Four Benefits of Employee Retention & How to Improve It At Your Organization
Employee retention is a huge issue in our current labor market, and the stats show it: 4.2 million people quit their job in July of this year — almost 1 million more than in 2021 — and currently, 63% of U.S. employees are actively searching for new positions.
As organizations scramble to find ways to keep their people, only 36% of employees report feeling engaged with their work and workplace — which means employers need more than a hastily thrown together plan to hold on to top talent.
But how important is employee retention, really? Check out the following four benefits, along with strategies on how to future-proof your workforce with your own solid retention plan.
1. Increase Productivity and Employee Skills
A new employee can take up to two full years to reach the same level of productivity as an existing one. This is due to the learning curve for new employees to get acclimated with the role, people, and company culture. So when employees are constantly leaving, productivity decreases as a result.
However, companies that provide opportunities for employees to upskill, reskill, and evolve within the organization can see up to a 24% increase in profit margins and are more likely to retain top talent. And employees want to learn and grow in their careers, with 40% reporting that they would leave their roles within a year if not provided with adequate training and development.
To help employees grow their skills and the company grow its profits, employers should offer opportunities like:
- Career pathing: Opportunities for employees to set — and meet — goals for themselves, illuminating career paths they may have not considered before.
- Short-term gigs: Project-based assignments that help employees learn about different parts of the organization and boost their own skillset.
- Learning and development (L&D) courses: Knowledge courses and certifications that offer employees the flexibility to learn on their own time and provide them with content designed to help them perform better in their roles.
Utilizing an internal talent marketplace is one of the great benefits of employee retention as well because it can house internal mobility tools like the ones above, all in one place.
Employees at companies with internal mobility opportunities stay almost two times longer than those without them, and employees who take on new roles internally are 3.5 times more likely to be engaged with their work than those who don’t.
Both lead to greater productivity and an increase in skills, which helps retain employees for the long haul.
2. Create a More Positive Employee Experience
Creating an amazing employee experience is something frequently overlooked by employers, with only 24% of leaders reporting that employee engagement and connection is a part of what they think about, plan, and do every day.
As the Great Resignation has shown us, employees are taking action in response by leaving for jobs they believe will offer them a better company culture.
So, why is a positive employee experience one of the benefits of employee retention?
When people are happy in their jobs, have meaningful connections with their colleagues, and feel like they are learning and growing, they are less inclined to look elsewhere. After all, it’s easy to leave a job, but it’s much harder to leave a relationship.
Research also shows that not only do feelings of connections, belonging, and happiness increase employee retention, but they can boost productivity by up to 12%.
Here's how employers can create an employee experience that their talent won’t want to walk away from:
- Offer access to Employee Resource Groups (ERGs): ERGs increase feelings of belonging by offering an inclusive environment. Through ERGs, employees are connected to colleagues and resources that can lead them to future opportunities, keeping talent in-house.
- Invest in a mentoring program: Mentors help engage employees, connecting emerging talent with individuals that can guide them to new opportunities. Mentorship programs deepen the connection an employee has with their organization.
- Implement a referral program: Referral programs not only highlight internal talent, but they also showcase employee loyalty. Employees utilizing an internal platform to recommend colleagues for open positions means they’re happy in the workplace too, which is high praise for your company.
Related reading: 6 Ways to Engage Employees for a More Meaningful Employee Experience
3. Reduce Costs & Increase ROI
There’s no way around it: replacing employees is expensive. Costs usually range from 16% to 213% of an employee’s salary, and U.S. organizations pay up to $1 trillion collectively in turnover expenses every year.
Finding new employees also adds to recruiters’ plates — and with a recruiter shortage in the U.S., those plates are already full. Think about it: constantly updating and posting open roles, interviewing candidates, sending out job offers (that could be rejected, thus starting the process all over again), and then onboarding new employees takes a lot of time.
When employees stay, recruiters are given that time back to focus on other important tasks, and companies aren’t spending money and resources to hire and train loads of new talent.
One way managers can help ensure their recruiters are choosing quality talent that fits well within the organization and won’t be inclined to leave is by using AI technology to track candidate and employee data.
Phenom Talent Analytics integrates with any ATS to help identify effective campaigns, optimize lower-performing ones, and ultimately maximize ROI. It also provides managers with insights on where candidates are coming from, what content they’re interacting with, and can predict trends so teams are prepared for the future.
Related reading: Using Talent Analytics to Target Recruiting Spend and Maximize ROI
4. Create a Better Customer Experience
A positive company culture and brand reputation has to start from within.
Not only that, but when an employee leaves a company, their knowledge of and relationship with their customers leaves as well. Since it can take almost two years for a new employee to reach the same productivity levels of a previous employee, imagine how that affects the customer relationship as well.
When employees stay for the long haul, they are able to form meaningful relationships with their customers, in turn increasing customer trust of the brand. Employee turnover means hesitant customers, which can lead to decrease in company profits.
So how can managers work to showcase an honest, positive employer brand?
A simple way to do so is through employee video testimonials featured on the company site or social media accounts like LinkedIn. Who better for customers to hear about a company from than the people who work there? Sixty percent of Fortune 500 companies are already utilizing video on their career sites to attract candidates, and the use of video content is only increasing.
Related reading: How to Improve Employee Retention: Best Practices
The importance of employee retention in organizations is clear: it boosts productivity and morale, increases ROI, and creates a better customer experience overall.
Learn more about employee retention benefits and strategies in our