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Some businesses treat employees as if they are as easily replaceable as cogs in a machine: lose one or two and there are always plenty more to take their place.
But take a step back. Every person you employ means an investment of time and money. You've got to find them, bring them into the team, and train them to do the best job possible.
After all this effort, it makes no sense to treat them as expendable.
Instead, it's far better to take a strategic approach to keeping your staff with the company. Having a programme for nurturing staff and retaining positive, motivated employees will mean your business is more productive, profitable, and sustainable in the long-term.
So let's delve into why employee retention strategies are so important.
1. Improve the bottom line
Losing staff financially damages your business, pure and simple.
Research indicates it can cost anywhere between 30% and 150% of a person's salary to replace them, depending on their position, tenure, and experience.
You will spend time and resources advertising for new people, going through the whole recruitment process, then you will have to bring them onboard and train them.
Not only that, there's a loss of productivity as the new employee gets up to speed. She or he won't have any of the organisational knowledge that the person they replace had, which can lead to lost business opportunities or damage to your brand and reputation.
Meanwhile, another business could be benefitting from the talent and intellectual property the person who left took with them.
These indirect costs can be especially damaging for small to medium-sized companies.
Use Business Victoria's handy calculator to help understand the cost of staff turnover.
2. Reduce turnover
You can't build a successful business if your people are coming and going at a rate of knots.
Aside from the financial costs, your business needs talented, creative, hardworking employees who form a trusted part of a team.
Relationships between staff develop over time, just as each member develops the knowledge and skills necessary to do a great job.
This matters. 96% of Australian employers surveyed by recruitment company Hays believed skills shortages will impact operations or growth, the highest level since Hays began producing their Salary Guides.
Any steps you take to reduce turnover and inspire good people to build their careers with the company will mean your business will function more efficiently and effectively.
3. Maintain productivity
Keeping your current staff happy and motivated in their roles will ensure you maintain performance and productivity.
When an employee departs, he or she takes their knowledge and talent with them, and leaves behind a set of responsibilities your remaining staff will have to take over until you can find and train a replacement.
This extra workload can mean your existing employees are less effective at performing their own roles, while the stress on the whole team increases.
Aside from poor service delivery, this may mean that you have to postpone important assignments or projects because you don't have enough skilled people to do them, or management is spending so much time finding and training new staff.
Conversely, if your employees are satisfied with the way the company treats them and rewards them for their work, they will want to stay and put in extra effort to help the business succeed.
4. Boost morale and loyalty
High staff turnover isn't the most ringing endorsement of your company and its culture.
Our co-workers are often one of the most important aspects of job satisfaction, so if people are constantly leaving it can have a negative effect on the engagement and morale of the remaining team members.
Any problem with morale will create a problem with loyalty, as unhappy employees are typically less interested in doing what is best for the company or its customers. It will also mean you risk losing even more staff.
By focusing on creating a positive work environment and demonstrating you care enough about your employees to invest in their success and inspire them to stay, you will strengthen staff commitment, improve employee relations, and increase company morale.
Having loyal workers will mean you have dependable workers. They will also be your advocates when they talk about the business to other people or on social media.
5. Strengthen recruitment
Not only do effective staff strategies help you keep your best people, they also help you attract quality employees.
If you create a work environment where employees are valued, job and benefit expectations are met, and advancement opportunities are provided, you will be a desirable place to work. Not only will your existing employees want to stay, talented people will want to come to work for you.
However, if you regularly lose staff, the company's name and reputation can be harmed, not only by word of mouth but by reviews on employment websites and in social media.
This sort of damage to your reputation can put job seekers off before they even apply, and can go on affecting your recruitment efforts for years to come.
