In today’s workforce, employees are constantly on the move for better opportunities. In fact, CareerBuilder’s Candidate Behavior Study determined that 3 out of 4 full-time employed workers are open to or actively looking for new job opportunities. Employees can leave for a variety of reasons: lack of recognition, absence of rewards, dishonesty, no chance of career progression, shortage of feedback, no access to personal development or training, lack of mentorship or micromanagement. However, all factors can be traced back to a root cause: low employee engagement.
In this blog, we will analyse the real costs of not only replacing your employees but replacing your best ones. What are the implications of staff turnover for your company?
When talking about costs, we instantly think of monetary costs. Staff turnover in the first year costs Australian businesses $3.8 billion, in New Zealand it costs three times an employee’s salary in their first year and in the US this number is $160 billion a year.
These are startling statistics, but there is more than dollars to lose when your best talent leaves your company. What other costs or challenges does your business face when staff leave?
They are more difficult to quantify, but some soft costs that instantly jump into our minds include: loss of knowledge retention, plus additional training for current and new employees; low organisational morale and engagement; and low organisational performance.
When one of your best people leaves, the employees who stay wonder if they are doing the right thing by staying in the company; they consider whether there is something wrong with the company and if they should start looking for better opportunities… but this is something that also crosses the minds of your clients. When a good employee leaves, the clients wonder if there is something that they aren’t aware of and if they should look for a new vendor elsewhere.
In the period between one staff member’s departure and another becoming fully trained, other team members must cover the leftover work. This, in turn, decreases the engagement level of the rest of the team, reducing productivity and increasing the likelihood that these employees will consider seeking new positions as well.
Additionally, it is crucial to remember that not every employee is replaceable. There are some employees that make other people want to show up and stay in your company. Some employees, generally the more engaged, carry an extra added value that simply cannot be replaced. Despite this reality, CareerBuilder’s research noted that business leaders are confident that those who leave the company can be easily replaced and focusing on engaging current employees appears to be seen as unnecessarily time-consuming and expensive in their minds.
Sometimes when you don’t value your employees enough and don’t adequately take care of them, you don’t realise if the people that you are losing are your best and brightest employees or not.
Recent studies show that high performance employees deliver 400% more in productivity than the average employee and, if they are not satisfied with their jobs, 1 in 5 employees will be likely to leave the company.
High turnover means significant investment in recruiting and training new employees, rather than in developing current staff members with the goal of keeping them engaged. Turnover is and will always be far costlier than improving employee engagement, both in the short-term and in the long-term. It is high time to think what you, as an employer, can do to keep your employees engaged and reduce these costs for your company.