Employee Retention in Organisation

What is Employee Retention in Organisation 

Organizational performance and productivity depend on the employees engagement with their day-to-day work contributions to the organization, and if the experienced staff decide to resign from the organization, it would have a highly negative impact on the organization's productivity. Hence, the HR departments of the organization work hard to retain their staff in the organization, and effective employee retention can save an organization from productivity losses. High-retention workplaces tend to employ more engaged workers who, in turn, get more done. Engaged employees are more likely to improve customer relationships, which help to improve productivity. Employee turnover is a leading workforce management challenge for many organizations and human resources (HR) professionals, creating significant operational costs for employers and compromising their growth and profit.

Employee retention is very important for small businesses, because it’s very costly and time-consuming to replace staff members, and it can hurt the remaining employees’ productivity when people leave the company and the positions remain unfilled.(Fuscaldo,2023)

What Causes High Employee Turnover in Organisation

                                                                                (Source)

       Losing an employee is called turnover which is caused due to below reasons

1. Lack of employee purpose
2. Poor compensation
3. Being overworked
4. Bad managers
5. Little to no feedback or recognition
6. Poor work/life balance
7. Boredom
8. No opportunity for growth or development
9. Bad hiring procedures Toxic or negative culture

What is Employee Retention

Employee retention is defined as an organization’s ability to prevent employee Turn over  or the number of people who leave their job in a certain period, either voluntarily or involuntarily. Increasing employee retention has a direct impact on business performance and success. Therefore Organizations are make their best strategies to hold their employees in the organization with developing  to mitigate employee turnover risks.

Employee Retention Theories 

	Retention Practices	Outcome
1	Maslow’s hierarchy of needs (people management)	Map your employee experience to the pyramid of needs and benchmark how you stack up. Prioritize gaps at the bottom of the pyramid to make the biggest improvements in retention.
2	Herzberg’s two-factor motivation-hygiene theory	Teams need to be satisfied with both ‘hygiene’ factors and ‘motivators’ if they are to commit to long-term employment within your organization.
3	The human motivation theory	To increase retention, employers must keep on top of satisfying these basic needs for their employees. This means first determining which of these needs are most important to each employee, as these core drivers vary from person to person
4	The social exchange theory	In terms of employee retention, the social exchange theory suggests that if an employee finds their relationship too risky (and lacking in enough reward) they will leave. Simple.
5	The theory of Organizational Equilibrium (TOE)	The more satisfied your teams are with the contribution they are making vs their compensation, the greater employee retention
6	The equity theory	The more positively your employees feel about how they are treated in the workplace, the more loyal they are likely to be. Treat your employees well, they’ll stick around
7	The human capital theory	The more you invest in the development and education of your teams, the better they’ll perform and the more likely they’ll be to stay put.
8	The resource-based employee retention theory	When your teams feel they have a purpose at work and their contributions are valued, retention is likely to remain high.

Effective Employee Retention Strategies 

A retention strategy is a plan that organizations create and use to reduce employee turnover, prevent attrition, increase retention, and foster employee engagement and this will help to keep the employees in the organization longer

(Source)

1.On-board and Orientation-The company must also establish a solid first impression. Thus, retention begins with on boarding and orientation. During on boarding and orientation, explain the following: Work culture, Support, Part of the team

2.The Training Program-The training program extends the on boarding and orientation processes. Training, whether in-person or online, represents your firm. Provide quality training materials for new hires to assist them grasp your company's processes. You can recruit trainers or allocate new hires to current staff. This approach makes new hires feel comfortable and part of the team by letting them spend time with a colleague without hierarchy standards. While the same method provides your present employees greatest satisfaction, the employee retention plan works best when they feel management trusts them. The training program is for new and experienced staff. This means industry-specific up skilling. Up skill training shows seasoned employees how much progress and value your organization offers, which increases retention.

3.Perks and Benefits-Employee benefits enhance morale. During the employment process, disclose benefits. These may attract and keep employees. Every employee enjoys these benefits: Flexible hours, remote work, Health insurance, stress management WiFi, fitness, and digital subscription reimbursement

 4.Communication and Feedback-Let your employees know they may talk to you about anything holding them back. Address their problems immediately. Discuss employee and company futures in regular meetings. Discuss their performance, contribution, and aspirations to fulfill company goals.

