Why Employee Retention is Important
Your organization probably has an employee retention strategy in place. There's a good chance that it includes a number of talent development programs or awesome employee benefits. You may even use an employee engagement strategy to increase your retention rates.
But do you know why employee retention is important?
According to the Work Institute’s 2018 Retention Report, there has been a 141% increase in open jobs since 2009. This incredible job market gives employees more options if they choose to leave your organization. With that in mind, it’s not a surprise that employee retention is an important business objective.
Still not convinced? Here are 3 other reasons why employee retention is important for your organization.
3 Reasons to focus on employee retention
- Skilled workers are a hot commodity.
The job market is booming now, but as the economy continues to grow so does the war for talented employees. Because of this, skilled workers are becoming few and far between. In fact, a McKinsey study approximates the job market will be short between 16 and 18 million college graduates in 2020.
With a talent shortage, once you’ve hired the best individuals you want to keep them. These top employees are the ones that will fill an organization’s leadership pipeline and secure the future of the company. Increasing your employee retention will increase the likelihood that these individuals will remain with your organization so they can become leaders.
- Tenure is an appreciating asset.
The value of an employee increases the longer they stay with an organization. As time passes, their knowledge and experience continue to grow making them an essential piece of a network. They build relationships with other employees and clients that are vital to the success of an organization.
Trends in Employee Tenure states that median tenure for all working groups has decreased since 2012. This finding is consistent with the observed decrease in retention. Because of this, tenure is becoming scarce and highly coveted by organizations. Increasing employee retention is important to preserving these individuals as assets to the organization.
- The cost of turnover is more than you think.
If you feel like the cost of low retention is irrelevant, you have likely undercut the expense. The Work Institute’s report reveals that employers in 2018 paid over $600 billion in turnover costs. What's more important is that the number is projected to grow by 2020. The cost per employee differs, but it can be estimated at 33% of their annual salary.
The rise in recruitment and training costs makes it easy to see why an organization would focus on high turnover. Combine that with the loss of productivity while a role isn’t filled and increasing employee retention rates becomes a must.
What can do you to increase employee retention?
The answer: mentoring!
We’ve done extensive research and found that mentoring can help increase these retention rates. By providing employees a mentor that can support them in their career path, organizations can increase tenure and employee loyalties. Our studies have shown that 94% of employees that have been through a mentoring program have been satisfied with the organization.
Mentoring improves employee engagement, which Gallup reports is likely to increase retention as well. Employee engagement should be top of mind when combating employee turnover. Many organizations are doing whatever it takes to keep their employees engaged.
Discover how improving employee retention can increase your ROI, with Insala's Retention ROI Calculator.