The secret behind a profit-making business is its highly skilled and capable employees.
In the same manner, the secret behind loss-making business is its low skilled and incapable employees. Therefore, the need to retain the experienced and qualified people has been a challenge for business organizations over the time.
Employee turnover is very costly for a business, as it has already spent money on developing those employees. However, No company can force their employees to stay at the organization.
On the other hand, forced retention can result in either absenteeism or presenteeism which can be considered killers of the organizational performance. The only alternative HR professionals have to do is to introduce some retention policies which will really motivate people to work with the company, because attention for employee retention is of the importance in the business world.
Individuals working together in an organization to earn their bread and butter as well as make profits are called employees. Employee retention is a function of the HR department tasked with reducing the number of employees leaving the company by improving key processes and conditions. The ultimate aim is happier, loyal employees that actively want to remain with the company. Furthermore, it is a process in which the employees are encouraged to remain with the organization for the maximum period of time or until completion of the project. Before retention policies are made, senior managers ought to know that the company suffers from the turnover problems. Hence, let’s find out why employees leave the organization.
Why employees leave
Employees tend to leave, as they are no longer satisfied with the company. Employee’s decision to leave the organization comes up with the idea of low job satisfaction. Job satisfaction is the level of contentment that employees feel about their work that can affect the performance. It is obvious that employees leave the company, due to the discontent that they feel about their job. There are various ways that cause low job satisfaction, ultimately resulting in higher labour turnover. Employees should be motivated to remain with the company and positively contribute towards the profitability. Even though motivating factors can vary from person to person, some common factors can be identified.
Once employees feel that this is not the job that they really expected, they might decide to leave. Specially, when growth opportunities cannot be expected, people look for other organizations that provide employees with growth.
Employee training is very important. When people cannot keeps hopes about promotions, they get discouraged. People work for money, unless they are paid in proportion to their knowledge and skills, they cannot be prevented from going for another company. When promotions are made on the basis of sexism and favoritism, hardworking people are disillusioned at the organization and subsequently leave. Moreover, lack of trust between employees and the management, lack of appreciation, stress from over work can result in turnover. The fact that skilled employees leave the organization means the business loses its spirit. The cost caused by the turnover is immeasurable. Let’s find out how.
Cost of turnover
Almost every company allocates a significant amount of their profits and time so as to make their employees armed with modern knowledge and skills that pave the way for winning the market competition. When these employees leave the company, they take knowledge and skills acquired at the company into other companies. The situation goes from bad to worse, as most of the employees leaving the business will join with competitors in the same industry.
Once employees who are considered an asset to the organization are recruited by the competing companies in the same industry, the previous company that bore the financial burden to develop employees is unable to deliver better results in the market. This will result in low customer satisfaction. In other words, what needs to be noted is that low employee satisfaction in the organization can lead to the low customer satisfaction in the market. Ultimately company will incur losses.
Employees working for a longer period of time are more familiar with the company’s policies, guidelines and thus they adjust better into the organizational culture.
If people are recruited newly, extra money and time has to be spent on making them familiar with the culture. Old employees are more loyal to the organization than newly recruited employees. When employee loyalty is shattered, company can never keep customers loyal to the brand. Disloyal employees never want to build the customer loyalty. Hiring competent people is not an easy task. However, company has to hire people at the rate at which people leave the company. It can be seen that how costly employee turnover is.
How to retain the best
Retaining highly skilled and competent employees is a hot topic in today’s HR discussion. A company should not retain all the employees in the organization. If so, it is also going to be very costly. What needs to be noted is that company must not hesitate to fire poorly performed employees. However, emphasis ought to be given to make retention strategies for the best interest of employees.
Employee recognition is one of the most important factors which go a long way in retaining employees. Everyone likes to be appreciated. Holding money consuming functions to admire employees is not essential, leaders should appreciate their subordinates at every possible time. Once employees are not overloaded with works, they can be creative and add a competitive advantage to the company. The responsibilities must be delegated, according to the individual’s specialization, qualifications, experience and interests. Further duties should not be assigned without providing a proper training.
Freedom of expression is of utmost importance at the workplace to retain employees. Employees should be able to express what they feel about the company and complain even against CEO. If an employee resigns, reasons must be widely discussed. Many employees, especially female employees leave the workplace, after marriage.
The main reason may be work-life imbalance. Hence, work-life balance strategies coupled with monetary satisfaction should be introduced. Creating employee friendly culture is a must, as many workers leave, especially, at the grassroots level, due to the bad behaviour of co-workers.
Employee turnover can cause domino effect, tarnishing the goodwill of the company. It is proved that sometimes, people are pushed out of the organization, due to the low job satisfaction. Nevertheless, at some cases, people are pulled by better chance in the industry. Having avoided all these negative factors, an organization should be able to retain those important for the organization.
(Amila Muthukutti holds a BA in Economics from the University of Colombo and can be contacted via email@example.com)