Losing talent is expensive
You have probably heard that losing talent is expensive, but how expensive is it really? Why is good talent retention important?
Coming from a sales background I have witnessed several companies struggle with a high turnover of salespeople together with sales managers and HR is challenged to recruit the right people with crucial traits.
It even comes up as CEO’s top business priority to recruit the right talent (PWC, 20th CEO Survey, 2017). So needless to say – talent acquisition affects business results.
What’s the cost of losing talent?
In 2016, the time to fill a position has increased by 50% from 2010. Also, the average vacancy costs $500 per position per day and multiplied with 44 days (the average period to fill a position) it adds up to an astonishing $22,000 to fill a position (CEB, Global Talent Trends Q2 2016). Of course, this also depends on what type of position there is to be filled and the average salary.
In some cases, the cost of losing an employee is accrued to 213% of the employee's salary in one year
(Many Employees Have a Mid-Career Crisis. Here’s How Employers Can Help, Serenity Gibbons for Harvard Business Review, 2018).
That is a lot of money…
What about the non-monetary cost?
Surely, it’s not just about money when losing an employee. It’s also about losing the friendship, hope, and purpose for the remaining employees. Something I have experienced myself in some organisations. It essentially made me pose questions like “Why are they leaving?”, “Am I missing something that is about to happen in the organisation?”, “Is the grass greener on the other side?” and so on… In those times it has taken away my focus from my tasks and, honestly, led to less productivity. Which I am sure not what my employer would have wanted from me.
In addition, consider these costs as well:
- Hiring a new person (recruitment agencies, advertisements, interviewing with several managers, and tests)
- Onboarding (training, time with management and other employees)
- Loss of productivity (it takes time to reach full productivity, sometimes 1-2 years of the former employee)
- Loss of engagement from other employees (the high turnover disengages other employees and loss of trust for the company)
- Errors and less customer service (it takes time for new employees to solve problems)
- Training costs (over 2-3 years its common to invest 10-20% of an employee's salary into training – that is being lost)
(Josh Bersin by Deloitte, 2013)
In summary, the company and managers lose honed skill sets, knowledge and trust from other employees and shareholders. Employees are considered assets for companies, but the valued employees bring more value to the companies they work for over time. The longer employees stay within an organisation, the better more productive they get as they learn and fine-tune products, systems, and collaborations between other departments and employees
How often does a person change jobs?
On average, a person stays at a job for 4,2 years. Which means they would change jobs 10-15 times during their career
(The Balance, ‘How often do people change jobs?’, 2018).
But it gets worse… the new millennial generation is much more open to changing work quickly. If given the choice, 38% of millennials globally would leave their jobs within 2 years (The Deloitte Millennial Survey 2017). Ouch! That can really hurt a company’s retention figures.
Serve your employees just as well as your customers
So, don’t lose your valued talent when you have already invested thousands in recruitment, training, and guaranteed commission.
The most successful companies have a strong purpose, a common sense of mission, shared vision and deep respect for their employees and customers. They also put invaluable time, money and energy to create an engaging environment where the right people have development opportunities and can continuously add value to the company and its customers.
It doesn’t matter in which industry you are operating in as the heated economy and the shifts in demographics (millennial's entering the job market) force you to compete for the best talent.
Remember that if you want your company to be high-performing you must have loyal employees. This means you need to serve your employees just as well as you serve your customers.
If you are curious how 1-on-1 coaching could support to retain your talent, please contact me.