Workplace is going away. Move to Workmates
now to get the first 90 days free.

Why Does Employee Retention Matter?

Feb 10, 2022
15-day free trial workmates logo Try Out Our
Employee Engagement Software For Free
checkmark No credit card needed checkmark Less then 5 min to set up

Are high sales rates and ROI the true measure of a thriving business?

While a continuous streak of customer acquisition and high-selling products is impressive, these all prove meaningless without a team of competent employees to carry out the business’s most essential operations.

When employees start leaving one after the other, it is usually not a good sign for any business. The failure to acknowledge and work through workplace issues affecting employee motivation and performance could potentially lead to a business's downfall.

In contrast, working hand-in-hand with staff to improve work performance and employee satisfaction is the first step to implementing an effective employee retention program.

What is employee retention?


Employee retention is the capacity of any company or business to keep its staff on payroll. Businesses with high employee retention rates imply empathetic management and well-accommodated staff. After all, why would people want to leave a company that adheres to their needs and demands?

There are internal and external factors that affect how well a business can encourage its workforce to stay.

During the onslaught of the COVID-19 pandemic, companies worldwide experienced a dramatic decrease in their in-house workforce. If not due to income loss and forced closure, some employees had to resign to protect themselves from the deadly virus. Others chose to find a more convenient money-making alternative, either in the form of a home-based job opportunity or a new business venture.

COVID-19’s economic impact is an example of external circumstances that test employee retention. Although the pandemic is out of the employer’s control, there are still specific countermeasures that they can work on to adjust to the sudden shift in employee expectations. These countermeasures involve adjustments in the workflow, chain of command, and task distribution. It would not be reasonable to use the pandemic as an excuse for not being able to revise company policies for the benefit of the staff.

On the other hand, some of the most common internal factors that influence employee retention include salary rates, employee benefits, stress management in the office, and team dynamics. Overworked and underpaid staff are likely to resign and find job opportunities with higher offers. If the workplace is demotivating and tolerates toxic behavior within the management and staff, it discourages people from staying. At the same time, the lack of opportunities to advance their career are huge red flags, especially for tenured employees.

Why is it a relevant factor in a business’s long-term development?

Retaining employees, whether old or new, is a sign of empathy and concern for the welfare of the staff. Any business would find it almost impossible to advertise their products, engage potential customers, and sell without a team to back them up. 


Who will carry out their marketing strategies? Who will engage interested buyers and address customer concerns? Who will represent the company and leverage its success with the business’s core objectives?


That said, employee retention is crucial in the following:


Reducing operational costs — Replacing tenured staff with new hires is costly for any business. The constant need to hire and train new personnel skews the time and resources meant for gaining stability and securing ROI for the business. Instead of moving forward, companies are held back by the repetitive cycle of guiding newly hired staff and orienting them about workplace culture. 

Whereas, when trainees are molded into experts in their field, the company is also equipped with a well-oiled combination of skills and broadened knowledge base that enable companies to exceed customer expectations. More satisfied customers also mean more earnings for the business. 


Boosting employee productivity — Employees are driven by management that proactively exhibits a consistent need to grow with their team. When staff observes that their colleagues are satisfied and encouraged to stay with the company for a prolonged time frame, it speaks volumes. It shows that the company values them as key players in sustaining and growing the business exponentially.


Reinforcing brand credibility — Customers are more empowered thanks to the interconnectivity of social media platforms. It is easy to expose brands abusing the rights and welfare of their employees. In contrast, businesses that encourage resilience, teamwork, and competence among their staff tend to gain the trust of their target customers. The drive to challenge employees to exceed their capacities in a nurturing and positive manner reflects favorably on a company’s new and existing clientele.


Enhancing customer experience — Happy employees bring happy customers. You can tell that employees are prioritized through their work performance and how they communicate with clients. They radiate positive energy and exhibit a professional and dependable work ethic. Moreover, their stellar customer service is consistent and easily recognized by both new and long-time customers.


Augmenting employee training/onboarding process — The better a company is at retaining their employees, the more they are inclined towards continuously improving how they meet employee expectations and demands. They are backed by constructive feedback backed by first-hand experiences of their long-time staff. Consequently, the management can draft employee welfare strategies that adhere to their needs and reflect the business;’s unique setup.

It is unfortunate that even in a modernized society, people still hear personal accounts of abusive bosses and large-scale corporations notoriously exploiting their employees for their personal gain. 

If you happen to be a business owner who stumbled upon this blog, do not be one of these heartless bosses who disregards the grievances of their staff. Instead, be a compassionate leader who takes the time to address employee concerns, discuss them with their team, and devise solutions to resolve these dilemmas.

Employee retention is not limited to keeping a team of professionals who will help them generate sales and acquire more customers consistently. It also focuses on promoting a harmonious work environment. People become more motivated when they have a positive working relationship with their colleagues and feel that they are appreciated in the company. 


Next to customers and loyal patrons, well-accommodated employees are powerful advocates of what a business aims to represent and achieve.


Author Bio: This article is written by our marketing team at HR Cloud. HR Cloud is a leading provider of HR solutions, including recruiting, onboarding, employee engagement, and intranet software. Our aim is to help your company improve employee engagement, employee productivity, and to save you valuable time!


Was this article helpful?
Yes, thanks
Not really
🎉 Awesome!
Thanks so much for your feedback!
Got it!
Thanks for your feedback!
The 12 Most Common HR Mistakes
Learn how to avoid common HR mistakes that frustrate employees and plague organizations.
Download Now