When a top performing employee leaves your company this can often be a headache for Human Resources – especially when employee turnover is increasing faster than ever.
In 2015, HR expenditure globally, was in excess of $400 billion (Bersin, 2016)and in the United States spending on corporate training grew by 15% in 2013 to over $70 Billion and over $130 Billion worldwide (2013) (Forbes/Deloitte). Organisations are investing in software and consultancy to understand how they reduce employee turnover.
However companies of all sizes are still struggling to attract, retain and engage employees, this difficulty has been coined the “war for talent”. Lars Schmidt a contributor to Forbes refers to retention as the biggest talent challenge of 2017 and Schmidt examines Linkedin’s report, “Global Recruiting Trends 2016”, and identifies a concerning aspect of the report. Only 32% of global talent leaders view retention as a top priority. Let’s look at why retention should be viewed at a top priority.
The monetary cost of replacing an employee is huge and a employee turnover can have a significant impact on your company’s bottom line.When an employee leaves your company, the result is a loss in productivity, additional HR hours, job postings, recruitment fees, interview hours, productivity gap. In short: Employee turnover is expensive.
Organisations also have to factor in the cost for replacement and the additional costs including training, exams and other expenses that come with new hires.
Organisations need to have a strong strategy of how they retain employees as it is becoming an increasing high cost factor for global organisations.
The figures below provide an average cost of replacing an employee within defined wage brackets.
- Average cost to replace a $30,000/yr employee = $4,800
- Average cost to replace a $50,000/yr employee = $9,850
- Average cost to replace a $75,000/yr employee = $15,300
- Average cost to replace a $100,000/yr employee = up to $213,000
- Average cost to replace a $250,000/yr executive = up to $532,500
(Corter Consulting, 2014)
But the good news is that organisations can take action now to keep their investment in their workforce. Organisations can improve this situation by implementing simple strategies to aid this challenge. We have spoken to many organisations worldwide and gathered three key strategies organisations can adopt to improve their retention.
– Communicate: Understand early what your employees want to achieve within the organisation. 30% of employees leave an organisation as career goals have not been met.
-Encourage: Managers should encourage employees to continually learn outside of their position to enable their skills further and to look to other potential positions within the company. Organisations who allow the movement of their people internally can dramatically reduce their employee turnover as a direct result.
– Culture: Many organisations underestimate the importance of setting the right culture within the organisation. This is one of the most critical factors an organisation needs to succeed with. 85% of new employees look to a companies culture before accepting a new job position.
Negative culture within an organisation leads to high employee turnover and this can also affect the organisation’s reputation externally. Creating the right culture where teams can feel valued, listened to, gain feedback and progress professionally will lead to happier employees!
How Talivest can help you build an engaged workplace
Talivest is an online platform that helps global companies tap into rich networks of their past and future talent. We help organisations understand why employees are leaving, stay connected with them and help re-hire high performing alumni as boomerangs. This results in reduced recruitment costs, boosted productivity, improved brand culture and a rich talent pool for referrals and boomerangs.