Human resource retention is a state in which employees continue to work stably over a long period of time without leaving the company. If the human resource retention rate improves, you can achieve effects such as “improved productivity and efficiency” and “easier increase in the number of talented human resources.”
However, many people may be worried, saying, “I know it’s better to retain human resources, but I don’t know exactly what to do.”
In this article, we will explain the current situation, benefits, and specific measures for retaining human resources for those who are facing issues with retaining human resources .
Table of contents [ hidden ]
- 1. What is human resource retention?
- 2. Current status of human resource retention in Japan
- 3. Three benefits to increase human resource retention rate
- 4. Reasons why human resources are not retained
- 5. Five measures to retain human resources
- 6. Retain human resources and increase productivity
1. What is human resource retention?
Human resource retention is a state in which employees continue to work stably over a long period of time without leaving the company . By retaining human resources, companies hope to prevent the loss of talented personnel and ensure that they remain active over the long term.
“Retention,” which is attracting attention in the human resources field, means “retention, maintenance, and retention,” and is a word that refers to efforts to retain human resources.
In recent years, resistance to changing jobs has decreased due to the diversification of work styles and the fact that it has become easier to start a business than before. Many companies recognize that retaining human resources is an important issue, as a loss of talented human resources leads to a decline in productivity and an increase in recruitment costs.
There are many job seekers who consider the staff retention rate as a deciding factor when choosing a company. A low staff retention rate can lead to a situation where new staff are not brought in.
In order to stop the outflow of talented human resources and continue to grow companies, efforts to retain human resources are essential regardless of company size or industry.
2. Current status of human resource retention in Japan
We will explain the current state of human resource retention in Japan from the following perspectives.
- Human resource retention rate in Japan
- Human resources retention rate by industry
I will explain each in detail.
2-1. Human resource retention rate in Japan
According to the “Summary of the 2020 Employment Trend Survey” released by the Ministry of Health, Labor and Welfare, the turnover rate for companies as a whole in 2020 was 15.0%. On the other hand, the retention rate is 85.0%.
The following table shows the results of a survey conducted by the Ministry of Health, Labor and Welfare in 2021 on the reasons why new employees quit their previous jobs.
| Reason for leaving my previous job | male(%) | woman(%) |
| I wasn’t interested in the content of the job. | 5.0 | 3.8 |
| I was unable to make use of my abilities, personality, and qualifications. | 4.3 | 4.8 |
| Human relations at work were not good. | 8.1 | 9.6 |
| I was worried about the future of the company. | 6.3 | 4.5 |
| I had little income such as salary. | 7.7 | 7.1 |
| Working conditions such as working hours and holidays were poor. | 8.0 | 10.1 |
| marriage | 0.5 | 2.2 |
| Childbirth/Childcare | 0.1 | 2.1 |
| Nursing care/Nursing | 0.7 | 1.5 |
| Other personal reasons | 19.1 | 24.6 |
| Retirement age/expiration of contract period | 16.5 | 12.3 |
| Company circumstances | 7.3 | 7.8 |
| Other reasons (including secondment, etc.) | 15.0 | 8.0 |
Approximately 40% of all employees leave their jobs due to dissatisfaction with the company’s work content, evaluation, or working environment.
2-2. Human resources retention rate by industry
According to the Ministry of Health, Labor and Welfare, the retention rates by industry for FY2020 are as follows.
| industry | Retention rate (%) |
| Mining, quarrying, gravel extraction | 93.7 |
| Construction industry | 89.5 |
| manufacturing industry | 89.8 |
| Electricity, gas, heat supply, water industry | 89.3 |
| Information and communication industry | 88.1 |
| Transportation/postal industry | 87.7 |
| Wholesale/Retail | 85.4 |
| Financial industry/Insurance industry | 91.7 |
| Real estate business/goods rental business | 86.2 |
| Academic research/professional/technical services industry | 90.0 |
| Accommodation/Food service industry | 73.2 |
| Life-related service industry/entertainment industry | 81.3 |
| Education/learning support industry | 84.8 |
| Medical/welfare | 84.7 |
| Complex service business | 89.0 |
| Service industry (not classified elsewhere) | 80.6 |
In FY2020, while the retention rate is high in the financial industry and mining/quarrying industry, the retention rate in the service industry is low .
In particular, the “accommodation/food service industry” is the only industry with a retention rate of over 70%, and it can be said that it is an industry where efforts to retain human resources are important.
3. Three benefits to increase human resource retention rate
There are three benefits to increasing staff retention rates:
- Reduce recruitment and training costs
- Improve productivity and efficiency
- It becomes easier to increase the number of talented human resources
I will explain in detail.
3-1. Recruitment and training costs can be reduced
By increasing the retention rate of human resources, it is possible to reduce costs related to recruitment and training.
If human resources are left behind, new employees will have to be hired and trained, which will require a lot of cost and time to complete the training.
On the other hand, if we can prevent the outflow of human resources, it will lead to a decrease in recruitment opportunities, and as a result, we will be able to reduce recruitment and training costs .
3-2．Improve productivity and efficiency
The second advantage is that increasing the retention rate of human resources also leads to improvements in productivity and efficiency.
