Employee Retention - Definition, Importance & Components
What is Employee Retention?
Employee retention is the overall strategy or ability of an organization to retain its best employees and hence maintain a lower turnover. An organization is able to achieve this by adopting various employee retention programs. Employee retention is and should be one of the main focus areas of the human resources department in any organization.
An employee retention program involves steps starting from identifying the major contributors in the organization, and designing schemes to involve them with the organization to ensure that they do not leave. The success of these programs is measured by simple metrics like retention ratio, and turnover.
Importance of Employee Retention
Each organization spends a lot on attracting the best talent. These employees contribute a lot towards the success of the company. All these contributions directly impact the bottom line of the company. The employees who stay with the company for longer time contribute efficiently and become integral part of the company and the position. Now if these employees leave the company and join the competitor, this would be mean double loss for the first company. First they will be directly impacted by the employee not being available and secondly the employee is now contributing to the competition. Also the person who may replace may not be able to come at par that early.
So better is to retain the employee and make sure he/she remains motivated.
Components of a good Employee Retention Strategy
Typical strategies used to retain employees include
1. Better Job Design to enhance motivation and engage the employee.
2. Good compensation & benefits so that the employee does not look for better paying opportunities outside.
3. On job training and training helps the employee to remain relevant and add to the skills and contribute back to the organization
4. Better perks like insurance, car, house etc. which makes sure that employee feels comfortable and secure & good quality of work life (QWL).
5. Rewards and Recognition go long way in valuing the employee and making sure that he/she stays.
6. Inclusion in company decisions will give employee the confidence of being an important part of the company.
7. Timely interaction with the employees to make sure they are not dissatisfied with the job or role so that steps can be taken to improve the situation.
8. In case employee decides to leave, proper channel and process should be in place to make sure company can communicate options and listen to the reasons so that employee can take a more informed decision.
The above strategies are just few steps which a company can take. Employee retention is very subjective and may vary for different companies and different employees.
Advantages of Employee Retention
1. A lot of investment is needed to train an employee and to make him productive. The employee retention makes sure the employee stays and applies the learning for the growth of the organization.
2. Employee retained in organization feel part of the overall vision and become better contributors in the long run.
Hence, this concludes the definition of Employee Retention along with its overview.
This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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