Do You Know How Important Employee Retention Really Is?

What is Employee Retention? The definition of employee is a person employed for wages or salary, especially at nonexecutive level. The definition of retention is the continued possession, use, or control of something or, the fact of keeping something in one's memory or, the action of absorbing and continuing to hold a substance or, failure to eliminate a substance from the body. 

Why is retaining employees important? Do you know how much you're spending on each new team member? The national average is between $7,500-$28,000! That's INSANE!!! Let's break it down... Each new team member will have found your open position from a job posting that you paid for. The drug test, background check, training and onboarding again all things you are paying for. Now, let's go even further... The team member you currently have that held the interview was not available to help a customer or be productive elsewhere, same thing happens with training and onboarding. All of these things NEED to happen, but it costs your company money. Not to mention, you are losing out on revenue from 2 team members now, not 1.

You may not think it's important, let's say for this conversation each new employee cost your company $10,000. If you need 100 staff to completely cover every position needed in your company, that's $1,000,000.00 just in hiring to staff your company one time. Now, over the next year or so you have to replace 30 employees that's an additional $300,000.00. 😬 You may have a smaller company that only has 30 employees. Let's figure it out. 30 employees at $10,000 is $300,000 in initial hiring costs. Now if you lose 10 employees over the next year or so it's an additional $100,000. 😬Remember, the amount for hiring does not include lost revenue, overtime paid to other employees etc.

Based on this conversation, do you know the first company's current retention percentage? 70%. The second company's current retention percentage is 66.67%. It may not sound too bad, but in a year, that's not a goal you want to hit. The percentage any company should aim for in retention is 90%. That leaves 10% for turnover which includes, college students, firing, retirees, and the occasional bad employee.

If your company is not where you want it to be, or should be, we can help! RetentionRoots Coaching focuses on your unique situation and works from the roots up to help cultivate a workplace that your employees are excited about. Visit www.retentionroots.com to book your coaching today. If you're not sure what your retention percentage is, there is a calculator on the home page. 

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