Why employee retention is more important than ever

Pasquale Schifino

At a time when the labor market is becoming increasingly competitive and qualified specialists are scarce, every company faces the challenge of retaining talented and experienced employees in the long term.

Employee retention is therefore becoming increasingly important for the success and competitiveness of a company.

But how can this loyalty be created and maintained?

In this article, we will look at the importance of employee retention and the benefits of strong retention.

We will also look at the various factors that can influence employee retention.

Finally, we will present some proven measures that companies can use to strengthen their employee retention in order to benefit from motivated and loyal employees in the long term.

So it’s worth reading!

🎯 The most important summarized:

Employee retention refers to all measures and strategies that a company takes to retain its employees in the long term.

The benefits of employee retention include lower staff turnover, increased productivity, a stronger employer brand and increased customer loyalty.

Factors influencing employee retention are working environment, remuneration and benefits, career opportunities, quality of leadership and more.

Measures to increase employee loyalty include promoting work-life balance, offering benefits and introducing a feedback culture.

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Table of contents

1. What does employee retention mean?

2. What are the benefits of employee retention for companies?

3. What forms of employee retention are there?

4. What are the factors that influence employee retention?

5. What measures are there to strengthen employee loyalty?

6. Conclusion: Strong employee retention for long-term company success

7. More on the topic of employee retention

What does employee retention mean?

Employee retention refers to all measures and strategies that a company takes to bind its employees to the company in the long term with the aim of reducing fluctuation and retaining qualified employees in the company for the long term.

In order to achieve this goal, it is crucial to create a positive working atmosphere in which employees feel valued and enjoy working.

To this end, targeted measures such as further training opportunities, flexible working time models, employee surveys and team-building activities are used to strengthen employee commitment and loyalty.

What are the benefits of employee retention for companies?

If companies manage to retain employees successfully, this has several advantages:

Lower staff turnover

Strong employee loyalty reduces the likelihood of employees leaving the company. This reduces staff turnover and the cost of recruiting and training new employees.
Increased productivity

Employees who identify with the company and feel committed to it in the long term are generally more motivated and committed. They work more efficiently and make a greater contribution to achieving the company’s goals.
Maintaining continuity and experience

Long-standing employees bring valuable experience and knowledge that they have gained in the course of their work at the company.

A high level of employee retention enables the company to benefit from this expertise and to continuously learn from the experience of its employees.
Strengthening the employer brand

A company that is known for high employee retention is perceived as an attractive employer. This can lead to qualified specialists being more willing to apply and work for the company.
Increase customer loyalty

Satisfied and long-serving employees make a significant contribution to customer satisfaction. They know the customers’ needs better and can fulfill them in a more targeted manner. This increases customer loyalty and the company can build long-term customer relationships.
Cost savings

Lower staff turnover reduces the costs of recruiting, inducting and training new employees. In addition, long-serving employees can perform their tasks more efficiently as they are familiar with the company’s processes and procedures.
Promoting innovation

Employees who feel committed to the company in the long term are more willing to contribute new ideas and drive change. A high level of employee loyalty can therefore promote the company’s innovative strength.

Would you like to know how you can measure employee retention?

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What forms of employee retention are there?

In theory, there are various approaches to describing the different forms of employee retention.

One of these forms is rational retention, in which employees are motivated to remain loyal to the company by rational considerations and factors. This includes criteria such as salary, working conditions, career opportunities and other objective aspects.

Another form is emotional loyalty, which is based on a strong emotional connection between employees and the company.

This involves a sense of belonging, identification with the company’s values and goals and trust in managers and colleagues. The emotional bond is often created through positive experiences, personal relationships and a supportive working environment.

A third form of loyalty is based on ethical and moral aspects and is referred to as “normative loyalty“.

It is based on the shared values and norms that both the company and the employees share.

This is about the alignment of personal convictions and moral principles with the company’s values and goals and arises from the feeling that the company acts in an ethically responsible manner and makes a positive contribution to society.

Another form of employee retention is perspective retention.

This is based on a shared future perspective between employees and the company.

It arises when employees feel that their personal goals and ambitions are in line with the long-term goals of the company.

Employees must be able to identify with the company’s vision and strategic direction and see the opportunity to develop and advance within the company.

In addition, perspective retention is based on trust, openness and clear communication on the part of the company.

Employees must feel that their individual skills and performance are valued and that they have the opportunity to develop and take on new challenges.

What are the factors that influence employee retention?

There are numerous reasons why employees decide to stay with an employer. These include aspects such as the working environment, remuneration, working hours, the quality of management and more.

Before companies should take measures to strengthen employee retention, it is crucial to know which factors influence employee retention.

In the following, I would like to explain some of these factors in more detail:

1. Working environment

The first factor that has a major impact on employee motivation is the working environment. A pleasant and comfortable working environment can make a significant contribution to employees feeling motivated.

The same goes for a clean, well-lit and well-ventilated workplace. This not only contributes to general well-being, but has also been proven to increase productivity.

When employees feel comfortable and valued in their environment, they are more willing to give their best and identify with the company.

Furthermore, a good work-life balance plays a crucial role in employee retention. If employees have enough time for their personal interests and commitments, they can switch off better and are generally more satisfied.

This in turn has a positive effect on their motivation and strengthens their loyalty to the company.

2. Remuneration and benefits

A second decisive factor that significantly influences employee retention is remuneration and the range of benefits on offer.

The level of remuneration and additional benefits such as bonuses, premiums, company pension schemes or flexible working time models can have an immense influence on employee motivation and loyalty.

