The figures that speak to the cost of replacing an engaged employee are more than surprising; in many ways they’re quite staggering. To replace an engaged employee costs between 60%-200% of the employee’s total annual salary. Indeed, replacement isn’t exactly a cheap exercise.
A high employee turnover translates into higher operating costs, a subsequent loss of profits and, possibly, a loss of market share. All of the above are obvious disadvantages in a competitive environment, but the good news is that talent retention is a well-researched subject, and that there are answers to your questions.
Why is Talent Retention Important?
Good, engaged workers know your company well, are knowledgeable about its products and services, can make good decisions when needed, and, further, understand the market in which the company operates.
In other words, human capital is a valuable asset and an investment in retaining your personnel is an investment in productivity.
The following is a brief list of essential reasons that point out why talent retention should be a business priority:
- Hiring is a time consuming process: Each CV needs to be examined, and a single round of interviews is often insufficient to find the correct fit.
- Training: new recruit training is an essential element in the hiring process, and it takes time before a new recruit can begin to perform at optimal levels.
- “Defection”: It is likely that if an employee leaves his/her current position in your organisation, they may be employed by a competitor operating in the same space.
- Engaged employees are adjusted: The longer an employee has worked in an environment, the more they understand about company structures, key personalities, company culture and the value creation chain.
- Loyalty: Loyal employees tend to work harder and feel a sense of ownership over their work: this is to say that a personal emotional investment by the employee in their work leads to productivity and returns.
- ROI: Businesses across the size spectrum that retain their top talent perform on average 20-30% better than those companies that don’t. This in itself could be a key motivator for management to implement a staff retention strategy.
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What Do Employees Want?
The secret key to retaining talented individuals is to engage with them, understand their concerns and needs, and respond to this information as best as is possible. In a general overview, the following lists the items that contribute to employee satisfaction:
- Involvement in decision making
- Freedom to voice ideas
- Feeling enabled to perform well
- Having adequate opportunities to develop
- Feeling that organisations treat individuals as individuals, as opposed to mere production units.
Wanting to retain talent?
In the effort to retain top talent, a strategy needs to be developed that speaks to the criteria that actually make an employee want to stay at a company. In this regard, executives may want to approach incentive specialists who have years’ worth of experience in the field. If you decide to develop a programme without aid, however, bear the following in mind:
- Build relationships and communicate with employees regularly
- Build good recruitment processes
- Build morale and provide a work environment that is comfortable and pleasing
- Build respect: it is important that employees respect their direct supervisors as well as company leadership
- Always, always treat employees fairly
- Recognise and reward behaviour that reflects good work habits: A culture of appreciation is easy to implement, but the ROI is very high as productivity increases.
Indeed, retention can certainly go a long way to improving productivity, profit margins, and general morale, and can foster a happier, more positive work environment. Armed with the above information, and some enterprising thought, you may be on your way to designing a successful retention gambit.
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