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Why employee retention may be cheaper than recruitment

Which matters more: recruitment or retention? Many employers struggle to answer this easy question. Every organisation is powered by its people, and hiring the right people starts with strong recruitment. Typically, employers believe that finding talented, motivated, experienced, and high-potential applicants to fill open positions is the best way to ensure a prosperous future of growth and innovation. But how much is that talent worth if it walks out the door after a year or two? Retaining existing employees means building institutional knowledge in your workforce and generating more stability.

Why employee retention may be cheaper than recruitment

Here is why employee retention may be cheaper than recruitment for small businesses, as told by Background checks.

Recruitment in a job seeker’s economy

The respective value of recruitment and retention shifts depending on the economic situation. During the recession, when unemployment rates were high, and candidates were plentiful, it was vital for companies to focus most of their energy on finding and hiring the right people. The economy drove retention because people who were stably employed wanted to stay that way.

Now, employers are contending with the opposite. The current unemployment rate in the UK is one of the lowest seen in decades. Almost all industries have more job openings than they do applicants to fill them. In hiring, this trend is called a “job seeker’s economy.” Today’s job seekers have the power to demand more from would-be employers, from higher salaries to better benefits packages.

The job seeker’s market won’t last forever: many economists are predicting a slowdown in 2020, if not the start of a full recession. In the meantime, employers need to strategise how they are going to stay competitive while most organisations are seeking skilled, qualified people.

Modern recruitment is challenging

The first thing that is critical for employers to understand is that recruitment is extremely challenging right now. There aren’t as many people looking for jobs, which means that most modern recruitment involves reaching out to people with stable employment and trying to woo them away from their current jobs.

It is more difficult to recruit someone who is happy in their current job than it is to attract someone who is actively looking for new employment. Switching jobs is a life-disrupting and potentially highly stressful experience. If someone is content in their current job, a prospective employer will need to make them an offer they can’t refuse. Modern recruitment tends to involve high salaries, big signing bonuses, and cushy benefits packages, among other perks.

Retaining top talent strengthens company culture

Retention benefits from the job seeker’s economy. If you are trying to retain a team of talented, hardworking employees, then you want them to maintain the mindset that they have no reason to walk away—but that mindset isn’t something that comes for free.

Contentment in the workplace takes engaging and fulfilling work, strong company culture, good work-life balance, and other factors that play into the employee experience. If you want to turn your organisation into a workplace that people don’t want to leave, you need to work at it by: 

These are all steps that can all make a difference in employee satisfaction and retention. They will also demand commitment from those at the highest level of your organisation.

Retention is ultimately more about the mindset and values of an organisation than it is about investment. While retaining top talent will cost your organisation money—from educational opportunities for employees to more attractive policies for family leave—those investments ideally stay within your company by boosting institutional knowledge, experience, and employee loyalty.

Turnover is costly

Employee turnover is extremely expensive. Even if you manage to recruit a top-tier candidate who can ace your interviews, pass background checks, and meet all your qualification requirements, there is still the process of training, onboarding, and integrating a new hire into the culture of your business.

It can take months for an organisation to adjust after a new hire, affecting productivity, morale, and more. Finally, without good strategies in place for retention, there is a chance that those hires won’t last, which means even more rebuilding and adjusting.


Both recruitment and retention matter. However, in today’s job market, with low unemployment rates and the challenge of attracting qualified hires in any industry, employee retention is a cheaper investment option for businesses than recruitment—and a more valuable one.

More on HR and staff management and company culture strategies.

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