Three Reasons Why Your Business Should Focus on Employee Retention
No matter the size or profit level of a company, employee retention has become a problem for many businesses.
Employee retention is defined as a company’s ability to keep valued, high-performing employees on staff. When top employees shift from enjoying their job to being dissatisfied in the workplace the impacts of this move can ripple throughout the company both before and after that employee turns in their notice.
The factors within a business that can impact employee retention levels tend to include employee morale, career path options, recognition, and employee-manager relationships. While it is easy to let the focus on these factors fall below direct revenue generating activities on the priority list, they should always remain a top focus. Here are three reasons why your business should focus on employee retention.
1. Open Positions and Hiring Cost Money
While there is a daily cost of having employees, employee vacancies can often cost more per day. While many factors impact the total cost of each opening within your company, the elements typically fall into two categories: Cost per Opening and Cost per Hire.
Cost per Opening is the financial impact an employee vacancy has on your company.
If an employee was in a revenue impacting position, revenue might be lost. This is because even when other staff or yourself is covering the work, there is not enough time for one person to produce the same level of work as two people.
During the time of the vacancy, there might be services not performed, fewer items produced for sale, or decreased customer experiences due to longer wait times or other factors.
Cost per Hire is what it costs your company to fill an open position. This cost is made up of:
- Recruiting fees including recruitment services (if used), advertising the open position, and running a background check and drug tests.
- Training expenses to get the new hire up to speed.
- Salaries and benefits differences if the new hire qualifies for higher pay or negotiates additional benefits.
- Time loss from you or an employee having to take time to find, screen, interview, and select candidates. Any time spent hiring is time not spent on other revenue impacting activities.
SHRM says that on average it costs six to nine months of the open position’s salary to hire a replacement. This means to fill a job where the yearly pay is $50,000 it could cost $25,000 to $37,500 when factoring in the Cost per Opening and Cost per Hire.
When employees are retained, these costs are avoided.
2. Experienced, Valued Employees Take Less of Your Time
When you hire an employee, you are adding that employee to your team to do work. With each employee, you are giving yourself additional time to work on your business instead of in your business.
When employees end up taking too much of your time, you start to lose the benefit of having employees to assist you with your company’s workload. Instead, you are spending your valuable time tending to their needs or even hiring their replacement.
Now, that does not mean you should not be spending time with your employees. As a company leader, you should be forming positive, impactful connections. However, when employees are unhappy, they tend to take more of your time through negative interactions. This even includes the time when you are not physically with them, but they are taking up extra space in your mental capacity. Typically, the unhappy employees that take the most of your time are the first ones to leave the organization – and just because they are unhappy at the moment does not mean that overall they are employees you want to lose.
Focusing on employee retention helps make employees feel valued in the workplace. Valued employees tend to care more about their work and in turn gives you more time to do the value-added work you want and need to do instead of worry about theirs.
3. Happy Employees Lead to Happy Customers
Lastly, when companies focus on employee retention, workers tend to be happy in the workplace. When employees are happy, they tend to care more about the customer and strive to have better customer relations.
There is the quote by Simon Sinek that says, “Customers will never love a company until the employees love it first.” There is much truth in this quote.
If an employee hates coming to work every day, their attitude is going to impact their work. Their work then affects your customers. This can be through direct interactions if they work with clients or indirectly if their actions filter down to your clients.
When you make employee retention activities a priority, you are contributing to the creation of delighted customers. This is because when employees are happy, they create positive customer experiences.
Need Help with Employee Retention?
Are you have trouble retaining employees within your business? Let’s jump on a free Employee Retention Evaluation call to see how I can help you with your business needs.