Each month we tap into the AHRI:ASSIST resource centre to find the most topical question members are asking. This month we look at employee retention.
How important is employee retention?
Retention of talent is very important for organisations. Companies that look after their employees and keep their good performers long term have better engagement, higher productivity and profitability. It makes good business sense to retain staff that add value and contribute to the organisation’s goals and objectives. Many companies do not realise the many costs associated with high turnover until it is too late. Actively implementing retention strategies is a good way for organisations to demonstrate their commitment to employees and for keeping their talent.
We do not measure turnover rates. Where should we obtain this data?
You should consider regular reporting of turnover rates to see any trends within teams, departments and the organisation as a whole. Turnover costs the business time, effort and money. Exit interviews and exit reports can assist with turnover calculations. Payroll may well be able to assist with collecting this data from their system. To see example turnover calculations, refer to the AHRI:ASSIST workforce turnover section and workforce turnover checklist template.
Who is responsible for employee retention?
Retention is a broad area and many people are involved in its activities. The senior leadership team is responsible for driving the company culture that values and supports talent within the organisation. They must lead and demonstrate best practice retention strategies and actions as instilled in the policies, procedures and objectives set by the CEO. All managers and line supervisors are responsible for managing their staff in a professional and engaging manner which contributes to higher retention rates. Employees are responsible for working collegially and providing a supportive work environment. HR is often a driver and project manager in terms of designing and delivering retention strategies and activities. They work closely with senior management in the implementation of retention initiatives.
What is best practice in turnover rates?
Reported employee turnover rates commonly range anywhere from two per cent to 30 per cent, per annum.
As a guide, six per cent turnover is often cited as healthy retention. Concern may be warranted if turnover is 15 per cent or higher. Take note that turnover rates vary due to a number of factors; the type of industry, company size, organisational culture and leadership and management priorities.
What are the main factors that affect retention?
There are many factors that affect retention and they include poor leadership and incompetent management, lack of training and development opportunities, lack of suitable rewards and benefits, lack of succession planning and career development, little flexibility with work arrangements and the culture of the organisation. Each topic is discussed in detail and useful information can be located in the AHRI:ASSIST information sheets and templates.
The five characteristics of an employer of choice:
- Recognises and rewards staff well
- Invests in the learning and development of its people
- Operates ethically and fairly at all times
- Has family/life friendly workplace practices
- Management is passionate and engaging to work with
This article is an edited version. The full article was first published in the July 2015 issue of HRMonthly magazine as ‘AHRI:ASSIST Q&A’. AHRI members receive HRMonthly 11 times per year as part of their membership. Find out more about AHRI membership here.