity. On average, expect a new hire to take up to two years to reach the productivity level of the previous employee.
Lost engagement
If your company has a high turnover rate, the employees that stay will feel demotivated. The direct result of this is a loss of engagement. Workers stay motivated and on-target when they are part of a team working toward a common goal and members of the team see consistent progress. Progress is difficult to achieve with a high turnover rate. Existing employees feel as though they are fighting an endless battle and become disengaged with their team and their work.
You can greatly improve employee retention by making a better effort to reward high-performing employees. Employee recognition is front and center when it comes to how happy your team members are in their positions. Recognition Awards are some of the simplest ways for you to recognize employees and improve turnover.
Benefits of Recognition Awards
- Recognition Awards Create a Positive Culture: The same study found that recognition programs create a positive organizational culture and improve employees’ day-to-day experiences. Why should you care about having a great workplace culture? It will help you attract and retain millennials – the largest generation in the workforce – and Gen Z, who are on the rise. Plus, everyone loves a fun workplace, and employee recognition awards are a good reason to host an event or a party!
- Recognition Awards Increase Engagement: A positive culture also makes for happy employees – and happy employees don’t leave. According to one Gallup poll, employee recognition awards and programs boost engagement and increase productivity. Personalized awards go even further, letting your employees know that you listen to them and want to get to know them as individuals, which builds trust. Managers who gain their team’s trust and respect will inspire them to go the extra mile.
- Recognition Awards Improve Relationships: In the study from SHRM, 87% of HR managers agreed that recognition positively affects employee relationships, which are essential to retaining employees. In another study from Globoforce, 89% of respondents said their work relationships matter to their overall quality of life. That shouldn’t come as a surprise: Your team spends one-third of their lives at work and may even spend more time with coworkers than with their families! Having friends at work makes employees less likely to quit – period.
- Recognition Awards Empower Employees: When set up in the most effective way, recognition programs incorporate feedback and input from all levels of the organization and all departments. Giving employees a say in recognizing their peers – and knowing that the recognition they receive comes from their peers – makes them feel empowered within the organization. And empowered employees feel less need to look elsewhere.
- Recognition Awards Attract Better Talent: A positive workplace culture, empowered and engaged employees and strong workplace relationships will all help you attract the best talent in your industry. This doesn’t just help your company’s bottom line – it will help you retain employees, too. When your team is surrounded by talented, smart coworkers who know how to help, they’ll feel more supported and will be better able to share the workload, leading to less stress and better morale.
Whether you’re a company of 10 or 1,000, employee retention is a subject worth focusing on. Retaining your employees will save you time and money and even help you attract new talent. The foundation of any solid employee retention strategy is straightforward: good pay and benefits, training, feedback and recognition awards that show them how much you value their contributions.
Contact EDCO for Employee Recognition Awards to Increase Employee Retention
EDCO Awards & Specialities can help your business retain employees by providing customizable, fun, and unique employee recognition awards. Thinking about hosting an in-person or virtual award ceremony? We got you covered!
For more information about our multi-location shipping / dropshipping services, contact us at (800) 377-8646 today!
