Do you really have to worry about employee retention in a bad economy? In a word, yes.
Here are 3 reasons why retention matters even when the Dow takes a dive.
1. The cost of replacing an employee may affect your business more adversely in a tight economy. Some of you may be thinking, well, yes but what if I don’t replace an employees that leaves? This is always an option but the price is then paid by other workers in the absorption of those duties which translates into less productivity, worsening work/life balance, more stress, etc. In the long run this strategy can create a retention spiral that leaves your company with serious turnover and cultural issues.
2. Employee poaching. If you are in an industry that is fighting over people during the good times then guess what? The smartest companies are poaching your people during the bad times as well. Great companies don’t stop recruiting because the economy has taken a downturn — rather they recognize it as an opportunity to sell the greener grass at their organization to your people. How do you fight it? Keep a pulse on the workforce. Continue to recognize great work even in the hard times.
3. Paradoxically, job security will become more important to your employees which can increase turnover. Why? Because your best employees will be keeping their eyes open for companies that can offer them a more secure future. Consider that in an employee’s mind a decision to keep your company “lean” and go through a small layoff often simply translates into panic and job hunting for those that were lucky enough to not be let go. Choose your actions and words wisely in an economic downturn as your cure can sometimes be worse than the ailment.
So, why the post on a down economy now? Well, it always helps to wish for the best but be prepared for the worst. And, well, that whole China thing is interesting.
Look for a big announcement from PeakEmployee later this month as we continue to build upon the best Workforce Retention Analytics package in the industry!