Why Retained Employees Perform 150% Better at Their Jobs

Heather Harper

Written by Heather Harper

Aug 8, 2018  - Last updated: Jun 3, 2019

Retained employees are employees who are likely to stay within an organisation and 'employee retention' refers to a businesses ability to keep its employees for long periods of time.

A companies employee retention can be represented by a simple statistic. To calculate the overall retention rate of employees within your organisation: select a measurement period (this could be as short as a month or as long as a year) and divide the total number of employees at the end of this measurement period by the total number there was at the start of the measurement period, and then multiplying it by 100.

In order to understand why employee retention is so important, it is important to understand the main reasons why employees leave:

  • Poor salary and benefits
  • Lack of career development opportunities
  • Lack of skills or appropriate training
  • Dissatisfaction with colleagues, leadership or management
  • Lack of work/life balance
  • Feeling like they are being treated unfairly

high turnover

It is also important to find out why your employees are leaving your organisation, to do this you could carry out confidential surveys and questionnaires to gather the feedback of every employee who has left the company.

You can also conduct exit interviews on everyone who leaves. These type of interviews are really valuable ways to gather a constructive insight and information as to why people are leaving. When conducting these, it is best to have the interviewer be someone who did not directly work with the employee that is leaving, as this will allow them to be more open and honest. Also, in these interviews you should ask questions that allow people to be constructive and not critical, for instance, questions about how the organisation can be improved to make employees happier.

Before continuing, here are some ways to improve employee retention:

  • Ensure that all of the new employees being recruited have a realistic idea of what the job entails and their areas for success, responsibility and development
  • Introduce effective appraisals and feedback meetings that are filled with praise and constructive criticism.
  • Promote a good work/life balance and ensure that all employees feel like they can share things in a trusting environment
  • Introduce a mechanism for staff to register and bring notice to dissatisfaction. Promote a sense of trust and confidentiality within this system so that everyone feels that they can openly communicate their worries and problems
  • Make sure you have effective training programmes and career development prospects for all employees, old or new
  • Ensure that there is a clear hierarchy, clear responsibilities for each role and a defined reporting system for tasks and problems.

employee retention

Retention programmes focus on the relationship between management and their workers. The promote competitive pay, benefits packages, employee recognition and employee assistance programmes - all ways to make employees more satisfied and motivated and happy at work.There are many benefits of having retained employees and many reasons why you should invest in keeping your employees retained within your company.

A high employee retention rate is cost effective. Having a high turnover rate within your organisation can be very expensive, with some people estimating that it can cost up to 50% of an employees annual salary to replace them. This will have a direct effect on the productivity of your organisation and will end up costing you, and your organisations, lots of money.

Therefore, keeping your employees retained saves the replacement costs of replacing each employee and reduces the indirect costs of losing employees such as decreased productivity or a loss of clients.

cost effective

Keeping your employees for as long as possible maintains performance and keeps productivity high. Recruiting and training new employees takes time and having unfilled positions mean that work isn't getting done, decreasing productivity. Besides, even when these positions are filled, there is a learning curb that most employees need to overcome before their work becomes profitable.

A high employee retention rate also increases morale, and this will make your employees work harder. Employees that enjoy the environment they are working in and the atmosphere that is promoted within the organisation are more likely to stay within your company.

Employee retention is important because it creates a positive working environment and strengthens employees commitment and motivation to the organisation. This healthy and happy environment will also attract potentially very successful new hires to the organisation.

Keeping employee retention high will keep the levels of consistency high. If employees are coming and going at random intervals then it will be virtually impossible to keep the momentum of the teamwork. Furthermore, instead of focusing on the big long term goals of the team the managers will be forced to focus on retraining people.

Keeping your employees retained also keeps the good talent and ideas within the organisation. Every time a good employee leaves, you're losing their talent, their organisational knowledge and their developed skill sets. You may also be unintentionally benefitting your competitors as the employees that are leaving your company are taking the skills and experience that you have taught them and using them in other similar companies.

In general, you can never instantly replace a good employee who has the hands on knowledge, experience and skill that your organisational desperately requires.

Employees also can't develop friendships if their colleagues are constantly leaving the team, and then joining again. This lack of opportunity to create bonds with other employees will have a knock on effect on their motivation and enjoyment of being in the company and will therefore reduce their productivity and effectiveness.

friendship at work

A final point, is that the longer employees stay in their job the more skills they require, the better the returns on your investments. Every time you hire a new employee your are making an investment, and the longer they stay in the company and the more high quality work they do for you; the more you get out of your investment.

"Retaining your top internal talent is critical in growing a successful business. A happy and retained employee will always outperform someone who is unsatisfied with their work." - Shane Scholefield, Factory Buys

So, overall, employees who are retained are 150% better at their jobs because of the things influencing their decisions to stay. They are more satisfied, more motivated and more productive - so they will be making your company more money and will therefore be better at their jobs.

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Heather Harper

About the author

Heather Harper is a psychology student from the University of Lincoln. She currently works as an intern for WorkStyle and is studying a Masters in Occupational Psychology at the University of Manchester.