Article 2 - Benefits and Drawbacks of Employee Retention
Introduction
Employee retention, the practice of retaining employees within an organization over an extended period, holds both benefits and drawbacks that shape an organization's workforce dynamics and overall success. Understanding the benefits and drawbacks of employee retention is crucial for crafting effective human resource strategies that foster a thriving and motivated workforce while addressing potential challenges that can arise. In this discussion, we will explore the benefits and drawbacks of employee retention.
"Long-term health and success of any organization depends upon the retention of key employees. To a great extent customer satisfaction, organizational performance in terms of increased sales, satisfied colleagues and reporting staff, effective succession planning etc., is dependent upon the ability to retain the best employees in any organization. Encouraging employees to remain in the organization for a long period of time can be termed as employee retention. It is a process in which the employees are encouraged to remain with the organization for the maximum period of time or until the completion of the project" (Das et al, 2013)
- Knowledge transfer and expertise retention- Long-term employees often have valuable knowledge, skills, and expertise that they have accumulated over the years. (Bender and Fish, 2000)
Reduce recruitment and training costs- It reduce recruitment, onboarding, and training costs for new hires. (Suraihi et al, 2021)
Positive organizational culture- When employees stay with a company for a long time, it can foster a sense of loyalty, commitment, and camaraderie among the workforce.
Employee loyalty and engagement- Retained employees are more likely to feel invested in the organization's success, leading to higher levels of employee loyalty and engagement.
Increased productivity and efficiency
There is a significant relationship
between:
- · Employee empowerment and employee retention.
- · Employee compensation and employee retention.
- · Employee training and employee retention
- · Appraisal system and employee retention.
6. Stronger brand reputation: A company with a high employee retention rate is seen as a desirable place to work. This can attract top talent and make it easier to recruit new employees. It can also boost the company's brand reputation and make it more attractive to customers and partners.
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| (Lever, 2022) |
Drawbacks of Employee Retention
1. Resistance to Change- Long-term employees may become resistant to change, especially if they have grown accustomed to specific routines or processes. This can hinder the organization's ability to adapt to new technologies or market demands.
2. Limited Fresh Perspectives- Retained employees might lack fresh perspectives and innovative ideas that new hires can bring to the organization.
3. Potential Overpayment- Employees who have been with the company for a long time may have received regular salary increases or promotions, resulting in overpayment compared to market rates. This can strain the organization's financial resources.
4. Skill Gaps and Obsolescence- Retained employees may possess outdated skills or knowledge that is no longer relevant to the evolving business landscape.
5. Employees may be more likely to become complacent. Employees who choose to stay might be less inclined to take the initiative and drive the organization's progress.
Importance of employee retention
The enduring well-being and prosperity of any company rely on the ability to retain essential staff members. To a significant degree, factors such as customer contentment, organizational achievements such as heightened sales, contented co-workers and subordinates, and successful succession planning all hinge on the organization's capacity to retain its top-tier employees.
1. Recruitment can be a challenging endeavor. Human resources experts meticulously select a handful of candidates from a vast reservoir of potential talent. Initial screenings are carried out, after which the chosen candidates' profiles are passed on to relevant department heads. These managers then rigorously assess the candidates to determine their suitability for the company. It's important to note that finding the ideal candidate is a process that consumes a significant time.
2. The long-term health and success of a corporation depend on its capability to keep crucial personnel. To a notable extent, elements like customer satisfaction, organizational accomplishments like increased sales, content colleagues and subordinates, and effective succession planning all revolve around the organization's skill to retain its foremost employees.
3. Upon an individual's resignation from their current role within the company, there's a likelihood that they might opt to join a competing organization. In such instances, employees often carry with them the company's strategies, policies, and valuable data to their new place of employment. To counteract these concerns, it becomes crucial to require new hires to sign an agreement that restricts them from joining competitors.
4. Employees with extended tenures possess a deeper familiarity with the company's policies and guidelines, resulting in smoother adaptation. They exhibit superior performance compared to those who switch jobs frequently.
