Importance of Employee Retention During a Recession
Importance of Employee Retention During a Recession Introduction During a recession companies have to constantly protect and plan for financial attacks from increased expenses, decreased sales as well as customer and especially employee retention. Management must realize that their employees are suffering just as their businesses are with increased expenses and costs for everyday items. All parties must work cohesively to transition through a down economy.
Employers must be aware that their employees will be looking for other employment if the company is not providing the tools time and training in order for them to perform their jobs well.
This is especially important during recessionary times when the focus needs to be on customer and employee retention. Numerous studies have found and experts agree that “company culture” is the leading factor in employee satisfaction and retention. Companies must embrace the importance of employee retention through the implementation of various retention practices so that they will be better prepared to continue to grow and be successful even through recessionary times.
Companies that grasp that concept and incorporate an environment where employees feel empowered, motivated and engaged will result in greater productivity and teamwork and therefore greater customer loyalty. Company Culture Company culture and in several instances lack of a positive company culture appears to be the leading factor in the retention ratio of employees remaining versus voluntarily leaving a company. The culture of a company is defined by many different aspects. Organizations that focus on employee retention and management programs have found some surprising indications.
Employee retention has been a challenge for all companies big and small and across industry lines. Many have researched and studied the reasons why some companies have better retention rates than others similar. Many experts agree that a basic foundation of proven retention and management skills being implemented and used effectively will result in a higher retention rate. The consensus of decades of research has found that “high retention has little to do with formal programs and everything to do with culture” (Duggan, 2010).
Companies that aim to make sure theirs is a company that values its most valuable asset, its employees. Years of analysis on employee retention and human resource directives have shown that an environment where employees are valued assets and treated as such as well as one where talent has been developed with the proper tools, time and training show higher retention levels over time in any economic environment. “Among those who strongly agreed that they work for a manager who cares about their well-being, 94 percent said they intend to stay with their current employer.
Of those who strongly disagreed that their manager cared about their well-being, just 43 percent planned to stick around” (Ryan, 2010). A well known gem known among informed and effective management is that employees do not leave companies they leave bad managers. With this knowledge companies should be able to make sure their focus and goal should be to ensure that their company and its management is effective, dependable and respected leaders. This focus in the long run will ensure there is a positive company culture that will allow them to maintain their most valued asset.
Importance of Solid Human Resource Practices The human resource department should take the lead when implementing policies, disciplining employees and layoffs or terminations within a company and especially during a down economy. The human resource department can ensure that policies are implemented smoothly and within legal guidelines. They are there to ensure that company policies and procedures are communicated effectively. “HR must take the lead in workforce management, including, when necessary, conducting layoffs or terminations of employees in a systematic, ogical and effective manner “(Lieber, Spring 2009). Companies are finding that by developing their current pool of employees they will be better able to weather any market trends whether up or down. Employers should focus on making sure that employees receive regular feedback from their managers. Informal weekly meetings are a great start to fostering positive relationships between managers and their staff. Studies have found that consistent communication helps to ensure that employees are comfortable with positive and not so positive criticism.
Communications and how effective companies are at communicating new policies and procedures help to foster a level of trust and openness within the entire company. An environment where employees are encouraged to voice their concerns and receive proper feedback ensures that employees are engaged in their positions and in the success of the company. Any positive, proactive measure implemented by human resources, as long as done with honesty, will help to engage employees and contribute to a positive company culture. Misconceptions of Employee Retention
Employee retention is one of the most important factors in any companies’ success. Along with its importance come several misconceptions as well as adverse effects as a result of them. The majority of employers believe that employees would never consider leaving their jobs during a recession. In fact, a survey conducted by Salary. com showed that 65% of employees admit to passively or actively looking for a new job already (Throckmorton, n. d. ). Experts are in agreement that many times companies focus on retaining their high level executives during difficult times.
An article in the Mckinsey Quarterly emphasizes that companies should instead turn their focus on retaining the “key employees” (Cosack, Guthridge, Lawson, 2010). Key employees are defined as ones that are normal performers and are critical to the company’s success overall. Key employees are not necessarily the high level executives; they are normal performing employees that are critical to the overall success of the company (Cosack, Guthridge, Lawson, 2010). Collectively the departments support the entire company and share in the company’s success.
Employers tend to believe that employees are also less engaged in their positions during a down economy because they believe that employees have fewer employment options. This is another misconception. In a study conducted by the Center for Creative Leadership and Booz Allen Hamilton found that employees are more engaged in their positions during a recession. Conclusion As one can conclude maintaining a high and effective retention rate is a challenge for most companies no matter the condition of the economy.
Companies that are serious about their success will always value their most important asset, their employees. Successful companies will have embraced the challenges and will engage their employees. Companies with effective and ethical leaders will be laying the foundation for long-term success of the company in a any economic environment.
References Duggan, M. (2010, August). Best practices: Retention. Drug Topics, 154(8), 21. Retrieved October 31, 2010, from ABI/INFORM Global. (Document ID: 2137959661). Lieber, L. (2009). How to manage terminations and layoffs in a recession. Employment Relations Today (Wiley), 36(1), 95-102. Retrieved from Business Source Complete database. Cosack, S. , Guthridge, M. , & Lawson, E. (2010). Retaining key employees in times of change. McKinsey Quarterly, (3), 135-139. Retrieved from Business Source Complete database. Throckman, R. (n. d. ). Are You Worrying about Retention During the Recession? You Better Be! Retrieved from http://www. strategichrinc. com/articles/rentention-recession. htm. Ryan, J. (2010). Keeping Employees Happy in a Post-Recession World. BusinessWeek. com, 5. Retrieved from Business Source Complete database.