11 Benefits of Employee Retention (Plus Definition)

By Indeed Editorial Team

Updated September 13, 2022 | Published April 13, 2021

Updated September 13, 2022

Published April 13, 2021

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

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Many companies use a variety of strategies to retain their employees. Retaining employees can offer managers and companies an array of advantages, including improving the efficiency and satisfaction of staff members. Knowing more about the various benefits of keeping employees may help organizations determine strategies to improve their retention rates.

In this article, we define employee retention and share the major benefits of employee retention strategies.

What is employee retention?

Employee retention is how well companies can keep their employees around. Companies with low turnover rates tend to use employee retention strategies to encourage team members to stay with the company for a long time.

When you have a high employee retention rate, this can indicate that employee morale and job satisfaction are high at your company. It can also signify that the company is making your workplace an enjoyable environment to work in every day.

Related: How To Calculate Employee Turnover Rate

11 benefits of employee retention

Here are the top ten benefits of employee retention:

1. Increased employee loyalty

When employees feel their employer supports and values them, they may feel more loyal to the goals of their company. Finding ways to keep employees around longer can also improve loyalty since long-term employees have invested a lot of time and effort into their job. With increased employee loyalty comes more productivity and ethical work.

For instance, an employee who genuinely cares about the company may feel more inclined to finish their work on time and be honest about the hours they report.

Related: The Importance of Employee Loyalty and How To Improve It

2. Decreased hiring costs

Finding new team members can get quite costly. Things like hiring recruiters, training staff and giving sign-on bonuses can add up. By keeping their employees around, companies can limit these costs. Companies can save money by investing in their current staff rather than looking for new candidates.

Related: The Real Turnover Cost of Losing an Employee (And Ways To Retain More Talent)

3. Highly skilled workforce

When an employee is with the company for a while, they can build their skill set and relevant experience. Rather than starting over with a new employee, employers can build an effective workforce by using their resources for continued training and career development among current team members.

When filling a high-level position, employers can benefit from promoting internally since their current employees already know the company and may have the right set of skills.

Related: 10 Strategies To Retain Your Employees (With Tips)

4. Fewer transitions and employment gaps

High turnover rates can lead to a decrease in productivity. That's because when an employee resigns, it can take some time to fill their role, which could lead to either a gap in the position or more work for the remaining staff members.

By contrast, organizations that retain their employees may experience fewer gaps in their positions and can often avoid overloading the workloads of the existing employees. 

Related: 9 Key Employee Retention Metrics To Track

5. Improved customer relations

Clients can notice when companies have high turnover rates. This might concern customers who want to support businesses with positive company cultures. When companies keep their employees around, clients have the chance to get to know employees.

This familiarity can benefit businesses since clients may feel brand loyalty because of the chance to work with a favorite staff member. Creating relationships and rapport with customers is an important part of making repeat sales.

Related: Customer Relations: 13 Ways To Build Better Connections

6. Positive company culture

High turnover rates can lead to lower employer morale. It can be challenging for employees to feel excited about work if many of their coworkers resign. When employees want to stay around, the company culture can benefit.

Everyone is an integral part of the company culture, so when employees feel happy and committed to their work, this can help contribute to a positive culture. Along with benefiting current employees, good company culture can attract top talent and improve customer relations.

Related: 8 Types of Culture in the Workplace

7. Better brand reputation

When companies are able to keep employees around, this can reflect positively on the way they operate. This can be good public relations for a brand. When employees have good things to say about their company, this can boost a brand's reputation. This may come with all kinds of additional benefits, such as increased profits, positive press, competitive hiring edge and brand familiarity.

Related: 20 Strategies for Employee Retention

8. Deeper connections among staff

The longer colleagues work together, the better they can get to know each other. By working with the same people for years, you can get to know each other's personalities and working styles. This can lead to better teamwork and collaboration in the workplace. It can also lead to more camaraderie among staff, which can contribute to increased job satisfaction.

Related: 8 Types of Pay Progression Structures Employers Use

9. More competitive staff

When news spreads about a company's high retention rates, this can help the company attract top talent. When your company is a good place to work, it can attract people who wish to leave your competitors. This is useful for companies looking to gain a competitive edge by having a talented staff.

Related: How To Recruit Top Talent for Your Company in 7 Steps

10. Consistent processes and systems

Having the same employees around makes it easier to keep your processes and systems consistent. Each time an employer takes on a new hire, they may experience a gap in the way their systems work.

For example, a company with a small customer service department may fall behind on work if they lose one staff member. By having employees around for a while, employers can ensure their team fully understands how the company operates.

Related: 10 Examples of Training Programs and Their Benefits 

11. Optimized revenue

Retaining your employees can ultimately help boost both departmental or overall company profits. A business's revenue can increase based on several benefits it can receive from employee retention, including better customer service, reduced hiring costs and optimized employee productivity. This can also boost a company's ROI, a metric that may help demonstrate to HR staff the value of retaining employees.

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