Appropriate remuneration is not only a sign of appreciation for the work performed, but also an incentive for employees to give their best. If they feel that they are fairly remunerated, they are more willing to identify with the company and stay on board in the long term.

Furthermore, additional benefits such as bonuses or premiums can have a strong motivating effect. They reward outstanding performance and create incentives for continuous commitment and success.

Company pension schemes or flexible working time models are also important benefits that can strengthen employee loyalty. They show employees that their well-being and individual needs are taken seriously.

3. Career opportunities

Promoting professional development and creating opportunities for advancement within the company is another factor for many employees when it comes to staying on board in the long term.

Employees want to feel that they can continually develop and that their career is being progressed within the company.

Companies should therefore offer targeted training opportunities to expand the skills and competencies of their employees. This can be achieved through internal training, external training programs or mentoring programs.

In addition, it is important to show employees clear opportunities for advancement within the company. This can be done through transparent career paths, regular performance reviews and individual development plans.

If employees see that they can progress within the company in the long term and that their work is valued, they are more likely to remain loyal to the company.

4. Corporate culture and values

Positive corporate communication, clear corporate values and a harmonious working atmosphere are also factors that encourage employees to identify with the company and ensure their long-term commitment.

If employees feel that their values are in line with those of the company and that they can work in a supportive and pleasant working environment, their motivation and satisfaction will increase.

But how do I achieve this?

A positive company culture is characterized by open communication, mutual respect and teamwork.

It is important that employees feel that they are heard and that their opinions and ideas are valued. Clear corporate values give employees orientation and help them to identify with the company’s mission and vision.

A good working environment creates an atmosphere of trust and cooperation. Employees must feel comfortable and be able to support each other.

This increases productivity and the willingness to commit to the company in the long term.

5. Managers

The fifth factor for long-term employee retention is the quality of managers.

An outstanding manager is able to build trust, set clear goals, give constructive feedback and take the individual needs of employees into account.

Recognition and appreciation are of great importance here: praise, recognition and regular feedback for outstanding performance strengthen employee loyalty. After all, employees want to feel that their work is valued.

6. Communication

Open and transparent communication on the part of the company plays a further role in employee retention.

It is very important that employees are informed about important decisions, changes and developments in the company.

Clear and honest communication makes employees feel valued and taken seriously. They have the feeling that their opinion is heard and that they are part of the overall process.

This creates trust and strengthens employee loyalty to the company.

Transparent communication also promotes understanding of business decisions and enables employees to actively participate and help shape them.

7. Social ties

The final factor that influences employee retention is social ties.

Social ties play a role because relationships with colleagues and superiors promote a sense of belonging and cohesion within the company.

A harmonious team atmosphere in which everyone supports and respects each other contributes significantly to strengthening loyalty to the company.

A supportive working environment is also very important, as it gives employees the feeling that their needs and concerns are being taken seriously.

These social aspects strengthen employee loyalty and build long-term bonds with the company.

To conclude this chapter, I would like to list the influencing factors once again:

1. Work environment
2. Remuneration and benefits
3. Career opportunities
4. Quality of the manager
5. Recognition and appreciation
6. Communication
7. Social ties

According to my research, these are all factors that have an impact on employee retention. There may be others, but these should be the most important.

What measures are there to strengthen employee loyalty?

Now that we have clarified which factors have an influence on employee retention, we should next look at the various measures that exist to strengthen retention.

Here are some examples & ideas of what measures work to increase employee retention:

1. Promoting work-life balance
(Flexible working hours, sabbatical, home office …)

2. Offering benefits
(Job bike, company health insurance, free drinks …)

3. Promote further training opportunities
(Training budget, regular feedback from managers, job rotations …)

4. Create a positive working environment
(Clean, well-equipped workplaces, rooms for relaxation …)

5. Attractive remuneration structure
(Bonuses, vacation and Christmas bonuses, inflation adjustment …)

6. Introduction of a feedback culture
(Interviews, surveys, feedback games …)

7. Promote health, sport and leisure activities
(Company sports, vaccination campaigns, health days …)

8. Clearly defined corporate culture
(Transparent management style, open communication, clear corporate values …)

Conclusion: Strong employee retention for long-term company success

Now that we’ve talked in detail about employee retention, let’s recap on how important it is for the success of a company.

Strong employee retention is therefore of great importance, as it has numerous positive effects on the company.

It leads to lower staff turnover, which reduces the costs and effort involved in recruiting and training new employees. In addition, strong employee retention increases the productivity and motivation of employees, which has a positive effect on the quality of work results.

Furthermore, strong employee retention contributes to the creation of a positive working environment.

Employees who feel emotionally connected to the company and share its values and standards are more motivated and satisfied. This in turn has a positive effect on the working atmosphere and promotes harmonious teamwork.

In order to benefit from these and many other advantages of strong employee loyalty, companies must take targeted measures to promote it.

This includes open communication in which the company’s goals and values are clearly communicated.

It is important that employees feel that their individual skills and performance are valued.

Recognition and appreciation are decisive factors in strengthening the emotional loyalty of employees.

Furthermore, companies should offer further training opportunities to give employees the chance for personal and professional development. Not only does this contribute to the employee’s long-term loyalty, it also shows the company’s interest in the employee’s individual career development.

Ultimately, strong employee retention not only has a positive impact on employee motivation and satisfaction, but also on customer loyalty and the company’s image.

Companies that retain and develop their employees can benefit in the long term from motivated and loyal employees who are actively committed to the success of the company.

Companies should therefore not underestimate the importance of strong employee retention and take appropriate measures to strengthen it.

Strong employee retention should therefore be pursued as a strategic goal, as it is a key factor in the long-term success of a company.