5. Retaining valuable employees with strong capabilities and potential is crucial for the organization. Every company requires dedicated and skilled staff members who can innovate and bring unique contributions.
References
- Al-Suraihi, W.A., Samikon, S.A. and Ibrahim, I., 2021. Employee Turnover Causes, Importance and Retention Strategies. European Journal of Business and Management Research (EJBMR).
- Bender, S. and Fish, A. 2000, "The transfer of knowledge and the retention of expertise: the continuingneed for global assignments", Journal of Knowledge Management, Vol. 4 No. 2, pp. 125-137. https://doi.org/10.1108/13673270010372251
- Das, B.L. and Baruah, M., 2013. Employee retention: A review of literature. Journal of business and management, 14(2), pp.8-16.
- Hong, E.N.C., Hao, L.Z., Kumar, R., Ramendran, C. and Kadiresan, V., 2012. An effectiveness of human resource management practices on employee retention in institute of higher learning: A regression analysis. International journal of business research and management, 3(2), pp.60-79.
- Lever. (2022). The State of Internal Mobility and Employee Retention Report. [online] Available at: https://www.lever.co/research/2022-internal-mobility-and-employee-retention-report/.
- Miller, B. HR Daily Advisor, (23/10/2019) Can employee retention have a downside. [Online]. Available at https://hrdailyadvisor.blr.com/2019/10/23/can-employee-retention-have-a-downside/ Accessed on 7th August 2023.
- Tephillah, S. Swarnalatha, C. (2016) Need and importance of employee retention in organization related to Human resources management. Laxmi. Pp. 13-14. Available at https://www.google.lk/books/edition/NEED_AND_IMPORTANCE_OF_EMPLOYEE_RETENTIO/RxBXDAAAQBAJ?hl=en&gbpv=1. Accessed on 7th August 2023.
An insightful summary of the advantages and disadvantages of employee retention strategies. Both the benefits—such as knowledge transfer and a positive organizational culture—and the potential drawbacks—such as resistance to change—are amply highlighted. The research insights present insightful viewpoints on the subject. Which organizations in the modern era are successfully utilizing these strategies to strike a balance between employee retention and innovation and growth? Can you give some instances of businesses that have successfully struck this balance?
ReplyDeleteYour feedback is greatly appreciated.
DeleteSeveral businesses today have had success with employee retention programmes that strike a balance between keeping a positive work environment and encouraging innovation and development.
Ex: Google, Salesforce, Patagonia, Microsoft, HubSpot, Zappos, Adobe
Google- Google is famous for its creative workplace environment and employee-welcoming policies. The business offers a wide range of benefits and perks to its staff, including free meals, wellness programmes, and chances for personal growth. Google promotes a culture of innovation and creativity by encouraging its employees to spend a portion of their workday focusing on their own projects.
Salesforce- Salesforce is committed to developing a solid corporate culture that supports employee engagement and well-being. The company provides a range of opportunities for professional growth, including training programmes and leadership development projects. They value inclusion and diversity, which fosters a productive workplace and encourages staff members to contribute their unique perspectives to the table.
Patagonia- Known for its dedication to environmental sustainability and its employee-welcoming policies. The company provides flexible work schedules, including options for remote work and on-site child care. High employee satisfaction and retention are due in part to Patagonia's steadfast commitment to its values and support for work-life balance.
"Your discussion on the benefits of employee retention is insightful. The points you've highlighted, from knowledge transfer to reduced recruitment costs, underscore the significant impact that retaining experienced employees can have on an organization's success. The connection between employee empowerment, compensation, training, and retention is particularly intriguing, showcasing the multifaceted nature of this crucial practice. Looking forward to your insights on the potential drawbacks of employee retention
ReplyDeleteThank you for your insight.
DeleteWhile employee retention strategies offer many benefits, they can also come with certain drawbacks and challenges that organizations need to be aware of and address. Here are some other potential drawbacks of employee retention.
Limited diversity of thought
Resistance to leadership changes
Limited cross-pollination
Reduced adaptability
Missed innovation opportunities
Limited cross-pollination
Risk of groupthink
Performance issues
Employee retention is a crucial aspect of an organization's success, offering both benefits and drawbacks.
