When you are competing for top talent, finding and retaining the best employees is critical. There will always be turnover. You need to keep it to a reasonable limit by hiring right and taking good care of your workforce.
The Real Cost of Turnover
Frequent churn hurts your company from a bottom-line standpoint – and then some. There are both tangible and intangible wounds that result from having a revolving talent door.
- The financial hit from losing an employee can range from tens of thousands of dollars to two times a person’s annual salary or higher for senior-level roles. Estimates vary. The Society for Human Resource Management recently put this cost at six to nine months’ salary to replace a person. The Center for American Progress lists a range of costs, from 16 percent of annual salary for jobs paying less than $30,000 a year to 213 percent for highly educated executive positions.
- The real cost of turnover also encompasses a number of other factors. These include advertising, interviewing, screening and hiring a replacement. This is followed by onboarding and training. Add lost productivity as a new hire can take up to two years to reach the output level of an existing employee. Engagement is lost on the part of other workers who witness high turnover and likewise experience productivity slumps. Customer service can suffer and errors often increase, simply because new team members take longer and are often less adept at solving your unique business problems.
- People are an appreciating asset. The longer they stay with a company, the more productive they become. Over time, they master the systems and products and learn to work together like a fine orchestra. Most employees are cost to your organization at first. With the right practices, they increase in value. Your job is to move them up this curve as effectively and efficiently as possible.
Use Your System to Drive Retention
Think strategically about talent retention and management. High-performing companies serve their employees just as well as they serve their customers and are rewarded with loyalty. Each company has its own unique retention model. Define and understand yours. Know what matters:
- Compensation counts, yet not as much as you may think. Too little compensation will increase churn, but overcompensating people will not make up for a poor culture or work environment. In highly competitive positions, compensation is critical, but it is by no means the only motivator.
- Job fit ranks high. Consider not only your employee value proposition, but more accurately, your job value proposition. Be sure you are attracting the right people for each and every role. Some jobs are particularly demanding. Honestly explain roles and their positive and negatives – and you will draw people who fit. If you oversell a job, you will increase turnover.
- Career growth matters. Millennials and young professionals are rapidly moving into high-value roles. They are motivated by rapid growth, career opportunities and meaning. Their primary focus is on work/life balance, fun and collaboration. This is not your father’s workplace.
- People seek value alignment. Research has shown that people at work respond through Maslow’s Hierarchy of Needs. Once they are “safe” – or paid well enough to sustain their lifestyle – they seek more value. This means good use of their skills, appreciation and recognition, an inclusive and diverse environment and the opportunity to take pride in their work. Their personal goals, aspirations and values need to align with those of their employer.
The team of specialized recruitment experts at BrainWorks can help you achieve better recruitment, retention and talent management results. We know your business and your industry, and we are passionate about your success. Contact us today to learn how you can achieve the highest return on your talent investment.