Employee Retention in Small Companies

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Employee Retention

Employee retention is an important factor to consider in all organizations. . The U.S. Bureau of Labor Statistics (2006) estimates that 23.7 percent of American workers voluntarily quit their jobs. Each time a company must recruit, hire, and train employees there are costs involved. In addition, high turnover has a negative impact of employee morale, corporate culture and efficiency. Employees that stay with a company tend to be happy, which is reflected in the manner in which they do their work, and on customer relations. Retention can be viewed as a satisfaction meter within an organization, and is especially important for a new organization to achieve.
Objective
The objective of this paper is to highlight importance of employee retention and identify keys to employee retention in a new, small organization.
Problem Definition:
Businesses start small, often operating on limited resources in order to maximize opportunities. An old adage states all expenses walk on two feet. Every employee that is added to an operation adds costs. This is obvious in terms of the basic payroll costs, but there are also additional considerations that must be identified. It is estimated that "the average cost of recruiting, hiring and training a new employee at close to $4,000" (Welz Prafder, 2014). Hiring is a difficult process. An organization must outline the job duties, run advertisements, select from a pool of applicants, hire and process paper work. Turnover -related costs have been estimated to represent approximately 12 percent of pre-tax income for the average company (The Society for Human Resources Management, 2008) There are legal obligations, paperwork, and share of mind that must be contended with as employees are added. Companies that are able to retain employees are better able to compete and focus on their corporate objectives.
Other benefits of employee retention include holding onto organizational know how with existing employees. This is particularly true in smaller organizations where one person may be responsible for many tasks. When that person is let go or leaves, corporate knowledge also leaves. This is a drain on the organization. In the event the employee goes to work in a similar business or for a competitor, this can be increasingly harmful to an organization. The longer an employee works for an organization the more knowledgeable they are with the organization's policies, guidelines, customers, and cultures. This organizational memory is an important factor in the smooth operation of an organization.
Low employee turnover is in part due to employee loyalty. Employees that are treated well are more likely to put the organization first, and work to make sure it succeeds in its objectives. This loyalty is magnified when a group of employees has worked together in a small, new company. There is an increased willingness to help out toward the common ...