What is Retention strategy?
A retention strategy is a set of procedures that an organisation uses to keep its employees (e.g. through compensation, policies, benefits, office perks, etc.). When developing those strategies, a company's primary goal is to reduce employee turnover, or the number of employees who leave a company during a given time period.
Even though a low turnover rate can be beneficial depending on the nature of the industry, higher percentages can be costly in terms of both money and time. Replacing an employee can be costly, costing anywhere from 6 to 9 months' salary depending on the position. Losing high-performing employees can have an impact on team productivity and morale because it necessitates changes to a department's or team's daily operations and workflows – especially if the departing employee is a manager or higher.
Why is employee retention strategy important for an organization?
1. Consistent productivity flow:
Professionals who work for a company for an extended period of time add significant value to the organisation. In a retention strategy, they have a thorough understanding of the company's vision and are well-versed in how to meet the expectations of their role . Furthermore, they have acquired all of the necessary skills to effectively complete tasks on a daily basis.
2. Cost savings for the company:
A retention strategy involves retaining skilled and dependable employees is financially beneficial to a company. Scouting, recruiting, and onboarding new employees is costly and time-consuming, with an average cost of $14,936 and a replacement time of 94 days. With a good retention plan, companies with lower employee turnover costs have more funds to invest in other areas of the business.
3. Reduced training time:
With a good retention strategy, long-term employees are well-trained and confident in their ability to carry out their daily responsibilities. They have established effective communication channels with their manager and colleagues and understand how to complete projects on time. With a retention plan, new employees require training and time to adjust to the new environment and its requirements, which can temporarily reduce team productivity.
Types of employee retention strategies
The different types of employee retention strategies:
1. Providing employees with challenging and meaningful work.
2. Investing in employees’ professional development and training them in cross-disciplinary skills.
3. Offering benefits package.
4. Adopt a social recognition system to recognize high performing employees.
5. Creating a culture of open communication.
6. Not overburdening employees.
7. Establishing clear expectations and policies.