Talent is an organisation’s biggest asset. For companies operating in a competitive market, people are their biggest competitive advantage. Building a strong team of capable people is how you stay ahead of the market.
The growing global talent pool is hotter than ever but scaling up is still a challenge for many organisations. Focusing on recruitment alone isn’t a sustainable strategy. Without a focus on employee retention, scaling up will continue to be a challenge too difficult to overcome.
So, why is employee retention important? Can employee retention be a driving force behind business performance? There are several reasons why employee retention is so important.
Hiring Challenges
As mentioned before, the global talent pool is growing quickly. However, recruiting talent that meets your organisation’s requirements will continue to be a challenge. Skills are not the only component to consider when recruiting new talent, you also have to think whether the talent can fit into your organisation well in terms of culture and vision.
Hiring challenges become even more difficult to overcome when you lose people faster than you can recruit them. Without a proper employee retention strategy, this will always be the case. The problem is exactly why a lot of companies face immense people-related difficulties when growing at a rapid speed; they simply can’t hire people quickly enough without sacrificing quality or culture.
A Competitive Market
Hiring new talent is only the beginning. Employee retention is also important because organisations don’t just look for new talent in the talent pool., they often seek qualified, experienced people who are already working in other organisations.
This means there is a significant risk of your key people being hijacked by other companies. Even worse, they may be hijacked by competitors looking to gain a significant market advantage. Once again, a good talent retention strategy is how you overcome this issue.
External Challenges
There are also external challenges associated with hiring the best talent, for example in the UK, start-ups and enterprises are struggling to fill key roles because of Brexit. It is no longer easy to bring in talent from Europe for a number of reasons.
In a statement to the media, Dr Newlove of Antibodies pointed out the importance of investing in company culture in order to retain talent especially as Brexit is causing it to become harder to recruit individuals from across Europe.
External factors such as market uncertainty and animosity towards European employees are among the contributing problems to these issues in many businesses.
A Big Investment
Dr Newlove’s remark about investing heavily in employee retention has another side: there is also the fact that organisations invest heavily in their team members. Employees become more productive over time. They learn about the company’s culture, get familiar with their work environment, and adapt to their key requirements.
At the same time, employees grow alongside the company. Time spent working for the company is time spent becoming more suitable for the organisation. Hiring new talent to replace existing people isn’t a viable strategy because of the steep learning curve every new employee must face upon deciding to join the organisation.
The problem is more apparent in start-ups and companies who are R&D based, or those operating in specific fields. Replacing valuable talent is almost impossible. At the very least, it would take the company a lot of time and energy to find suitable replacements for strategic employees.
Understanding the Risks
Now that we have established how employees are assets – and how replacing them isn’t always easy – it is time to take a look at the other side of the equation: what are the risks associated with not having a sufficient employee retention strategy?
The first and biggest risk you will face when you don’t take employee retention seriously is the interruption of business operations. When key employees resign or move to another company, you lose a valuable resource that supports business operations. It is only a matter of time before smooth operations are no longer possible because there aren’t enough talented people to perform mission-critical tasks.
Interruption of business operations is just the start. Efficiency takes the blow next. As made apparent earlier in this article, hiring a replacement is a costly and time-consuming process. Even with a replacement hired, you still have to make additional investment in getting new team members ready for their roles.
On top of these risks, there is also the risk of losing valuable knowledge and expertise. For example, an engineer who has faced a particular problem in the field before can help the company avoid similar problems from occurring. Replacing that engineer with a new one means losing the ability to anticipate issues and leverage experience.
The bottom line is clear; employee retention is crucial to the success of the business. You want a team that grows alongside the business, instead of one with a high turnover. The latter can potentially hamper business growth, if not make growth impossible altogether.
Hiring Smart
Whilst employee retention can be comprehensive as a strategy, one of the elements that must not be neglected is the hiring process itself. The right hiring process can make it easier to retain top talent which is always a good start, isn’t it?
There are simple tips to follow if you want to hire smart. First, you should to hire candidates who truly want to work for you. That extra motivation is a huge addition to your team. You also want to be flexible with your hiring process. Asking candidates to go through five interviews before a hiring decision can be made is no longer the way to go. Hiring process needs to be simple and accurate.
You should be specific with your hiring needs too, either by providing potential candidates with a detailed job description, or using job roles (or functions) as benchmarks. The latter allows you to attract candidates with more skills and experience.
These tips, combined with a good employee retention strategy, enable companies to overcome hiring complexities. Now that you know how important employee retention is as a strategy, you can start crafting your own strategy based on the challenges faced by your business or start-up.