Benefits of Employee Retention

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In the world of production, all elements have cost and benefit components. Each and every decision that is made has an impact on the bottom line, whether that be positive or negative, and the more positively we can impact the bottom line, the better. Every employee has a share of this impact, and employees who have more experience and time with a company, often share a larger portion of this positive impact. With this being said; How does employee retention actually impact a company’s bottom line?

Experienced Employees

A crippling cost of high turnover is due to the loss of institutional knowledge, skills and relationships within the organization and with customers and partners that disappear when an employee exits. The organization loses the potential value the employee could have delivered, often referred to as the opportunity cost. When senior employees depart, the loss can impact succession planning as well.

An organization that focuses on retaining more senior or experienced employees will see significant returns as these individuals are apt to solve complex issues on their own, have an increased production value, and less likely to be involved in an injurious event. All of which benefits the organization both in the short term and long term.

Increased Productivity

Persistent turnover causes a host of issues for employers. The most immediate impact is loss of productivity. On average, it can take a new hire one to two years to reach the productivity of an existing skilled employee. In addition, new hires need time to build relationships with co-workers and customers. An understaffed environment also causes problems of its own, including overtime and burnout, resulting in lower work quality and production delays.

Effective employee retention can save an organization from productivity losses. High-retention workplaces tend to employ more engaged workers who, in turn, get more done. Engaged employees are more likely to have higher quality production value, and production teams that have had time to coalesce also tend to be more productive.

Increased Revenue

One could argue that all of the benefits of employee retention could be measured by the increase in revenue. While it is true that many of the benefits from retention will be reflected in revenue increases, it is inarguable true that increased revenue will be directly correlated to employee retention. Revenue gains stem from reduced hiring costs, increases in productivity, and the delivery of higher quality products, among other things. Tracking revenue increases from retention policies can be an important opportunity to see exactly how much of an impact a company’s current retention efforts are having.


In conclusion, the impacts that a focus on employee retention can have on a company are numerous. With the few discussed in this article, it is easy to see that a focus on retention can be a lucrative endeavor, both in quantifiable and unquantifiable metrics. All in all, the most important thing to remember is that employees are more effective when they feel like members of a team, rather than a cog in a machine.

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