Why the employee retention KPI is crucial to your bottom line

Classic management advice often holds that your company makes money because of products and processes -- and not necessarily because of people. As a result, employees can be seen as interchangeable, with a belief that if someone leaves, he or she will simply be replaced by someone else. That new person will be trained and all will be good for the company.

This approach does work for many jobs, but it is not the best way to think about your field service organization. Your technicians often have very specialized knowledge, and losing one of them can mean a revenue loss in an area they specialized in. Similarly, your employees have built relationships with specific clients they work with. If one of your employees leaves, that relationship could be in jeopardy. That can also represent a revenue loss.

On top of those two situations, you have this concept: if a technician leaves but your workload is essentially the same, that means it is now being done by a smaller group of technicians. That leads to increased workload for all of them, which leads to a reduction in work-life balance, which can stress out technicians -- and possibly lead to another technician leaving. It becomes a domino effect, and the same thing can happen with your back-office employees. When one person leaves, the workload of others increases. That leads to stress, and so on.

Some FSOs do not consider employee retention to be a financially driven KPI to analyze, but it is very crucial to the bottom line. You need to be tracking it, and you need to tie it in with better managerial training, a focus on quick and organic feedback, and overall better communication within your organization. You probably won’t achieve 100 percent employee retention -- even the best companies in the world to work for do not do that -- but you should definitely aim for over 80 percent, meaning 8 in 10 of your people are consistently staying with you.

It is important to focus internally on a metric like employee retention, because without a strong internal focus, there is almost no way to be successfully externally (with clients).

All this said, employee retention is simply one KPI that your FSO should be tracking in real-time. There are potentially a dozen more. We have put together an eBook on eight real-time KPIs that will help drive your business forward. You can download it now.

And as always, if you have any questions about FSO management or employee retention strategies or anything else, do not hesitate to contact us.

Written by Julio Hartstein