ReplyDeleteAs per WHO(2010) High retention can lead to a stable workforce, improved collaboration, and increased productivity.
However, excessive retention can hinder innovation, fresh perspectives, and career advancement opportunities. Focusing solely on retaining underperforming employees can lead to a lack of meritocracy and hinder overall growth.
Striking the right balance between retaining valuable employees and welcoming new talent is essential for maintaining a dynamic and successful organization.
Agreed. Several studies have been carried out to look at the basic relationship between organizational performance and employee turnover. Although some studies have found a positive relationship, Saridakis & Cooper (2016) argue that employee turnover is harmful for organizational performance. Performance can be damaged by the departure of talented and experienced workers, and replacement initiatives might not be successful (Miller 2017). Employee turnover can affect organizational performance in four key ways. They include innovation, customer satisfaction, financial outcome, and productivity and efficiency.
DeleteAgreed, Hannay & Northam (2022) states that employee retention has several benefits, including knowledge retention, cost savings, positive culture, and brand reputation. However, there are drawbacks like resistance to change, limited fresh perspectives, and potential overpayment. Recognizing the importance of employee retention for an organization's success is key to developing effective human resource strategies.
ReplyDeleteAbsolutely, you're spot on. Employee retention indeed brings about numerous advantages, but at the same time, it has some drawbacks. Understanding the significance of employee retention is pivotal for crafting effective human resource strategies. Balancing the benefits with these potential drawbacks requires a thoughtful approach that encourages both continuity and the influx of new talent. This delicate equilibrium is crucial for maintaining a competitive edge and sustaining growth within the organization.
DeleteAgreed, Employee retention retains valuable staff, offering benefits like knowledge continuity, cost savings, and engagement. However, it can hinder change adaptation, limit fresh perspectives, lead to overpayment, and cause skill gaps (Herman, R.E. - 2005). Despite challenges, retention fosters committed, innovative workforces for organizational success.
ReplyDeleteYour insightful comment highlights the dual nature of employee retention. While it undoubtedly safeguards valuable staff, ensuring knowledge continuity, cost savings, and increased engagement, it's essential to recognize the potential downsides too.
DeleteOvercoming these hurdles becomes paramount, as your comment aptly suggests, because successful retention not only nurtures committed and innovative workforces but also contributes significantly to the overall success of an organization. It's this equilibrium between the benefits and challenges that organizations must navigate to maximize the positive outcomes of employee retention. As your comment implies, overcoming these obstacles becomes critical since good retention not only fosters devoted and creative workforces but also contributes considerably to an organization's overall success. Organizations must strike a balance between rewards and difficulties in order to maximize the good outcomes of staff retention.
Contents of this article clearly described. the major drawback of retaining people in an organization is not invite the skilled employees from the outside. The Obsolescence of knowledge and skills of Retained employees can replace with their resignations or involuntary turnover ways. Employees who may not possess updates through training and developments will practice the outdated skills or knowledge that is no longer relevant to the evolving business landscape.
ReplyDeleteAbsolutely, your insights are spot on. The potential challenges in attracting talented individuals from outside the organization is, in fact, one of the major disadvantages of long-term employee retention. This might result in a lack of new ideas and knowledge. Furthermore, there is reason to be concerned about retained employees' potential for knowledge and skill obsolescence. People who haven't been exposed to ongoing training and development may find themselves relying on out-of-date skills and knowledge that don't match the demands of the current market as the business landscape changes. For an organization to continue to grow and be relevant, it is crucial to strike a balance between retention strategies and the acquisition of new talent and skills.
DeleteEmployee retention offers stability, expertise retention, and reduced recruitment costs. Engaged staff enhance teamwork, customer satisfaction, and company culture. However, potential drawbacks include stagnation in innovative ideas and resistance to change. Over time, limited new perspectives may hinder growth. Additionally, retaining underperforming employees can harm overall productivity. Striking a balance between retaining valuable experience and encouraging fresh perspectives is essential for sustained organizational success.
ReplyDeleteNice article and a good read.
