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Employee turnover is a nightmare. Businesses are left in shambles as they look for a replacement to bridge operational gaps. Employees, meanwhile, shoulder the aftermath of a departed employee: Additional workload, productivity loss, and poor mental health. This is not all, though.
Companies are competing for talent — the cream of the crop. On top of rising labor costs, organizations are also creating attractive compensation packages and benefits that align with the standards of applicants. If you’re afraid of losing your top performers, you’re not alone.
There’s one good news: Employee retention can be addressed, albeit by working with a dedicated team from an outsourcing partner. Let’s tackle how well internal vs outsourced teams deal with retention and turnover.
Why Does Employee Retention Matter?
Companies that manage to retain their employees in a given period demonstrate strong employee retention. As a business owner, you understand the importance of keeping your high-performing employees for much longer. Here’s why employee retention matters:
Promotes Employee Engagement
Engaged employees equal increased morale. When companies foster great camaraderie and healthy professional relationships among team members, employees will feel connected with their peers — resulting in a happy, productive workforce that looks forward to coming to work each day.
Employers who challenge employees to try out different roles — like a minor leadership position — or undertake new projects help build the grit and confidence to overcome the discomfort of moving out of one’s comfort zone. This leads to higher job satisfaction and a deeper sense of purpose in the workplace.
Enhances Customer Experience
Much like forging a solid working relationship with peers, maintaining a strong relationship with customers is also vital for retention. From ensuring consistent brand voice to offering nuanced solutions, long-tenured employees know the complexities associated with high-quality customer experiences.
Newer employees, though, need to overcome a learning curve to match the caliber of more experienced employees. Hence, by retaining tenured staff members, companies can continue offering superb customer experiences, further improving customer perception and brand reputation.
Optimizes Recruitment Costs
Did you know that the cost of hiring a US employee is $4,683 USD? If we factor in the cost of equipment, benefits, and training for each employee, companies can expect to spend around thousands each year. By prioritizing retention, organizations can hire internal staff and fill jobs faster.
This is especially handy for mid-level, senior, or executive positions. Through internal hiring for higher positions, HR departments have more financial wiggle room for hiring and training entry-level candidates.
What Are the Effects of Employee Turnover?
Whether an employee is fired or leaves voluntarily, employee turnover reflects your organization’s workplace culture and potential for career advancement. Here are the effects of high employee turnover:
Loss of Productivity
Fewer employees translate to more workload. Staff members crunch the deliverables of departed employees while juggling their own tasks, which spirals into poor productivity, low morale, and, ultimately, missed deadlines.
On the client’s side, delays are a no-go, and this affects their perception of your business. On your employees’ side, they treat the increase in workload as a sign to leave for greener pastures. Higher retention is not just healthier for your tenured employees, but it also strengthens client-business relationships.
Increased Recruitment Costs
Finding a replacement can cost around half or even double the salary of an employee. High turnover entails investing more time and money in posting job advertisements as well as recruiting and training new employees.
When employees leave, companies have fewer options for internal hiring for senior positions, forcing them to recruit an external resource who has little institutional knowledge.
Difficulty In Recruitment
Employee reviews are like a “performance check” for companies. Former employees express their dissatisfaction through poor ratings, signaling to job seekers that the company does not treat its employees well. This makes your organization a less attractive workplace for potential candidates, which in turn translates to difficulties in hiring qualified talent.
Internal vs Outsourced Teams: How Do They Stack Up Against Each Other?
Here, let’s explore how internal vs outsourced teams stack up in performance, loyalty, scalability, and collaboration in relation to employee retention and turnover.
Performance: How Employee Turnover Jeopardizes Teams
Internal Teams
Turnovers are an inevitable part of running a business. But if turnovers are a common occurrence in your company, that’s a point of concern. Employees quit for a multitude of reasons, including:
- Overworking: Overworking kills. According to the World Health Organization (WHO), 745,000 individuals who worked 55 hours every week died due to stroke (398,000)
and coronary/ischemic heart disease (347,000). Overworked employees suffer from productivity loss and low morale, thus compromising the quality of their deliverables. To protect their physical and mental health, they quit.
- Wanting Higher Pay and Better Opportunities: Perhaps an employee was passed over for a promotion, or there was simply a lack of growth opportunities in the workplace. Cases like these prompt employees to look for jobs with higher pay, senior roles, and new responsibilities.
Because employees know their worth, they want to work for a company that aligns with their values, hones their existing skill set, and offers a healthy work-life balance. As a result, the competition for attracting top talent becomes even tougher. If your employees often leave your company, you risk losing your high-performing employees to a competitor.
Outsourced Teams
Outsourced teams are your helping hands, taking care of tasks that your company may not have the time and manpower to complete. They help enhance productivity, as outsourcing teams free up your internal staff from excess workload and non-core tasks. This allows your company to meet increased customer demand and expectations without sacrificing service quality and efficiency.
Furthermore, outsourcing providers can offer performance management tools as well as data-driven insights on employee performance, helping you identify low performers and create tailored professional development programs.
By leveraging these resources and improving opportunities for career development, you create loyal, purpose-driven employees who are confident of harnessing their potential for future promotions.
Therefore, outsourcing becomes not just a way to offload repetitive tasks, but also a means to maximize your internal team’s skill sets and performance for long-term growth and retention.
Why Outsourced Teams Win:
- Improves productivity and performance.
- Helps clients create personalized career development programs.
- Enables greater focus on internal employees’ core competencies.
- Makes employees more purpose-driven.
