Anyone who has ever worked in the field of human resources (HR) knows what a formidable challenge it can be to find and recruit essential talent. But retaining and developing that talent may be an even more daunting task. Nevertheless, reducing employee turnover and optimizing talent development are fundamental to a company’s success.
Fortunately, as difficult as it may be to find and hold on to the best workers, it is far from impossible. The key is understanding why employees stay, as well as why they choose to leave. Once you understand that, it is much easier to formulate best practices to drive employee loyalty.
Why It Matters
Though recruiting may consume much of an HR professional’s time and energy, the work done in the arena of employee retention is just as important, if not more so.
This is because the departure of an employee not only creates a vacuum in the workflow that HR must move quickly to fill but it also causes profound disruptions that reverberate across the organization and its employees.
It’s estimated, for example, that in even a small retail store, the monetary losses incurred by the departure of a single worker can range from $3,500 to $25,000. These figures reflect not only the loss of that employee’s output but also the costs associated with recruiting and training a replacement.
But the impacts of employee turnover extend far beyond the financial deficits created by a vacant position. Rather, every worker who leaves the company affects the organizational culture overall, often in highly detrimental ways.
Indeed, studies show that high employee turnover rates are strongly associated with low workplace morale and decreased worker productivity.
Optimizing the HR Lifecycle
Given the significant and wide-ranging impact of employee turnover on enterprise performance, HR professionals must be proactive in their efforts to retain and develop employees.
This often means instituting retention efforts across the entire HR lifecycle, from recruiting and training to development and management. Such efforts also necessarily involve the formulation of best practices for administering departures when they do occur.
The HR lifecycle, after all, is an integrated and comprehensive whole. The interconnectedness and interdependence of each stage of a company’s relationship with its prospective, current, and former employees necessitate that each stage is undertaken to reduce employee turnover rates to the greatest possible extent.
Recruiting the Right Employees
Because retention efforts should begin with the recruiting process, one of the first and most important tasks of an HR professional is to recruit the right people for the job.
Recruiters must not only have a deep knowledge of the essential skills, attributes, and characteristics required in each job function, but they also need to engage in a systematic and well-structured interview process that facilitates efficient but thorough candidate screening.
In addition to optimizing the screening process, HR leaders can also increase their efficacy in the first stage of the HR lifecycle by developing benefits packages that will attract top talent.
Today’s workers, for instance, often expect more than has been traditionally offered to workers of previous generations.
In addition to a reasonable wage and health, life, and retirement insurance, for example, workers typically expect additional perks that will provide an added bit of security and support their overall quality of life.
For example, benefits such as a health savings account (HSA) can be especially appealing to workers, particularly those who have or plan to start a family. An HSA gives workers funds for medical expenses not covered by insurance, minimizing out-of-pocket costs in the face of high health insurance deductibles, copays, and other services.
Enhancing Employee Management
It may seem that once you’ve retained the right candidates, the hardest part of your job as an HR leader is over. But, as has been shown, recruiting is only half the battle. Now you have to keep that hard-won talent. And now, more than ever, that means prioritizing your employees’ professional development and career progression.
Studies show, for instance, that today’s workers rank the opportunity to learn as one of the top reasons they decide to take a job. But when workers feel stifled in their careers, when they feel deprived of the chance to hone existing skills and to acquire new ones and, above all, when they feel that they are likely to go no further in the company, they are also more likely to leave it.
Thus, a crucial aspect of reducing employee turnover is by fostering a culture of continuous improvement. The goal is to keep employees engaged with and invested in the company by providing a clear career trajectory and ample growth opportunities. In this way, you are helping to foster your employees’ loyalty to the company by demonstrating the company’s loyalty to them.
Managing Departures Effectively
No matter how successful your efforts to retain your employees may be, it is inevitable that departures will occur. Workers will retire. They’ll leave for personal reasons. They may even leave to pursue other opportunities simply because they do not feel they mesh with the organizational culture of your company.
It happens. But it is possible to minimize the negative impacts of an employee’s departure. You will want, above all, to try to make the departure as amicable as possible, including working with the employee to ease their transition out of the company. If the departure is amicable, join with your staff in celebrating the employee. Send them off with a party, shared memories, and best wishes.
Ideally, you may also decide to recruit a replacement internally and, if the departing employee is willing, engage them in training their replacement. This can help reduce or avoid the costs of external recruiting while also minimizing the distress and disruption the other workers may feel.
Employee turnover is one of the greatest threats to organizational performance, costing the company thousands of dollars, draining employee morale, and sapping productivity. However, there are many improvements HR professionals can implement to reduce turnover. This involves optimizing the HR lifecycle and embedding retention efforts throughout the recruiting, management, and departure phases.