What Is Employee Retention?
Simply put, employee retention is the ability to attract and keep workers employed at a business. It’s the opposite of employee turnover, which occurs when workers either voluntarily leave a company (voluntary turnover) or are terminated (involuntary turnover).
Retention is measured by the employee retention rate. This is calculated by subtracting the number of workers who have left during a given time period from the total number employed at its beginning. Dividing the remaining number by the total number gives you the percentage rate of retention for that period.
Why Is Employee Retention Important?
The retention of employees is important for the following reasons:
- It’s more cost-effective to retain employees than to recruit, hire, onboard, and train new ones.
- Employee turnover interrupts company productivity. Employees who must shoulder additional duties during a worker’s absence and adjust to working with a new staff member may not be as efficient as they would be otherwise. This includes managers, whose time spent on termination and hiring processes is diverted from other important tasks.
- Employee retention is better for morale among the workers who remain: otherwise, they may begin to wonder if they’ll be fired next, or whether they’d be better off elsewhere.
Employee Retention Strategies
Employees may leave for any number of reasons: dissatisfaction with the job, the emergence of better opportunities, major life changes, or in response to a work dispute or perceived injustice. Here are some strategies for preventing turnover:
- Conduct routine check-ins. Talk to your employees regularly about what is going well, what isn’t, and how they’re feeling about the job in general. Ask for feedback and give them a chance to ask questions.
- Allow employees to communicate anonymously. Using anonymous surveys about how the company is doing gives workers the opportunity to communicate without fear of retaliation.
- Empower your employees. Express trust in your workers in areas within their roles and skill sets and give them the freedom and opportunity to improve upon or add to them.
- Don’t micromanage. In addition to implying disrespect or mistrust, micromanaging can make employees feel nervous and distracted, which makes them less productive and more dissatisfied with their job. It also discourages learning and growth.
- Be transparent. Communicate openly with team members about successes, challenges, accomplishments, and policies. This increases employee comfort and effectiveness and helps to avoid unnecessary drama or costly mistakes.
Improve Employee Retention With a Business Accelerator Program
Enrolling in a business accelerator program and working one-on-one with a business coach is an excellent way to get guidance on employee retention strategies for your business. If you’re a growth-minded small business in the Northwest Chicagoland area, consider applying for admission to an accelerator program with Next Level Northwest.
Next Level Northwest is a business acceleration public-private partnership serving the Northwest Chicagoland region. We support regional and local businesses through collaborative and innovative initiatives to help grow the economy. Download our Program Overview PDF here.
Ready to take your business success to the next level and become a Next Level Northwest graduate? Download and prepare your application following this process today!