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5 Ways HRMS Can Increase Employee Retention

A high turn-over rate is not only a waste of time, but also carries exorbitant financial costs. According to the Society of Human Resource Management, the quitting of an employee and the hiring of a new one can cost from 90 to 200% of the employee’s annual income. According to another estimate, it can cost from 30 to 400% of the leaving employee’s annual income, depending on whether the employee was a beginner or an experienced professional.

The need to increase employee retention is clear. Human resource management systems can help improve retention rates in several ways:

1. They track employee performance, and enable rewards and recognition

Many HRMS systems contain a performance appraisal or evaluation module. With a standardized method to evaluate employee performance, management can keep track of employee performance. Thus, underperforming employees can be enrolled in training programs or coached further, and employees who are exceeding expectations can be given raises and promotions. Being recognized for their work and effort will increase their dedication and loyalty to the company, making them more likely to continue working there for a longer time.

2. They convey objectives and goals to employees

Having a clear idea of what one needs to do in a certain position is vital in improving performance. HR systems usually qualify the objectives and Key Performance Indicators for specific roles. Keeping in view these goals and KPIs, employees will be better aware of what is expected of them. They may even be able to track completed and pending goals. With clearly-defined objectives, employees will be able to stay focused and will be less likely to quit from the frustration of not being conscious of their responsibilities.

3. They facilitate professional growth

One of the most common reasons why employees leave a company is not having enough development opportunities. However, HRMS systems help the management see the skills and shortcomings of employees, enabling the identification of training needs. Better training and development will open up more opportunities to move up the professional ladder, reducing the chances of employee disaffection, and increasing the chances of retention.

4. They allow employees to communicate with the management

HR systems allow employees to communicate with the Human Resources department and management with ease. Employees may be reluctant to communicate in person and may be more comfortable submitting complaints in writing. HRMS enables employees to air their grievances, make suggestions, and provide feedback, making them feel heard and enhancing their employee experience. Having a better experience in the company will make it more likely for them to remain.

5. They help companies understand why employees quit

Many companies conduct exit interviews when employees leave. HR systems can optimize this process through electronic exit forms. Leaving employees may be reluctant in giving honest opinions in a face-to-face interview and may be more comfortable and honest when providing feedback through online forms. Accurate feedback is important because it can help companies work on any recurring issues that lead to resignation of employees, thus increasing their retention in the long term.



In conclusion, with a suitable HRMS solution, companies can encourage employee engagement and satisfaction, and increase their retention. Employees being arguably the most important assets of a business, their satisfaction and lower turnover rates will predictably fare well for the business.