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The retention wheel

Employees are an organisation's most important asset. Hiring good people is difficult and expensive. It's obvious that employee retention is one of the most pressing issues in HR today. Organisations have come to realise the critical strategic implications of losing their best people. But how do you hold on to them?

india Updated: Feb 09, 2006 13:26 IST

Employees are an organisation's most important asset. Hiring good people is difficult and expensive. It's obvious that employee retention is one of the most pressing issues in HR today. Organisations have come to realise the critical strategic implications of losing their best people. But how do you hold on to them?

The first step to improving your employee retention is to understand why employees stay. Many make the mistake of focusing on the reasons employees leave like better pay packages and loyalty is unheard of. The recruitment and retention strategy most organisations choose is incentives.

While an important and necessary step, it's a short-term solution without long-term impact. Many organisations have reached a plateau where incentives are not making a significant difference. The three dominant factors influencing employee decisions to remain with their current employer are:

1 A positive relationship with their supervisor.

2 The opportunity to remain marketable by improving work skills.

3 Appropriate sharing in the financial success their efforts help generate.

There's no question that increased compensation is a very powerful lure to entice employees to accept new opportunities. But money is not necessarily the be all and end all. Career development and challenging work opportunities are often greater incentives than money to stay or start with an employer.

Recruitment is not a separate issue either. An effective retention strategy begins at the earliest stages of the selection. The estimated cost of a bad hire ranges from two to three times that person's salary. The most successful companies value their employees and they prove it everyday. They realise that people are their most critical asset.

They know that actual results will never reach expectations without the commitment of their people. And these organisations succeed because they attract and retain good people!

First Published: Feb 09, 2006 13:26 IST