Retention: How Smart Hiring Improves Loyalty
Internal Teams
Loyalty is not dead. According to West Monroe, cited in an article by Nonprofit Resource Hub, most employees (82%) exhibit high employer loyalty. While employees work for a company for 3.8 years, as per the Bureau of Labor Statistics, they can always change their course for the better. A company with great offers? Employees are ready to leave (59%) and seize the opportunity for a new beginning — one that guarantees growth.
That’s why, for companies, retaining employees is a challenging task. This is due to:
- Weak Employee Recognition: Whether they’re the most loyal of all team members, employees deserve to be appreciated. If they don’t feel valued, they’ll leave and move on to another company that’ll value their hard work and achievements. Employers who recognize their staff members’ milestones enjoy higher retention rates.
- Toxic Workplace: A toxic workplace goes beyond working long hours and unrealistic expectations. It also comes in the form of bullying, gaslighting, and backstabbing. Employees can either address such toxicities— albeit with varying degrees of success — or leave the company altogether.
- Poor Culture Fit: But whether you’re hiring an accounting or marketing professional, recruitment teams must also consider a candidate’s culture fit. Skills and qualifications are important, of course. But an employee who fits into your workplace culture is more likely to stay, therefore improving retention rates.
However, every staff member who leaves brings with them the knowledge and skills they acquired to another organization. With potential candidates expecting more from their employers, companies must rethink how to attract and retain future employees.
Outsourced Teams
If you’re struggling with improving retention rates, outsourcing work to an external provider can be of great help — and you don’t have to lay off your entire team while doing so.
For example — if your company has had a streak of ill-fitted hires lately — an outsourcing team from a recruitment process outsourcing (RPO) company can augment your hiring efforts with out-of-the-box strategies for sourcing better-fit candidates.
Not only is time-to-hire significantly reduced (40%), but you’ll also get the bonus of working with employees who align with your organization’s core values and fit into your company culture like a glove.
Combine culture fit with equal task distribution between your internal and outsourced teams, and you’ll have productive employees who are happy to stay and help your company grow.
Why Outsourced Teams Win:
- Helps clients attract qualified, better-fit candidates — improving retention.
- Minimizes time-to-hire.
- Promotes equal task distribution.
Scalability: How Scaling Smartly Retains Top Employees
Internal Teams
Scalability is always on the horizon, especially if your business is experiencing rapid growth. It’s one thing to aspire for scalability, but to be fully prepared for it? That’s another story. From budgeting to hiring the right people, there’s a lot to think about. While there’s no “perfect” time for scaling a business, increased workload and high employee turnover are clear-cut signs that you need to scale your operations.
But with the high cost of labor in the United States and developed countries, hiring locally may not be the most financially viable solution. Although it’s important to scale purposefully, balancing budget, performance, and retention can be challenging for internal teams.
Outsourced Teams
Picture this: Your internal customer service team is overwhelmed due to a surge in inquiries. It also doesn’t help that your organization has not invested in the right technology for optimizing customer support. With your agents overworked to the bone, their morale and quality of service plummet. High-performing agents leave, and sooner or later, some of the agents follow suit, leaving the rest to pick up the slack.
This situation doesn’t just happen in customer service or any department with high turnover. As mentioned previously, outsourcing to an external provider can help ease everyone’s workload. After all, outsourcing partners take pride in their scalable solutions. Need 10 to 20 outsourced professionals? Your outsourcing partner will take care of supplying the needed headcount.
Because labor is cheaper and recruitment costs are covered by an outsourced partner, it’s more financially viable to scale your team as needed according to demand. With more people on deck, work becomes lighter for your internal staff. Top-performing employees also stay and engage with company initiatives.
Overall, outsourcing encourages smart, purposeful, and cost-effective scaling. By scaling with a reliable outsourcing partner, your company has ample manpower to handle the workload while maintaining optimal service quality and productivity.
Why Outsourced Teams Win:
- Makes scaling efforts more cost-effective.
- Improves morale amid changes that come with scaling, which helps in retention.
Collaboration: How Teamwork Keeps Employees
Internal Teams
Collaboration is tighter among internal teams. Everyone works the same hours at the same workplace. Experienced employees boast institutional knowledge that comes with tenure. Companies with good internal collaboration have effective leadership practices and productive employees.
However, organizations that often dismiss employees’ ideas or feedback set themselves up for turnover due to a lack of respect and appreciation.
Outsourced Teams:
Outsourcing providers offer a hybrid outsourcing model for companies that value collaboration between internal and external teams. While this model brings cost savings and efficiency, the beauty of hybrid outsourcing also lies in the ability of both teams to leverage each other’s strengths.
Internal teams are also exposed to best practices and fresh perspectives, challenging outdated mindsets. This strengthens communication and combats isolation and burnout, making your in-house team feel more connected than ever before. When your employees feel they are a part of a group, they’re less likely to quit their jobs.
Why It’s A Tie:
- In general, internal teams have better teamwork. However, companies with poor team collaboration increase their risk of turnover.
- An external team solidifies teamwork between in-house and outsourced employees. Effective collaboration establishes a stronger connection between team members, thus enhancing retention.
Slash Turnover and Improve Retention With KDCI Outsourcing
Employees come and go, but there might be a recurring pattern to their departure. Whether it’s because of toxic office politics or a lack of recognition, turnover has repercussions for your business.
At KDCI Outsourcing, we help companies boost their retention rates through our outsourced human resources solutions — designed for productivity, efficiency, and performance. Our expertise in HR and recruitment enables us to tackle the root cause of turnover and implement appropriate solutions for retaining employees.
Don’t wait until your employees leave in droves. Nip turnover in the bud and establish your team of offshore HR professionals. Speak with our outsourcing experts today, and let’s discuss how we can help.
