Why Employee Retention Rates are Vital to Your Business

The present economic environment in the UK has not been conducive to good business. Rising costs and shrinking markets have created a precarious climate, and one which businesses are fighting hard to navigate. There are many ways in which businesses can weather the short term, but they still must consider longer-term factors when addressing longevity – a stand-out factor of which is employee retention. But what is it, and how can you as a business improve it?

What is Employee Retention?

Employee retention essentially describes the longevity of a given business’ workforce. It tracks employee turnover as a key metric, itself being the rate at which workers join and leave a business. If employee turnover is high, this means a significant volume of employees are leaving the business, or that employees are leaving after relatively short periods of employment; sympathetically, this means that more employees are being hired and trained.

Why Does Employee Retention Matter to HR?

On a core level, employee retention is important to monitor in relation to business growth and success. High employee turnover is expensive, between recruitment fees, the cost of training and other onboarding tasks, and the downturn in productivity that can result from populating a department with new starters.

Employee retention has obvious consequences for business longevity and success, but is also an extremely important vector for HR to track in particular. High levels of employee turnover can indicate endemic issues within the business, whether with regard to problem employees or departments, wider issues with company culture or even failures with regard to remuneration. 

Improving Employee Retention

As a business, your objective should be to keep employee turnover as low as possible, hence preserving high employee retention. This saves your business money in the medium-term, and ensures talent stays within the business in the long term. In order to do this, you need to address the chief causes of high employee turnover in turn. One of the immediate changes you can make to improve turnover is to review your business’ onboarding process. 

Onboarding is a leading route by which employees make long-term employment decisions, and poor onboarding can have a disincentivising effect. Investing further in your HR department, such as through lightening the load with a robust human resource management system, can improve onboarding outcomes by creating headroom for hands-on training; HR investment can also make employee resources much easier to access. 

Another key way to improving employee retention is to review your company’s wider culture. Are employees integrating well, or are there systemic issues preventing worker cohesion? Encouraging collaboration and allowing flexible work can go some way to addressing your company’s culture. 

Finally, there comes the matter of compensation. Employees must be paid well for their time, and are becoming more recognisant of their worth on the national stage. Without a competitive salary offering and perks, employees are more likely to look for their worth elsewhere.