Even within the same person, new employees and veterans have different work skills. Therefore, companies with many employees who continue working for a long time are more likely to improve productivity .
In addition, teamwork among employees who have worked together for a long period of time improves, so you can expect to improve work efficiency even without special measures.
On the other hand, in companies with a high turnover of personnel, there are many cases where employees are unable to carry out their original duties due to the large number of handovers. As a result, it becomes difficult to work on the original work, leading to a decline in productivity.
3-3. It becomes easier to increase the number of talented human resources
The third benefit is that it will be easier to increase the number of talented human resources.
A high staff retention rate gives the impression that the company is a rewarding company and a company that is easy to work in, which is a strong appeal to job seekers.
If you promote your work with specific data on your company’s website or employment site, you will increase the chances that talented people will apply .
In addition, there are cases in which employees who feel that their company’s environment is good will introduce people from outside the company.
4. Reasons why human resources are not retained
Reasons why companies do not retain human resources include:
| Reasons for not taking root | |
| There is a discrepancy in the work content | There is a disconnect between the work that companies want and the work that employees want to do. |
| working environment is not good | The environment is difficult for employees to work in, such as “long working hours” and “difficult to take paid/childcare leave.” |
| interpersonal relationships are not good | There are many problems between employees. There is no one or place to go to when a problem occurs |
| Evaluation is not appropriate | I have received an unfair evaluation for the work I have done. I don’t understand the evaluation criteria |
| I don’t feel like there’s a future | I feel anxious because I can’t see what I can gain by staying at this company for a long time. |
Companies that are struggling with low staff retention rates are likely to be giving their employees the same feeling as above.
No matter how many measures are taken to increase human resource retention, unless the root cause is eliminated, the retention rate will not improve.
Therefore, before implementing measures to retain human resources, it is important to reflect on the current situation and clarify what kind of existence the company represents for its employees.
5. Five measures to retain human resources
Here are five measures to help retain human resources.
- Prevention of mismatch
- Improving the working environment
- Introduction of a flexible working system
- Introduction of a system that allows for appropriate evaluation
- Implementation of training and skill development
If you are facing challenges in retaining human resources, please refer to this guide.
5-1. Prevention of mismatch
The first is to prevent mismatches.
If the company and the job seeker are hired without a mismatch in their perceptions, the difference between the image and the reality will reduce motivation , making it more likely that the employee will leave the job.
As an example, you may want to take the following measures:
- Disseminate internal information and work details to the outside world
- Create an environment where you can speak honestly during the interview
Specifically, we will communicate information through our official website and social media, and conduct interviews with as few people as possible.
5-2．Improving the working environment
The second is to improve the working environment.
Many people leave their jobs due to poor working conditions , such as long working hours, frequent holidays , and difficulty in taking paid or childcare leave.
If you have an environment like the one above, you need to understand your company’s situation and make improvements. Specifically, the following are effective.
- Introduction of a complete five-day weekend system
- Establishment of a consultation desk
However, there is no point in introducing a system just for the sake of it. There is always a cause for a bad working environment, and even if you introduce a system without solving it, there is a high possibility that it will fade away in the near future.
When working on improvements, it is a good idea to understand the root cause and improve the problem, and introduce systems as necessary.
5-3. Introduction of a flexible working system
The third is the introduction of a system that allows for flexible working.
In recent years, more and more people are placing importance on balancing work and life, or so-called “work-life balance.”
Therefore, introducing telework and flextime to accommodate diverse lifestyles will lead to improved human resource retention rates.
It is also important to create an atmosphere in which supervisors actively encourage employees so that they can use the systems provided without hesitation.
5-4．Introduction of a system that allows for appropriate evaluation
The fourth measure is to introduce a system that allows for appropriate evaluation.
If employees feel that their accomplishments are not being properly evaluated, they will lose motivation to work, and in some cases, this may lead to them leaving the company.
In order to prevent the loss of human resources due to evaluation methods, it is effective to introduce a system that allows for appropriate evaluation. For example, there is the following evaluation system.
| 360 degree evaluation | Receive evaluation from employees other than superiors |
| incentive system | Give special rewards for performance |
Additionally, cases where evaluation criteria are not well understood can easily lead to employee dissatisfaction. Therefore, it is important not only to introduce a system but also to clarify and disseminate evaluation criteria.
5-5．Implementation of training and skill development
Creating opportunities for in-house training and skill development is also effective in improving staff retention.
Young employees in particular tend to have a strong desire to improve their skills. Having plenty of opportunities to grow will increase your motivation .
Additionally, if there is more training and skill development, there will be a better follow-up system, which can be expected to have the effect of preventing early resignation.
6. Retain human resources and increase productivity
Human resource retention refers to measures to prevent the outflow of human resources and create an environment where talented human resources can continue working for a long period of time.
This is an important issue in today’s world of high mobility of human resources, and many companies are working to improve retention rates.
There is always a reason for low retention rates. If you review your company’s situation, clarify the issues, and take the necessary measures, your retention rate will improve.
Use this article as a reference to retain many talented people and grow your company significantly.
