Employee Retention

A recent survey (2008) by consultants Talentdrain provides interesting information about the difficulties 75% of participating organisations reported – retaining their employees.

Data suggests that 1 in 4 employees leave their jobs within 6 months while over 50% stay for less than 2 years. Low levels of unemployment, increasing job vacancies and widespread skills shortages give staff plenty of opportunity to change jobs if they are dissatisfied in their current role. The average annual rate of staff turnover quoted in a CIPD survey in 2007 is 18.1%, and average replacement costs are estimated at £7,750, so reducing turnover leads to significant savings.

Why do employees leave? HR generally assume it is “lack of promotion prospects” or “level of pay” whilst the survey of leaving employees shows that “personal growth” (defined as challenging work and opportunities for training and development) regularly tops Talentdrain’s surveys when employees are asked to identify the most important factor to maintain their commitment.

What are organisations doing to improve retention? Improving employee communication and involvement; improving the induction process; and improving learning and development opportunities, are cited as the most popular ways to increase employee buy-in and commitment.

Although the CIPD believe that 2008 will be a much tougher year for job-seekers, and the softer labour market may ease overall retention pressures, organisations faced with difficult trading conditions will need to retain their best talent to enhance their performance and competitiveness.