I firmly believe that the Great Resignation will continue to teach us more and more about how to run our businesses every year.
Combined with the current worker shortage, one lesson has become abundantly clear: holding on to employees is vital to the success of a business. The less we have to worry about staying adequately staffed, the more we can focus on completing our daily tasks and building toward our goals.
But it’s so much more nuanced than that. Talent retention touches upon so many aspects of running a successful business. So many, in fact, that it’s hard to imagine any business finding success without implementing some combination of employee retention techniques.
What is talent retention?
Talent retention is the process or practice of ensuring valuable employees remain with your organization for long-term employment—3 years or more. Usually, this takes the form of creating a comfortable work environment, offering unique benefits, and fostering a positive corporate culture.
Some of the most popular talent retention strategies include:
- Livable wages
- Employee development opportunities
- Health and wellness benefits
- Flexible/remote work arrangements
- Employee recognition programs
Why is talent retention important?
Talent retention is key for the health and growth of a company. Retaining top talent for long-term employment can help you avoid issues that would otherwise reduce your company’s productivity and revenue.
For instance, strong employee retention programs can help you avoid:
High employee turnover
High turnover rates come with a host of negative business effects, such as:
- Reduced morale
- Low productivity
- Reduced quality of products/services
- High replacement costs
According to Enrich, it can cost between 50%-60% of an employee’s salary to hire, train, and onboard a replacement. This can also incur significant time and opportunity costs.
Each member of your team has their own set of institutional knowledge, external experience, and specialized skills. Whenever an employee leaves your company, they take a great deal of knowledge with them. In this interview with Ari Bixhorn (VP of Marketing at Panopto), he cites an internal study that found that 42% of the skills needed to perform any given job are held only by the person currently filling that position.
This can introduce unnecessary confusion and tension into the workplace while simultaneously complicating the search for a replacement.
Your loss is someone else’s gain. When an employee leaves your company, they bring all of their knowledge and skills to their new employer. Because your competitors probably offer similar positions, your former employees could end up working for one of them.
And they’ll bring more than just their specialized skills. They can now offer any training or industrial knowledge (not covered by an NDA) to your competitor. This could increase their new employer’s competitive edge (and decrease yours).
The time in between losing one employee and training a new one leaves a productivity gap. This disrupted workflow can make things more difficult on the remaining employees (who need to pick up the slack), reduce productivity, and negatively impact both product quality and customer relations.
10 benefits of talent retention
Retaining employees does more than help you avoid worst-case scenarios—it offers plenty of benefits that can help your business succeed. Having a team of long-term employees can help you:
Offer consistent customer service
According to Salesforce, 76% of customers expect consistent customer service throughout an organization. A separate Salesforce study shows that 89% of customers are likely to make another purchase after experiencing positive customer service.
The message is clear: a consistent, positive customer experience is a key factor for success. When you retain long-term talent, you can ensure you provide the same positive experience each time you interact with customers. This can help customers know what kind of service they should expect, creating both loyal customers and positive word-of-mouth for your brand.
As I mentioned above, replacing employees can have significant opportunity and monetary costs. When an employee stays with your organization, it reduces those costs. This can inversely help increase your return on investment, as the time and money you’ve invested in that employee’s development stays within the company.
Improve employee morale
Improving morale works in a two-fold way. First, losing colleagues can impact the morale of the entire workplace. Your employees build relationships with their coworkers; losing that connectivity can dampen their mood while performing their job.
Second, workers stay in workplaces that make them happy. If you can create a workplace that improves their morale, they’re more likely to stay. It creates a cycle where happy employees remain, which helps the workplace become more positive, which can help improve the morale of your other employees. With a positive workplace culture, this can cycle can go on and on, ad infinitum.
According to studies, employees spend up to 60% of the workday communicating. CMS Wire found that 97% of workers say effective communication can positively impact their tasks.
The longer your team members work with each other, the more they can build a rapport. They can learn their colleagues’ preferred communication styles and methods. Most importantly, they can intuit what their coworkers do and don’t need to know/hear in order to complete their tasks. Effective communication takes time—the longer you can retain talent, the more time your team has to learn how to communicate with each other.
Build strong teams
Teamwork is key for a successful business. Effective teamwork can require several components, such as:
- Division of duties/strengths
- Mutual support
- Shared values
- Openness to ideas
Each member of your team likely has their own personality, attitude, and strengths. Learning how to fit each distinct personality into the group can take time. This is why employee retention is important for team building: they each need time to learn where they fit in, fall into their roles, and understand how to work together as one cohesive unit.
Develop seasoned employees
The more time someone spends in their role, the more experience they receive. The more experienced they are, the better they can perform their tasks. But retaining talent does more than give your employees the opportunity to grow within their role. It also gives you time to help their professional development.
When you recognize an employee’s strengths and weaknesses, you can help coach them into becoming even stronger in their role. You can also refer them to professional development courses and conferences to help them learn new skills. The stronger they become as employers, the more they can help any coworkers who might be struggling. They can become role models for the team or even earn promotions into leadership roles.
This all can ensure you have highly skilled teams and managers who fully understand your company’s culture and preferred business practices.
Because employee retention programs focus on improving the employee experience, it can help improve their engagement with their work. According to Gallup, engaged employees can help a company:
- Increase productivity by 14%
- Improve customer ratings by 10%
- Increase sales by 18%
- Increase profitability by 23%
Increase employee loyalty
Different managers often have their own definition of employee loyalty. I like to think of it as simply as possible: loyal employees focus on helping their organization reach or exceed their goals. They work hard and they don’t seek alternative employment.
If you invest time and money into retaining your employees, they’re more likely to invest their time and efforts into the company’s success. This makes them more engaged, more productive, and more profitable. It also makes them more likely to become brand champions, helping to build support and morale within the business, and awareness outside of it.
Avoid gaps in productivity
At the risk of sounding redundant, when you lose employees, you have fewer people to do the work. This puts extra pressure on your remaining employees, who now likely have extra tasks to complete. It also increases your chances of losing productivity until you hire a replacement. This gap in productivity can continue until the new hire completes training, integrates with the team, and reaches the same level of productivity as their predecessor.
Improve brand reputation
Brand reputation is how people—literally everyone—perceive your brand. And, for investors, customers, partners, vendors, and potential employees, your reputation can affect how they interact with your business.
Instituting strategies to retain employees (and, therefore, make them happy) can greatly improve your brand’s reputation. This is anecdotal, but I’ve read many, many threads online about any given business. Almost universally, someone will chime in with how that business has treated them as customers, employees, and so on.
Word-of-mouth is real—especially on the internet. When employees are happy with their workplace and management, they’re likely to tell their family and friends about it. Positive word of mouth can spread. This can increase your reputation as a positive workplace and strong employer.
In the past few years, this has become increasingly important. These days, people want to support businesses who support their employees. They also want to work for businesses who do so—as a result, a positive brand reputation can help you attract and acquire even more talent for your workforce.
And once again, the cycle of positive outcomes can begin!