Even as the Great Resignation comes to a close, many industries are still struggling to find and retain talented workers. Food service and hospitality, for example — both of which require in- person attendance — have seen high quit rates since the pandemic, in part because of burnout and a rise in available remote jobs. The importance of employee retention cannot be understated during this unprecedented shift in the labor market.
Perhaps nowhere is the importance of employee retention more obvious than in the accounting department. On the conservative end, the cost of replacing a worker may be as low as $1,500, as one convenience store chain found. That is still not cheap, and higher estimates span from $3,500 to $10,000. These costs account for overtime pay, recruitment, performing background checks, training new hires and lost productivity.
Retaining Younger Workers
Many industries are grappling with their staff entering retirement. Construction, aviation and defense, for example, face an aging workforce. Simultaneously, these sectors are struggling to attract and retain younger talent.
Younger workers are increasingly disillusioned with their jobs and are seeking higher wages to account for rising costs of living. A 2023 survey found that 61% of millennials and 78% of Gen Z workers were planning to search for a new role within the next year, underscoring the importance of employee retention.
Holding On to Talent
Often, the workers who quit voluntarily are the most skilled. These employees have the talent, drive and industry knowledge to transfer to another job successfully, making their absence an even bigger loss for the company. Keeping them on the team helps maintain high levels of performance and productivity.
Improving Morale and Productivity
Lower turnover rates can help keep employees in high spirits. Having a consistent team allows people to bond with their co-workers and can make them happier to come to work. It also gives employees a greater sense of security knowing their workplace recognizes and values its staff.
Higher morale improves workplace engagement. A Gallup report found that actively disengaged workers account for $7.8 trillion in lost productivity worldwide — equivalent to a staggering 11% of global GDP — which further underscores the importance of employee retention.
Creating a Solid Reputation
Investors and job applicants notice companies with high retention rates. It sends the message that the businesses are good places to work, have competent management and are financially stable. Building a strong reputation for good leadership and corporate culture gives companies a better chance of attracting investors and job seekers.
Improving the Customer Experience
Another area in which the importance of employee retention is clear is customer care. New hires often make frequent mistakes and may need help assisting customers.
In contrast, senior team members are usually more adept at engaging with clients. They know the answers to common questions, can quickly locate items customers are looking for and are better at problem-solving. Keeping them on the team makes a company look more competent and can give customers a better experience.
Underscoring the Importance of Employee Retention
The good news for employers is that most industries are seeing lower turnover rates. However, workers are empowered and have more options than ever when seeking employment. Retaining talented staff members improves morale, creates a better customer experience, saves money and boosts productivity. There has never been a better time to invest in employee retention.