An effective Employee Retention Program is a systematic effort to create and foster an environment that encourages employees to remain employed by having policies and practices in place that address their diverse needs.
A company's employees have always been a key asset but today, more and more companies are realizing that their people are by far their most important asset because in a world where technologies, processes, and products are quickly duplicated by competitors, and the pace of change and level of competition are constantly increasing, people are the key to the most reliable sources of advantage—better service, increased responsiveness, stronger customer relationships, and the creativity and innovation that keep a company one step ahead.
WHY EMPLOYEE RETENTION IS IMPORTANT
The process of retention will benefit an organization in the following ways:
1. The Cost of Turnover: The cost of employee turnover adds hundreds of thousands of money to a company's expenses. While it is difficult to fully calculate the cost of turnover (including hiring costs, training costs and productivity loss), industry experts often quote 25% of the average employee salary as a conservative estimate.
2. Loss of Company Knowledge: When an employee leaves, he takes with him valuable knowledge about the company, customers, current projects and past history (sometimes to competitors). Often much time and money has been spent on the employee in expectation of a future return. When the employee leaves, the investment is not realized.
3. Interruption of Customer Service: Customers and clients do business with a company in part because of the people. Relationships are developed that encourage continued sponsorship of the business. When an employee leaves, the relationships that employee built for the company are severed, which could lead to potential customer loss.
4. Turnover leads to more turnovers: When an employee terminates, the effect is felt throughout the organization. Co-workers are often required to pick up the slack. The unspoken negativity often intensifies for the remaining staff.
5. Goodwill of the company: The goodwill of a company is maintained when the attrition rates are low. Higher retention rates motivate potential employees to join the organization.
6. Regaining efficiency: If an employee resigns, then good amount of time is lost in hiring a new employee and then training him/her and this goes to the loss of the company directly which many a times goes unnoticed. And even after this you cannot assure us of the same efficiency from the new employee