Show us a company that is struggling to stay afloat, and we’ll show you a company that has a high turnover of staff. Because when it comes to business success, employee retention isn’t just another aspect to consider; it’s everything.
As we all know, the biggest struggle, especially for small to medium-sized businesses, is keeping the best talent on the books. Once your software developer hits a home run or your marketing manager scores a major shout out in the media, the big businesses come calling with their gilt-edged salary packages and on-site massage rooms.
So how do the smaller companies keep their best employees from jumping ship even when they’re coasting through calm, crystal clear waters?
Through happiness of course!
The modern day company works just as hard at keeping their employees happy as they do their clients and customers, and with good reason. By maintaining that feel-good factor around the office, they are able to keep their staff turnover rate below the accepted industry standard and keep their coveted talent on board.
But it’s not just about keeping the superstar employees happy, everyone from the mailroom staff to the CEO need to feel the work culture love and here’s why.
The importance of employer branding
The image a company projects as a potential employer is essential in the hunt for new talent. And cultivating a positive working environment for everyone within the organization can only lead to one thing – a great reputation.
Being well known as a company that fosters a strong emotional bond with its employees is something that can set an employer apart and make it an attractive option for job hunters.
This bond also instills a sense of loyalty within current employees making it harder for them to say goodbye to their work family. Nurture that bond just right, and an employer can expect to retain their staff for as long as they wish.
We touched on this subject last week in our post on why salary is an interview taboo when we talked about how employers’ attempts to create a positive working environment have taken precedence over many other aspects within the workplace.
The reason for this recent emphasis on workplace culture is not only talent acquisition, but retaining current staff. You see it’s these employees from the top right down to the bottom who are a company’s best horn tooters as they tell anyone who’ll listen what a wonderful employer they have. Remember, it’s all about the reputation.
Longevity = efficiency
They say that familiarity breeds contempt, but we beg to differ. When employees become familiar with each other and understand their role and responsibilities within the team structure, they become more efficient. Projects run more smoothly, deadlines are not a problem, and job satisfaction levels soar.
On the other hand, when an employee leaves, the well-oiled machine grinds to a halt as others take up the slack and a replacement starts their training. This in turn results in a drop in productivity and has a negative effect on the general mood around the office.
Avoiding such a scenario allows the company to spend less time and money on training and put more effort into streamlining current processes helping current staff achieve their personal goals.
Employee retention cuts costs
According to the 2016 Human Capital Benchmarking Report, the average cost to replace an employee in the US is $4129. It might seem like a low figure, but this report also includes the cost of replacing low-level wage earners and doesn’t quite reflect the true cost to companies looking to replace highly skilled employees.
For a more accurate estimation, we turn to a report by the Center for American Progress. Their study found that typically it costs a company about 20% of the employee’s salary to replace them. Interestingly though, they also found that in high-income positions where higher education and skills were essential requirements, the true cost of employee turnover could be as much as 213%. This means that a $100,000 a year employee might cost as much as $213,000 to replace.
With such astounding potential costs, it’s easy to see why companies are more than eager to keep their highest earners on the payroll, and work to reduce their cost per hire. Unfortunately, though, there comes a time when a parting of the ways is unavoidable which brings us along to our final point.
Perfect your employee offboarding process
While HR departments the world over usually have a solid onboarding process in place, there are many that fail to realize the importance of a positive offboarding experience.
Thinking that a person is no longer part of the organization and therefore not worth worrying about is a disastrous approach to take. Not only is it damaging to your employer brand (remember what we said about reputation) but it is also downright disrespectful. Regardless of how much the employee in question has offered the company in terms of success, they deserve the respect of their employers.
Of course, there are exceptional cases where this may be impossible, but generally speaking, all employees should leave with a handshake, the promise of a possible return, and their positive opinion of the company intact.
As experts in talent acquisition, it might seem odd that we are such firm believers in the power of employee retention, but it’s true. Retaining the best talent is what often separates an average company from a truly successful one. But that’s not to say that you shouldn’t introduce some fresh recruits to your team every now and then, and when you decide to do so, get in touch with vsource and let us bring the best talent to your team.