Importance of Employee Retention for the Business Success

Employee retention is important to all businesses for a variety of reasons. A high staff turnover rate not only results in a loss of skills and a waste of already spent training time, but it also suggests that something is wrong within a company that needs to be addressed.


Labor turnover varies by industry, and in some sectors, such as call centers and retail, it may not be as important to a corporation as it is in the scientific, technical, and manufacturing industries. As would be predicted, higher rates of employee mobility occur in locations with low unemployment, and this varies by geographic area.

A high personnel turnover rate might be detrimental in a corporation where experience is valued. This could be a product, a supplier, or a customer's experience. Motor car manufacturing, including motor racing, fine chemicals, where knowledge of raw materials is critical, and the insurance industry, where consumers have favorite salespeople, are examples of these three.

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You won't be able to simply replace your finest mechanic, chemist, or salesperson if they leave. It is your company's inability to rapidly replace lost qualified and knowledgeable employees that can cause considerable damage, especially if those who leave go to work for one of your competitors. As a result, it's critical that you examine the reasons why employees leave firms and strive to prevent this from occurring to you.

Because your clients usually have favorite salespeople, a loss of sales personnel can be very devastating to your business. If that person moves to another company in the same industry, their consumers will follow them. Not only that, but they're likely to have information on your whole consumer base, which will be quite beneficial to your competitors. Depending on the industry, this type of data loss can be devastating to a corporation.

So, why do employees leave? Why is it that certain businesses have a far higher staff retention rate than others? Job satisfaction is one of the reasons. Employees should be aware of what is expected of them not only on any given day but also in terms of the company's overarching strategy. Every employee should have a set of objectives and a plan to achieve them. Without that drive to succeed, the job can become monotonous, and other opportunities may appear more appealing.

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Another factor is future prospects. If an employee understands that good performance in their current position could lead to more responsibilities and/or pay, they are more likely to stay with your organization. Others merely consider remuneration, albeit this can be less of a consideration if the satisfaction, drive, and potential future rewards are sufficient to make current income less of a consideration. Many employees think in the long term rather than the short term.

Person retention, then, is closely connected to how the organization makes the employee feel relevant. They will be unsatisfied if their opinions are neglected and their experience is not utilized to its full potential. Employees require guidance in terms of what is expected of them, as well as goals to achieve. These objectives can be basic, such as manufacturing 25 widgets per day, or more sophisticated, such as adhering to a company budget's average monthly sales.

If they are given greater freedom in how these goals are achieved, they will be more motivated than if they are working to a set of rigid rules that require little thought and penalize innovation rather than rewarding it. There is no incentive for salespeople to "sell as much as they can," and there is no additional compensation in terms of position or money whether they sell ten or a hundred units.

Participation in business policy is usually beneficial in reinforcing employees' perceptions of their value to the organization. If an employee believes that he or she is respected, they are less likely to depart without good reason. This participation does not have to change basic policy, but if employees believe their opinions are insignificant, they will be less satisfied with their work than if management respected their input.

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How often do firms use consultants or other outside contractors to do work that might be done just as well by their own employees? This is a typical blunder, in which organizations fail to assess their employees' competence in areas other than the job they are paid to do. Many employees are capable of performing most of the contractual computer work, for example, but their value is not recognized due to their supervisors' lack of understanding of the technology.

Employee retention in many firms is also hampered by the poor quality of supervisors and line managers. Too often, persons who have demonstrated a talent for the work but are unable to manage to get promoted. A terrific salesperson and a good sales manager are two very different things.

Those who fail to become more professional in how they manage and encourage their employees will have a poor level of employee retention and hence struggle to compete against those who are more professional in how they treat and motivate their employees.

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