Employee retention is an extremely important issue to all companies, whether small startups or large corporations. However, research has brought to light many misconceptions about attrition, which make it difficult to develop successful employee retention programs. When human resources (HR) professionals and upper-level managers recognize the importance of employee retention and actively try to correct their misperceptions, they put themselves in a better place to keep their employees happy, engaged, and fulfilled. Below is a look at some of the most common mistaken ideas about retention and its importance.
Attrition is inevitable.
While some level of attrition is, indeed, unavoidable, this fact can be a benefit for companies. Small rates of attrition provide opportunities for correcting hiring mistakes, acquiring better talent, and changing the strategic direction of a company. However, high rates of attrition can have resounding effects on an organization, and the belief that these rates cannot be changed is false. Research has provided clear evidence that attrition rates can be minimized. Change requires a strategic approach to employee retention programs that involves well-planned and executed policies, and ongoing assessment and analysis to examine the effects of various initiatives. Organizations should also keep in mind that strategic retention programs can reduce retention rates even during times of crisis or instability at a company. In fact, there are examples of decreased attrition rates during periods of compensation cutbacks at some companies. Creating a strategic, multifaceted employee retention program involves a large investment of resources, but the payoff is generally very high, if difficult to measure.
Turnover has little effect on the bottom line.
The costs of high attrition rates are often hidden. Unfortunately, this means that companies often consider turnover only a minor inconvenience. However, the effects of an employee quitting can seriously hurt a company’s bottom line. When employees are unhappy or disengaged, they are less productive. As people prepare to leave, their productivity levels plummet dramatically. Calculating the economic effect of this disengagement is difficult, as is judging the impact of that talented person joining a competing company. One Silicon Valley firm offered the conservative estimate that each employee quitting ultimately cost the company about $125,000. Companies also need to consider the impact on customers, some of whom may follow the employee to a new company, as well as the HR time and resource costs of making a new hire. In addition, the work that gets distributed to other employees while looking for a new hire can overburden people, increase tension, and may make them consider looking for new opportunities.
Employees stay and leave for similar reasons.
While some organizations have a decent idea of why employees decide to leave, they often do not really understand why other employees choose to stay. The reasons why people decide to leave are often unrelated to reasons that people decide to stay. The best employee retention strategies try to minimize the reasons for leaving and maximize the reasons for staying. During exit interviews, managers should ask employees what attracted them to the new job, as well as ask what made them start looking for the new job in the first place. Great candidates often receive a number of calls from recruiters, so companies need to be proactive about figuring out what makes employees stay.
Employees leave primarily for organizational reasons.
When employees quit, managers tend to cite a number of organizational reasons for the loss. These reasons may include things like unfair vacation policies, or few opportunities for career advancement. While these organizational factors may play a role in the decision to leave, many of the most decisive factors relate directly to managers. When managers do not understand how to tailor their approach according to each employee’s needs, workers can become frustrated. Micromanagement irritates some employees, while others feel lost when given too much autonomy. Excellent employee retention programs involve initiatives to teach managers about the role they play in employee satisfaction. Companies that invest in the managerial skills of their mid-level leaders as well as their executives tend to have lower attrition rates, and their employees are more likely to feel engaged and satisfied with their jobs.
Attrition has little impact on the customer.
When employees in sales, account management, or other customer-facing positions leave, organizations tend to overlook the impact on customers. The lost employee can cause the customer to feel disconnected with the company and may trigger some customers to look into competitors, especially if they had a strong personal connection to the employee. In addition, attrition can have a negative impact on the quality of the product or service the customer pays for, which ultimately injures the company’s reputation. Frequent employee changes also point to organizational instability and may cause the customer to lose faith in the company’s overall soundness. To keep continuity strong, a great deal of time and resources should be devoted to onboarding and training new hires.