8 Risks you take if you fail to track employee engagement and retention
Employee engagement is not a management “fad.” It is not going to go away anytime soon. One factor that helps the recruitment industry to remain as fluid is the fact that many businesses just underestimate the importance of employee engagement.
They focus too much on attracting talent and not enough time retaining it. However, the fact of the matter is, engaged employees who want to stay at the organisation are critical to its success. This makes tracking employee engagement and retention a must for a business of any size. Companies that fail to monitor employee engagement run a lot of risks that impact on their ability to succeed and build competitive advantage.
Here are eight risks you take if you fail to track employee engagement and underestimate your investment in employee retention:
1. You will have higher costs — it costs a lot to hire and train an employee. Failing to hire the right people and then to retain them leads to both the direct costs of paying agencies, advertising and management time spent recruiting. It also leads to the indirect costs of a less productive team while a replacement is found. In Gallup’s study of organisations with engaged and disengaged employees, those in the top quarter percentile in terms of engagement had 25% lower turnover when they operated in high turnover industries, and small turnover firms had 65% lower turnover.
2. You won’t know how many people are leaving or why — failing to track employee turnover issues means that you won’t be aware of core problems that are driving people to exit your business. This means you also won’t be taking corrective action and the problem will persist. An exit interview at a minimum can help better track specific issues.
3. You will develop a reputation as a poor employer brand — companies that have a higher level of employee turnover are likely to have a harder time finding employees. When word gets out that a firm is not a great place to be, and this is evidenced by high employee attrition, the employer brand is affected. The reputation of the company as an employer will drop, and this makes it even harder to attract and retain talent. Since people are increasingly seen as key to competitive advantage, this is highly problematic. These problems have been exacerbated by the fact that there are online review sites where employees can rank and rate employers, meaning that stories of low employee engagement can spread faster than wildfire.
4. You will have higher levels of absenteeism — people that are not engaged take more sick leave. Gallup found that the organisations that were in the top quarter percentile for engagement had lower levels of absenteeism. However, a study by the CIPD also showed that those that are less engaged have lower levels of wellbeing as a result, and this may be a cause of this absenteeism — as well as the fact the employees are less involved in the first place.
5. You will have higher levels of health and safety incidents — organisations that have a lower level of engagement have much higher levels of health and safety issues. The Gallup survey found that businesses with the highest levels of engagement (in the top quartile) had 48% fewer safety issues compared to bottom quartile companies.
6. You will have lower customer satisfaction and loyalty — a lot of studies have shown that customer satisfaction is higher when employees are engaged and retained. It makes sense that employees that are happier are better able to sell to customers, and dealing with a new employee each time due to a lack of employee retention is a frustrating experience for a client.
7. You could develop a ‘toxic workforce’ — actively disengaged employees can be poisonous. They become miserable, and as a consequence, they then try to make everyone around them miserable too. They are not just watching the clock, but actively causing damage to the company. If you do not know you have an employee engagement problem, actively disengaged employees will be spreading negativity throughout the business. This means any employees that were engaged could be dragged down by them, making any issues much worse.
8. You will experience lower productivity and profitability — ultimately for all the reasons already mentioned, such as a higher level of accidents, higher absenteeism, and increased employee turnover, companies with lower levels of engagement, are naturally going to have lower productivity and ultimately profitability. Other factors also feed into this, such as the fact that companies with lower levels of participation have higher levels of quality issues and mistakes, wasting time and lowering productivity. In the end all the costs add up and profitability is impacted. This has been demonstrated over and over again in countless employee engagement and retention studies.
The bottom line is that your bottom line will suffer if you underestimate the importance of engaging your employees and retaining top talent. It can detrimentally impact your company if you fail to track employee engagement and retention and as a result, it will become harder and harder to understand if you have a problem, what the issues are or the extent of them. The question is, can you afford to not track employee engagement and retention?
At JGA Recruitment, we base our success on our placement retention statistics (currently 95.7%), that is, how many candidates we place that are still employed 12 months later. We believe this is the true measurable metric for tracking recruitment success.
Thanks for reading.