5.Rewards and Recognition-Rewards and recognition are the best ways to retain employees. Rewards don't require money if the budget doesn't match the expenses. Try these, appreciate your staff, Appreciate their work in front of the team, Sending a company-wide email (the replies will improve staff confidence). If your budget allows, you can reward employees with incentives, Gift cards, Promotion is necessary and ideal for long-term, great work

6.Work-Life Balance-The work-from-home culture has made work-life balance more important. Your workers need personal post office hours. To do that, they should work during office hours and not be contacted afterward. Your unique selling point can be your office hours. This prevents your workers from burning out while working quickly.

7.Work Arrangement- Lockdown has changed how people work—many prefer working from home to the workplace. Employees often transfer jobs to avoid office work. Work from-home can boost employee morale and retention.

8.Encouraging Inputs- The organization needs feedback from everyone, not just stars. Request input from everyone. To show appreciation for their feedback, explain which suggestions are incorporated and why others are not. This shows you value and respect their input.

9.Celebrating Milestones- The organization should recognize your employees' milestones. Celebrate your employees' accomplishments and corporate anniversaries. They deserve recognition for their long service to the organization.

10.Acceptable Pay Scale-  Pay scale or wage is the major aspect that erases professional and personal pain points. If the remuneration isn't good, your employees may look elsewhere. According to polls, 45% of employees resign due to wages. Your organization must follow industry pay norms and compensate employees fairly. Your organization should always revise pay scales (performance must be compelling) and offer pay based on abilities and experience to retain employees.

Benefits Of Employee Retention 

Employee benefits play an important role in employee retention because providing attractive benefits will cause more and more employees to stay back in the  organization .

(Source)

Top 10 benefits of employee retention as given  

1.Cost Reduction- Large U.S. firms spend over $1 trillion a year seeking replacement labour. Advertising, interviewing, and screening cost. On boarding costs include training and managerial monitoring. Losses in productivity, engagement, customer service, and business culture add to turnover costs.

2.Morale Improvement- Revolving doors can lower morale. Besides losing connections, remaining employees may have to work harder. Thus, motivation and contentment can drop. Turnover is contagious. Employees who see others job-hunting, quitting, or leaving may leave too. Successful employee retention initiatives may boost morale, increase engagement, and spread positivity in the workplace.

3.Experienced Employees- High turnover destroys organizational knowledge, skills, and relationships with customers and partners. The opportunity cost—the value the employee may have provided—is also lost. Senior staff departures might affect succession planning. Even in times of high unemployment, these employees—especially top performers or those with in-demand skills—are at risk for turnover. Senior or experienced personnel can solve complicated issues on their own, benefiting the organization, so retaining them pays off.

4.Recruitment and Training Efficiency- Replacing employees is costly. After recruiting and on boarding qualified candidates, an organization must train them. Losing a new hire wastes all that money. Retention reduces recruitment costs. Internal recruitment is another option. An employer can save tens of thousands of dollars by training and reskilling employees.

5.Increased Productivity- Employers face many difficulties with high turnover. Productivity loss is the main effect. New hires take one to two years to reach the productivity of existing employees. New hires also require time to bond with colleagues and clients. Understaffing leads to employee overtime, burnout, lower work quality, and delays. Productivity losses can be avoided by effective staff retention. High-retention workplaces have more engaged, productive staff. Engaged employees are more likely to develop customer relationships, and teams that have had time to gel are more productive.
6.Better Customer Experience-Customer experience is a customer’s perception or opinion about their interactions with a business, from their first interaction to post-sale support. These interactions depend on employees whose own experiences can impact how they engage with customers. This is where turnover can take a toll. For example, new employees might take longer to get things done, may be less adept at problem-solving and are more prone to customer service mistakes — all of which can damage the customer experience. In turn, customers might share their negative experiences, putting the organization’s reputation at risk. On the other hand, satisfied employees typically have higher morale and capabilities that shine through when working with customers.

7.mproved Corporate Culture- Corporate culture, which influences hiring and retention, is shaped by employees' attitudes, preferences, and actions. When an employee leaves, others may question their dedication to the company. Engaged, culture-aligned individuals who stay improve an organization's culture.

8.Better Employee Experience- Employee experience is how an employee views their contacts with a business from application through departure. It also considers co-worker, management, and customer connections. Positive staff experiences boost productivity and customer satisfaction, which can increase customer loyalty. HR cannot influence several elements of the employee experience in a business, from application through departure. It also considers co-worker, management, and customer connections. Positive staff experiences boost productivity and customer satisfaction, which can increase customer loyalty. HR cannot influence several elements of the employee experience. However, by focusing on employee needs and retaining their finest personnel, firms can improve employee experience and retention.

