As any small business owner or personnel manager could attest, managing the human resource can be the most critical challenge. Recruiting, hiring, and training new employees is a costly endeavor. In addition, each employee separation leads to a period of productivity loss. Even companies without “high” turnover rates, should understand, “What is employee turnover? ” Recognizing how retention rates impact overall success is an important step toward keeping the best talent.
Here are a few reasons every company should keep an eye on retention.
Having a lower than industry average turnover rate may not be enough. It may still be more cost-effective in the long run to invest in better retention efforts. Understanding long term trends can place companies in a better position to understand the actual ongoing costs.
Employee Group Rates May Differ
Another reason every company should carefully watch turnover rates is to understand who is leaving. While every employee is important, losing higher-performing employees has an even larger lost productivity cost. In addition, certain fields may be harder to recruit or take longer to train new employees. Organizations should monitor retention rates overall and within specific units or functions.
Duration of Employment Before Separation Matters
Tracking when employees separate can also provide insight into addressing a reason for turnover. Losing large numbers of new employees could indicate a needed change in selecting and on-boarding processes. Later separations could be due to things like company culture or lack of career opportunities.
Voluntary Vs Involuntary Separations Are Both Expensive
What is employee turnover? Should it count as turnover if an employee is fired for low productivity? While it is important to track whether an employee quit or was discharged, every separation has costs. Monitoring the number of employees discharged for not meeting monthly quotas could reveal a problem with management or training protocols.
Hidden Problem Indicators
Retention efforts that focus on understanding the needs of employees can also uncover serious workplace problems. Stay interviews are specifically designed as an opportunity for current employees to provide ongoing feedback to front line managers. This feedback can highlight serious problems like sexual harassment or abuse of power.
Retention Is About Success Not Numbers
Knowing that the retention numbers are higher than the industry average may give companies a false sense of comfort. The reality is, every worker separated results in wasted on-boarding costs and lost productivity. Tracking turnover specifics can almost always provide important insights into employee relationships.