Learn more about the benefits of strong employee retention strategies to reduce employee turnover.
A 2019 report from Gallup revealed that US businesses lose 1 trillion dollars each year due to employee turnover. Since then, employee turnover has increased exponentially. Over half of the US workforce suffers from workplace burnout, a significant contributor to turnover across all industries. Yet, for employers to reign in the growing costs of turnover, they'll need to understand the benefits of employee retention and find strategies to convince employees to stay with their organization.
Employee retention is the ability of an organization to retain its current employees. High employee retention is typically achieved through various methods and compensation efforts, including benefits, competitive pay, a positive workplace culture, access to quality mental health and medical care, and development opportunities. Employee retention cuts costs and improves business performance by decreasing hiring and training costs, improving company morale, maintaining experienced employees, retaining organizational and process knowledge, etc. Employee retention improves company performance and lowers unnecessary costs and roadblocks to growth.
An effective employee retention program targets employees' unique needs and builds organizational resilience in times of change. While natural turnover is an expected part of business, effective employee retention strategies can significantly decrease voluntary turnover. Business costs related to turnover include a loss of productivity due to lack of employee engagement, recruitment costs, administrative costs, training and onboarding costs, the loss of experienced employees with proprietary organizational information, and the time spent on these activities. High voluntary turnover can also cause a decline in company morale due to the absence of coworkers and increasing workloads for staff.
Your organization's human resource department plays a critical role in employee retention. These professionals manage employee relations, compensation, benefits packages, and disciplinary needs and support employee development. However, HR staff is also responsible for recruitment tasks like finding, screening, interviewing, onboarding, and training new employees. Without an effective retention program, HR professionals are inundated with the costs and time-consuming tasks of constantly recruiting and onboarding new employees.
As a result, there is less time available to take care of the human-centered duties of assisting employees facing challenges in the workplace. Deprioritizing HR's role to focusing entirely on hiring and administrative tasks leads to increased burnout in the industry. New data reveals that 53% of HR leaders are burned out, and 48% are looking for a new job. Designing an effective employee retention program is essential to the performance and retention of HR professionals in your organization.
In some areas, the return on investment (ROI) of retaining employees is evident. For instance, an organization can calculate the direct costs of recruiting, hiring, and onboarding a new employee. However, it can be more challenging to calculate the value an experienced employee could provide for your organization in the future.
Similarly, it can be difficult to provide hard numbers to define the value specific services bring to your organization. A retention program does more than simply keep employees from leaving. It builds an environment that engages employees and makes them more productive. For example, improved healthcare and wellness programs can lead to decreased employee absenteeism, offering a valuable ROI annually. A recent McKinsey study revealed that effectively treating anxiety and depression could lead to a 4:1 return ($4 back on every $1 spent), and addressing health inequities between employees of different races could result in a savings of around $80 billion for US employers.
Our study at Modern Health analyzed records of 149,451 unique employees across 104 customers and found that retention was 5.5% higher among employees who engaged with Modern Health versus those who did not. For an employer with 10,000 employees, turnover savings of 5.5% would result in an additional 137 employees retained. Assuming an estimated replacement cost of $28,155 to $42,233 per employee, employers would save $3,857,235 to $5,785,921.
Value on investment (VOI) is an umbrella term that considers the hard costs associated with ROI and the value your organization can get from implementing a specific service. VOI can include:
By offering your employees services that provide value in multiple ways, your organization can see improvements across various areas that increase your bottom line. As a result, it's essential to determine the value of each service you offer employees to improve retention.
Retaining top talent isn't only about minimizing the direct costs of turnover. It also creates opportunities for companies to grow and thrive due to the performance of engaged experienced employees. Employee retention provides these benefits for organizations across all industries.
To improve employee retention, you must first know where you stand and what you hope to achieve. These strategies can help you examine measurable data to gauge and improve employee retention.
Comprehensive mental health benefits can significantly impact an employee's decision to stay with an organization. By creating a culture of support and open communication, employers can provide the resources employees need to reduce anxiety, improve engagement, and reduce workplace burnout. To learn more about valuable employee retention methods, download our e-book, Employee Retention Strategies for Organizational Success.
Modern Health is the comprehensive mental wellness platform that combines the WHO well-being assessment, self-service wellness kits, an international network of certified coaches, and licensed therapists available in 35 languages all in a single app. Modern Health empowers employers to lead the charge in acknowledging that mental health is just as important as physical health, de-stigmatizing the conversation, and increasing accessibility of mental health services for all.
Modern Health’s clinically-designed substance use support addresses the entire spectrum of needs, providing proactive detection and outreach, comprehensive clinical treatment, specialized care coordination for members with high-acuity needs, and evidence-based preventative care and education.
Lydia Wright, Senior Manager of Global Benefits at Atlassian, and Emma Woodburn, Benefits Specialist at Intel, join Modern Health at Elevate 2022 to discuss how culturally centered care and engagement campaigns in preferred languages and time zones significantly boosts employee benefit utilization.