The ROI of Listening: How Employee Feedback Drives Retention

2 women at work talking in front of a white board, and written on it is "feedback"

There has never been a more important time for companies to listen to their employees. Why? Because the workplace is in constant flux: hybrid and flexible work are hot topics of conversation, quiet quitting is increasingly becoming more prevalent, and employee well-being is no longer something you can just check off your list. For HR leaders and executives, actively seeking (and, more importantly, acting on) employee feedback isn’t just a feel-good initiative.

Believe it or not, it’s a strategic investment with measurable returns.

The True Cost of Employee Turnover

It’s no secret that employee turnover is expensive. In fact, studies estimate that replacing an employee can cost anywhere from 50% to 200% of their annual salary. But beyond the financial implications, turnover can wreak havoc on team dynamics, productivity, and workplace morale. High retention, on the other hand, can have the opposite effect as it provides a sense of stability and can lead to organizational growth.

This all begs the question: How can organizations cultivate a culture of loyalty? The answer? By tuning into what their employees have to say.

Feedback as the Foundation of Retention

It’s simple. When employees feel heard, they stay. And yet, many organizations fall short on this one crucial action. According to a Gallup study, only 3 in 10 employees (30%!) strongly agree that their opinions count at work. That 70% gap of unheard employees is not only a missed opportunity but also a potential churn risk.

Here’s how prioritizing employee feedback can directly impact retention:

Building Trust: Regularly requesting feedback shows employees that their opinions matter. And when their input is met with action, their trust deepens. The result is a workplace where employees feel valued and respected.
Identifying Hidden Pain Points: Exit interviews often reveal issues that, if addressed earlier, could have prevented departure. So why wait until they’re out the door before getting to the root of the issues at hand? Continuous feedback loops provide insights into potential challenges before they escalate into expensive turnover.
Strengthening Engagement: Did you know that engaged employees are 87% less likely to leave their organization? Providing ways for employees to share feedback – whether through surveys, focus groups, or even one-on-one check-ins – allows them to share ideas, frustrations, and how they envision themselves growing with the company. And that can create a deeper connection to their roles and the organization.

Measuring the ROI of Feedback

Listening to what employees have to say doesn’t just improve morale. It can also work wonders for your bottom line. Here’s how HR leaders and executives can quantify the ROI of employee feedback:

Reduced Turnover Costs: Calculate the savings from retaining employees who might have otherwise left due to unresolved issues. (See the bullet about exit interviews above…)
Increased Productivity: Employees who feel heard are more motivated and productive, directly impacting organizational efficiency.
Stronger Employer Brand: Word spreads quickly in today’s digital age. Companies known for prioritizing employee feedback attract top talent and benefit from a stronger reputation in the labor market. (Just last month, it was announced that Starbucks CEO, Brian Niccol, increased the company’s paid parental leave as a result of an email he received from an employee. Not only did Starbucks partners (as they’re called) gain value from the improved benefit, but Starbucks made headlines as a result.)

Turning Feedback into Action

Collecting feedback is only half the battle, and is not nearly enough. If you want to make a real impact, you must follow through. Here’s how you can maximize the impact:

Close the Loop: Publish key findings through internal communications from feedback sessions, and outline the steps the organization plans to take. Aim to be as transparent as possible in service of building credibility.
Prioritize Actionable Insights: Not every piece of feedback requires immediate action. Focus on themes that emerge from all the input you receive that align with the company’s strategic goals or represent widespread concerns.
Lean on Your Leaders: Equip managers with tools and training to address team-specific feedback. Managers on the front lines often play an important role in shaping the day-to-day experiences of employees.

Listening as a Competitive Advantage

Organizations that excel in listening to employees don’t just reduce turnover, they gain a competitive edge. Creating a culture of open communication can help position a company as a workplace of choice – even in tough hiring markets.

If you truly want to care for your employees, you must listen first. Taking feedback seriously can help your organization retain top talent and also result in success.

Let's Take the Next Step Together

Training leaders to communicate effectively and listen to their employees is the foundation of the CARRY™ Consulting process. Book a consultation with CARRY™ Consulting today to enhance your internal communications and start driving real change in your organization.