Importance
of Employee Retention
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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.
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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.
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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
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Contributing
Writer: MONIKA SAH, MBA Student monikakumari.1989@gmail.com
Also
Read: How
To Increase Employee Retention - Strategies
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