Thank you for your insightful and detailed response! You've perfectly caught the spirit of employee retention. The advantages of stability, knowledge retention, and enhanced teamwork must be balanced against the potential disadvantages of limited innovation and reluctance to change. I'm delighted you enjoyed and learned from the article. Your participation deepens the discussion, and I value your insights!
DeleteGood, insightful thoughts were expressed in your article regarding employee retention.
ReplyDeleteMany studies have proven that an employee who is enriched with the feeling of empowerment would be more satisfied with his job resulting in the job retention. According to Snipes et al. (2005), there is a direct relationship between the job satisfaction and an employee’s empowerment.
Agreed. Absolutely, there exists a direct relationship between an employee's job satisfaction and their sense of empowerment. When employees feel empowered – that they have the authority, resources, and support to make decisions and contribute meaningfully – it tends to boost their overall job satisfaction. This empowerment can lead to a greater sense of autonomy, ownership, and engagement in their roles. On the other hand, when employees lack empowerment and are restricted in their decision-making abilities, it can lead to frustration and reduced job satisfaction. Therefore, fostering empowerment can be a key driver in enhancing overall employee happiness and motivation. (Onsardi et al, 2017)
DeleteYour article on employee retention presents insightful ideas. Research affirms empowered employees are more content and likely to stay. Snipes et al. (2005) link job satisfaction to empowerment.
ReplyDeleteThank you for your thoughtful comment! Your reference to Snipes et al.'s (2005) research linking job satisfaction to employee empowerment reinforces the ideas presented in the article. It's indeed fascinating how empowerment can play a pivotal role in fostering contentment and retention among employees. Your contribution adds depth to the conversation, and I'm glad to see the alignment between your insights and the article's content. Your engagement is greatly appreciated!
DeleteAbsolutely enjoyed reading your insightful blog post about the Benefits and Drawbacks of Employee Retention! Your thoughtful analysis truly highlights the significance of retaining talent within organizations. It's evident that your expertise in this area lends depth to the discussion, making it a valuable resource for both employers and employees alike. Looking forward to more enlightening content from you in the future. Kudos to the author for shedding light on such an important aspect of the corporate world!
ReplyDeleteThank you for your kind words! It's wonderful to know that the analysis resonated with you and is seen as a valuable resource for both employers and employees seeking insights into this critical topic. Stay tuned for more enlightening content ahead. Your encouragement motivates us to delve deeper into crucial aspects of the corporate landscape. Kudos to you for engaging with the discussion!
DeleteAgreed with this
ReplyDeleteDas ,Baruah (2013) Human resources are vital for every organization, even as technology becomes more important. People are the heart of a company, driving success. With a growing economy, competition is fierce, creating opportunities. But the main challenge is managing and keeping these valuable employees. Keeping skilled workers is crucial for competitiveness, as their expertise is essential. Also, keeping employees happy is a big task for employers.
Human resources are still crucial for every organization in the rapidly changing environment of today, where technology is becoming more important. People make up a company's foundation and drive its success. Intense rivalry exists in a growing economy, providing opportunities. But the biggest problem is finding a way to keep hold of this essential staff. Due to their critical competence, skilled employees must be retained if competitiveness is to be maintained. Furthermore, companies have a big responsibility to make sure their workers are happy.
DeleteI agreed with you and I would add that it is important for organizations to regularly assess their employee retention strategies to ensure that they are effective and that they are meeting the needs of the organization and its employees. This may involve conducting employee surveys, focus groups, or exit interviews to gather feedback from employees. Organizations should also be prepared to make changes to their retention strategies as needed.
ReplyDeleteAbsolutely. Organizations must regularly evaluate their staff retention strategies to maintain their efficacy and compatibility with the employee and organizational needs. In order to get insightful input, this involves techniques including surveys, focus groups, and exit interviews. Employers can better understand employee satisfaction levels, identify areas for development, and make well-informed decisions to boost retention efforts by consulting with their workforce. Changing strategies over time reveals a commitment to a productive workplace, increasing engagement and lowering attrition, which improves organizational success.
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