24.09.2016

Engage employees to increase retention

Great employees are a significant resource and considered by some to be the most inimitable source of competitive advantage.

The competition to attract the best people is fierce. The cost of replacing them when they leave can be high. [1] For these reasons and more, employee turnover can present a serious obstacle to an organization’s success.

Thankfully, there are actions you can take that have been proven to improve retention. Research shows that instilling a culture of engagement in your workplace can help keep people on-board and committed to your company.

Low engagement, higher costly turnover

When a valued person leaves your organization the departure can come with a variety of costs. Among others, they can include loss in productivity, expenditure of resources and negative impact on morale.

In fact, all told, the cost of replacing one employee is estimated by some experts to cost as much as their annual salary. [2]

That’s bad news for business. And organizations with low employee engagement are likely to suffer most.

A Gallup study of 23,910 businesses found that businesses with engagement scores in the bottom quartile averaged 31% – 51% more employee turnover than those in the top quartile. [3]

Take the first step 

Even the most basic efforts to engage employees can help cut down on turnover. Companies that simply seek regular employee feedback have been found to have turnover rates that are 14.9% lower than those that don’t.

But, it’s organizations that are serious about instilling a real culture of engagement in the workplace that see the biggest retention benefits.

Commit to culture, keep your people

According to the Chartered Institute of Personnel and Development (CIPD), engaged employees are ‘less likely to leave the organisation’ they work for. [4] Plain, simple and backed up by hard data: As early as 2004, quantitative analysis by Corporate Leadership Council found that engaged employees are ‘87 per cent less likely to leave the organisation’. [5]

An internal study by financial services giant Standard Chartered found similar results. Among their branches, those with high employee engagement had 46% lower voluntary turnover. [6]

Of course, some sectors may have naturally higher turnover rates than others. If your industry has historically high turnover rates, you might be tempted to think that employee engagement isn’t likely to have much impact. But the evidence shows differently.

While the precise impact of engagement on turnover rates will vary depending on the inherent characteristics of your industry, the results are virtually always positive.

In 2013, the Harvard Business Review reported that historically high-turnover organizations benefitted from 25% lower turnover thanks to employee engagement efforts. Low-turnover organizations felt even more benefit, with 65% lower turnover.

Conclusion: enhanced engagement reduces turnover

If employee engagement isn’t on your C-suite’s radar, it should be. Turnover is costly. A culture of engagement not only helps attract great people, it helps you keep them.

A raft of tools and services exist to measure and improve engagement in your workplace and it’s never too late to start.

To find out more about the benefits of engagement for your business’ bottom line, take a look at Culture Amp’s Impact of Engagement Whitepaper. You can claim a free copy here.


[1] MacLeod, 2009, p. 14.

[2] MacLeod, 2009, p. 14.

[3] Corporate Leadership Council /Corporate Executive Board, ‘Improving Employee Performance in the Economic Downturn’, 2008. Cited in MacLeod, 2009, p. 11.

[4] Chartered Institute of Personnel and Development, An HR Director’s Guide Employee Engagement, 2009. Available online at [www.digitalopinion.co.uk/files/documents/An_HR_Directors_Guide_to_Employee_Engagement.pdf][1] accessed 18 July 2016.

[1]: http://www.digitalopinion.co.uk/files/documents/An_HR_Directors_Guide_to_Employee_Engagement.pdf

[5] Corporate Leadership Council, Corporate Executive Board. Driving Performance and Retention through Employee Engagement: a quantitative analysis of effective engagement strategies. 2004. Cited in MacLeod 2009, p.14.

[6] Cited in MacLeod 2009, p.41.

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