In today's constantly evolving job market, retaining top talent is critical for strategic success. Gen-Z is now firmly embedded into the workforce. Evolving economic, political, and technical environments, methods and concepts that worked just a few years ago may no longer be viable, nevermind the impact of the pandemic. Businesses need to understand not just why employee retention is important, but also tailor their strategy accordingly. If you’re reading this blog, chances are good you have some inkling of why a better retention strategy is topping a lot of ‘to-do’ lists these days. We’ve prepared the top five compelling reasons to bolster your employee retention strategy.
1. Cost savings
Let’s get down to the brass tacks – one of the best business reasons why employee retention is important is the significant cost savings it provides. Have you ever done the math on the expense of replacing an employee? You might be staring down the barrel of six to nine months incompensation to replace an employee, according to the Society for Human Resource Management (SHRM). Covered in those costs are: hiring new employees, onboarding, and the lost output that results from their training and any deadtime between employees. The financial impact on your bottom line is pretty severe even if you’re replacing one or two employees, let alone if you have to replace multiple!
Needless to say, the easiest way employers can avoid these high expenses is by retaining their current workforce. Long-term workers also save training costs and boost productivity because they are already immersed in your company's procedures and culture.
2. Maintaining institutional knowledge
Chances are you’ve experienced the pain of losing a valuable employee who takes their knowledge with them. Long-term employees at an organization gain important institutional knowledge, everything from knowing the background of the business, your internal procedures, client interactions, and subtleties unique to the sector. Losing these workers means losing this important expertise, which could impact operations and strategic planning.
Retaining employees guarantees that this knowledge stays internal and that senior level employees will be around to mentor new members of the team, promoting a culture of stability and constant progress. If you can create a work environment with mentorship and continuous learning, employees will have more ownership and be more engaged with the business. Additionally, as an added bonus, organizations with a high degree of employee engagement report a 21% increase in profitability, according to Gallup research.
3. Boosting morale and engagement
Speaking of engagement…have you maybe seen that your staff members are less likely to engage in complimentary activities recently, or maybe they’re not super excited about team-building exercises? This can indicate a lack of enthusiasm and morale. Retention rates are directly correlated with employee engagement and morale. Maybe you’ve been caught in the recent rounds of layoffs – remaining employees probably feel unstable and insecure as a result of high turnover, which will lower their engagement and productivity.
It stands to reason that when employees witness their peers staying and flourishing inside the organization, it cultivates a feeling of loyalty and dedication. While layoffs may not be under your direct control, there may be some great options you can lobby for to support your teams. Offering flexible work schedules, clear career development opportunities, and acknowledging and rewarding accomplishments are just a few of the innovative retention strategies that can greatly raise morale. Not only are engaged workers more productive, but they also serve as brand ambassadors for the business, improving its reputation and recruiting appeal.
4. Adapting to generational shifts
Newsflash – the oldest members of Gen Z are turning 27 this year. If you’re modifying your retention strategies this year to align with the expectations and preferences of Gen-Z as they enter the workforce, you’re too late!
Figuring out what really drives your younger employees can be tricky. We’re overgeneralizing here, but in contrast to earlier generations, Gen-Z tends to place a higher emphasis on work that feels meaningful, professional advancement possibilities, and work-life balance, rather than just prioritizing job stability or pay. Additionally, they are typically very tech aware and anticipate that their employers will use contemporary technology to improve their working environment.
It's critical to update your employee retention plan to reflect these evolving goals. You’d use some of the tools we’ve already talked about here like providing flexible work schedules, encouraging a healthy work-life balance, funding professional growth initiatives, and making sure that the company's goals and values are shared by all staff members.
According to a LinkedIn research, 59% of Gen-Z would participate in upskilling training to boost their careers. It is possible to greatly increase retention rates and draw in top talent from Generation Z by understanding and catering to the specific needs of this generation.
5. Enhancing company culture
Do the mission, values, and vision of your organization resonate with your employees? A great workplace culture is an effective strategy for getting (and keeping!) employees on board. Employee retention and positive organizational contributions are more valuable when they are aligned with the company's mission, values, and goals. Additionally, a company's culture can be weakened and disrupted by high turnover rates, which then lowers overall performance and employee satisfaction. Starting to see a pattern?
Concentrating on employee retention can create a work culture where employees feel consistently appreciated and inspired. This entails encouraging candid communication, supporting diversity and inclusivity, and providing chances for employees to work together and forge those strong relationships. 77% of respondents to a Glassdoor survey said they evaluate a company's culture before applying for a job. A positive culture at work not only keeps talent on the team, but it also draws in new hires who are searching for a stimulating and encouraging environment.
Wrap up: Why employee retention is important
Alright, let’s recap:
Cost savings: Employee retention lowers the substantial expenses related to recruitment, training, and lost productivity.
Maintaining institutional knowledge: Long-term employees exchange and maintain important knowledge that is essential to the success of the business.
Boosting morale and engagement: Increased engagement and morale among staff members result in increased loyalty and productivity.
Adapting to generational shifts: Companies that live up to the expectations of Generation Z workers will continue to be appealing and competitive in the labor market.
Enhancing company culture: Retention and attraction of top performers are enhanced by a robust and consistent business culture.
Creative ways to retain employees
We know why we should be working hard to retain employees, but how about a little help in that direction? These strategies can serve as a foundation for your revamped retention plan:
- Offer flexible work arrangements: To help employees better balance their personal and professional life, allow them to work from home or offer flexible hours.
- Invest in career development: Give employees the chance to improve their education, pick new skills to acquire, and develop their careers within the organization.
- Recognize and reward achievements: Thank and recognize employees on a regular basis for their contributions. This can be done in team meetings, with official awards, incentives, or other means (Pro tip: you can also ask your employees how they’d like to be recognized and make it even more meaningful! Some employees prefer one-on-one feedback, for example)
- Foster a positive work environment: Establish a work environment that inspires, supports, and values its people. This means encouraging inclusion, equity, and diversity in addition to maintaining a positive work-life balance.
- Leverage technology: Utilize contemporary technology to improve communication, expedite procedures, and give employees the resources they require to be successful.
Go forth and retain
Understanding the significance of personnel retention and putting innovative strategies into practice will greatly augment your company's stability, effectiveness, and general prosperity.
Looking for another boost? Revamp your employee retention strategy today and create a thriving, engaged, and loyal workforce with PowerToFly’s consulting and training services.
