The Importance of Employee Retention

employee engagement employee retention leadership leadership culture leadership development the importance of employee retention turnover why is leadership development important Mar 30, 2021
The importance of employee retention

I saw an article recently titled “Nearly a third of workers don’t want to ever return to the office.” shared this particular title but I’ve seen several others from SHRM and multiple legitimate websites… The issues we’ve all faced over the last year have forced nearly every business to consider some significant changes in how it operates. I’ve also heard a number of business owners, staffing professionals, and even front line employees comment on how much government subsidies that have been handed out to individual claiming to not have work available, which have gone largely unchecked the entire time, are making it even harder to get the personnel the need to actually show up to work.

Interestingly enough, the incentives for individuals to avoid reporting back to work never seem to be mentioned in any of the articles about how many people don’t want to return. I’ve also found it odd that none of the articles I’ve seen have referenced a single employee engagement statistic. While it’s been several years since I’ve conducted an employee engagement survey, the averages when I did showed that around 20% of employees were actively engaged, about 50% were neither actively engaged or actively disengaged, and as much as 30% of an organization’s workforce tended to be actively disengaged. Each time I’ve provided an employee engagement picture with leaders since then, I’ve suggested that they picture the engagement scenario as ten rowers in a boat; two are rowing hard to keep the boat moving forward, five are holding their oars and just happy to be in the boat, and the remaining three are doing what they can to actually sink the boat!

With that image now hopefully etched into your mind, I’ll share that the most recent Gallup numbers I’ve been able to find show that nearly 40% of the American workforce is now considered to be actively engaged. To be completely honest with you, I’m struggling to understand how the percentage of actively engaged employees could have double, rising over three percent in just 2020 alone, while I’m hearing so many employers struggle to find people to fill their open positions and I continue to see articles about the number of folks who don’t want to return to their office. I suppose this may all tie back to George Canning saying, “I can prove anything with statistics except the truth”?

What does any of this have to do with the importance of employee retention? Moving forward, we’ll look at several of the significant costs any business faces when employee retention suffers. I opened with those details about employee engagement because engaged employees are far less likely to leave! Further, they’re also the ones who typically carry the bulk of the load while they’re with the company. The Harvard Business Review shared this from a global survey conducted by the Corporate Leadership Council:

“Company leaders won’t be surprised that employee engagement—the extent to which workers commit to something or someone in their organizations—influences performance and retention. But they may be surprised by how much engagement matters. Increased commitment can lead to a 57% improvement in discretionary effort—that is, employees’ willingness to exceed duty’s call. That greater effort produces, on average, a 20% individual performance improvement and an 87% reduction in the desire to pull up stakes.”

Just the discretionary effort alone should make a solid case for the importance of employee retention, especially with how closely engagement ties to retention. And current circumstances contributing to the difficulties in filling open positions make retention even more critical.

Next time, we’ll begin working through a few of the direct costs a company faces when retention is poor. Until then, you’re welcome to check out a complimentary webinar Cindy and I offer on How Top Leaders Set the Tone for Recruitment and Retention. Hopefully it fits your schedule...