9.Increased Revenue- Reduced staffing expenses, productivity increases, and better customer experiences boost revenue. To demonstrate the ROI of retention strategies, HR metrics should track revenue gains.

10.Improved Employee Engagement and Satisfaction-Positive employee experiences can increase employee engagement, which is a person's commitment to their job and company. Engaged workers have "skin in the game" and are more inclined to stay. Engagement is linked to employee satisfaction and morale, which are crucial to an organization's success. Bonus: Engaged employees typically become brand ambassadors who promote their companies to their networks.

Top Challenges in Employee Retention

Major challenge for an organization is to retain its valuable and talented employees and there are several challenges to do it and the followings are the top challenges in employee retention

1. Dissatisfaction of Salary
2. Better job opportunities in the market 
3. Hiring wrong Candidates
4. Lack of Appreciation
5. Unrealistic expectations from Employees

Conclusion

The companies whose business depends on imports are currently struggling due to the imposed import ban. For example, most of the consumer durables selling companies do not have sufficient branded stocks with them, and their sales have drastically decreased. According to the Fitch Ratings analysis report dated December 1,2022, Singer imports about 70% of its products, of which half are already banned. With this import ban, high government taxes and high interest rates do not favour the consumer durables business in Sri Lanka, and as a market leader, Singer's sales have dropped by 40% when compared with previous financial year sales. Most of the employees who work in the consumer durables field work with job threats, and they are looking for new job opportunities, and the staff turnover rate is increasing day by day. All companies in the consumer durables business should concentrate on an effective employee retention strategy to retain their best and brightest talent. Positive employee experiences can increase employee engagement, which is a person's commitment to their job and company. Engaged workers have "skin in the game" and are more inclined to stay. Engagement is linked to employee satisfaction and morale, and it will help organizations hold on to their employees. It refers to the strategies an organization develops to mitigate employee turnover risks and the processes it puts in place to increase retention of top talent and increase the organization's performance with better profits.

References

Armstrong.M.(2014), Armstrong’s Handbook of Human Resource Management Practice(13^th edition) [Online] Available at  https://www.google.com/search?q=e-book+of+ARMSTRONG%E2%80%99S+HANDBOOK+OF+HUMAN+RESOURCE+MANAGEMENT+PRACTICE.[Accessed 13^th April 2023]

 

Bamboohr (No date) An HR Glossary for HR Terms, [Online] Available at https://www.bamboohr.com/resources/hr-glossary/retention-strategy#:~:text=A%20retention%20strategy%20is%20a,retention%2C%20and%20foster%20employee%20engagement. /[Accessed on 13^th April 2023]

Crawely(n.d),12 Must - know Theories on employee retention, Employee retention aricale [online ] Available at https://www.gomada.co/blog/models-and-theories-on-employee-retention#:~:text=The%20resource%2Dbased%20employee%20retention%20theory%20(RBV)&text=Another%20important%20employee%20retention%20theory,you%20can%20reduce%20retention%20issues. [Accessed on 13^th April 2023]

 

Fuscaldo.D(2023), How to Manage and Improve Employee Retention, Business News Daily [online ] Available at https://www.businessnewsdaily.com/15878-employee-retention-rate.html[Accessed on 13^th April 2023]

 

Holliday.M (2021), 10 Benefits of Employee Retention for Businesses, Human resource article [Online] Available at https://www.netsuite.com/portal/resource/articles/human-resources/employee-retention-benefits.shtml#:~:text=Effective%20employee%20retention%20can%20save,tend%20to%20be%20more%20productive. [Accessed on 13^th April 2023]

 

Holliday.M (2021), What Is Employee Retention? Benefits, Tips & Metrics, Human resource article [Online] Available at https://www.netsuite.com/portal/resource/articles/human-resources/employee-retention.shtml#:~:text=Employee%20retention%20is%20defined%20as,on%20business%20performance%20and%20success. [Accessed on 13^th April 2023]

Logicmelon(no date) 10 effective employee retention strategies, [Online] Available at https://logicmelon.com/blog-post/10-effective-employee-retention-strategies/[Accessed on 13^th April 2023

Merin(2021), Top 5 Employee Retention challenges, HR Self article [Online] Available at https://hrshelf.com/employee-retention-challenges/[Accessed on 13^th April 2023]