In a global economy, attracting, retaining and developing talent should be a fundamental strategy for any organization.
The market is competitive and it’s projected to get increasingly more challenging with the ease of finding talent at the click of a button. Now, more than ever, employee retention is critical to the long term health of an organization. When good employees leave, it not only affects day-to-day operations, but also has an impact on underlying factors that aren’t always observed on a surface-level.
Here are 5 direct impacts employee retention has on your business and brand.
1. Costs: Hiring, training and Onboarding
The hiring process, from advertising, interviewing, screening and Onboarding, takes an average of 42 days. Every time an employee leaves, there are costs associated with replacing and training that resource- this is about 21% of an employee’s annual salary! A recent SHRM Survey drills deeper and adds that the average cost per hire is about $4,129. If you’re budgeting to hire 100 people in a year, that’s $40,000!
When recruitment costs account for most of your budget, it’s hard to allocate money towards product innovation or marketing campaigns to increase brand awareness.
2. Staff productivity and customer service
It takes time for new workers to become familiar with their role. A recent Allied Workforce Mobility Survey states 30% of organizations reported it takes a year or longer for a new employee to reach full level of productivity. A high turnover directly results in the loss of experience, knowledge and training – all of which directly relates to the level of customer service provided.
Employees who are still learning processes and policies aren’t prepared to offer the same level of customer service that an experienced staff member can. When customers are unhappy, they are unlikely to do business with the brand. As a result, the brand suffers a mediocre or poor reputation due to bad service provided.
Knowledge is the key to positioning your brand as a leader in the industry. Having seasoned subject matter experts in the organization is an asset as they can help support the transfer of industry and company-specific knowledge. Company-specific knowledge or tactic knowledge, for example, is experience gained while on the job and is hard to transfer from one person to another—like knowing the business process at one company versus another for the same task.
If new employees don’t have access to knowledge sharing with experienced staff, there will be a lack of standards across departments within the organization. In fact, knowledge sharing with people within, across and outside of your organization can enhance their ability to be innovative, creative, and increase the ability and speed of problem solving.
4. Employee engagement and morale
If turnover is high and an organization spends the majority of its budget on hiring and Onboarding new resources, it means less money can be dedicated to the development and engagement of current employees. A recent study found seven out of 10 people admit training and development opportunities influence their decision to stay with a company.
Many organizations fail to realize that the most expensive and time consuming part of the hiring process is finding the right cultural fit. By hiring external talent as opposed to investing in the development of current talent within the organization, it creates a disconnect between your employees and your business. This frustration from disgruntled employees causes them to become less likely to advocate for the business.
5. Smaller talent pool
The internet offers a wealth of information, including things like company reviews on sites like Glassdoor. These sites allow employees to anonymously rate their employer’s salaries, management, interview styles and corporate culture.
A company with poor reviews from current or previous employees can deter top talent as the company’s branding is negative and a lot of top talent would not choose to be associated with a company with such a poor reputation.
Are you keeping your employees happy? When 69% of job seekers say they won’t accept an offer from a company with a bad reputation, there’s a distinct correlation between talent retention and brand perception.
Are you working with a staffing agency to find top talent?