While hiring good people is definitely essential, employee retention is crucial in today’s economy. In fact, the effort to retain your employees should start as early as the moment an individual becomes a potential candidate, not when an individual threatens to leave. It’s just not enough to hand your staff a paycheck anymore. Now is a great time to consider what you’re doing to invest in your employees and what it will cost you if you don’t.
While money, gifts, and incentives are all nice, they often aren’t enough to keep people around longterm, especially if they are already dissatisfied. If your people don’t like the company, the people they work with, their boss, or the way they are being treated, they’ll leave. It’s as simple as that. Your job is to provide your workforce with a reason to hang around.
Your company must have a retention strategy that is in place long before departures are being threatened. Recognize what your employees want from their job and figure out what must be done to help employees meet their personal and professional goals. Then develop and implement a loyalty strategy that works if you want your business to thrive.
Of course, being able to effectively motivate people is not an exact science. There is no magic pill that always works – what may be an incentive for one person may not work at all for another person. For example, one employee might need flexible hours to be able to care for a sick family member, while another employee may appreciate skills development training. You must find out what motivates individual employees in order to retain them. That process can start as early as the first interview but is a conversation that should be revisited often. However, if you can find solutions that team’s needs, you’ll reap the benefits with a more profitable company; happier, more productive employees; and more satisfied customers.
Why Should Companies be Concerned about Employee Retention?
- Losing top employees (or any employees) can result in substantial recruiting, hiring, training, administrative, and productivity-related costs. Furthermore, the risk of losing customers increases the potential costs of top employee turnover. Top talent has a tendency to take their customers with them.
- On another note, the generation gap continues to create headaches for succession planning. While the economy continues to grow, the annual birth rate has just hit a 32-year low that will affect businesses for many years to come. In fact, economists are forecasting the economy to grow twice as fast as the total labor force over the next decade. With an inevitable labor shortage, that kind of growth can only be achieved with significant productivity gains. Will your business be able to keep up?
- In addition to the above points, the U.S. Department of Labor reports that the average length of stay with a company among workers aged 25 to 34 is only 2.8 years compared to the tenure of workers between the ages of 55 to 64 at 10.1 years. Younger workers aren’t staying with an organization for the length of their careers anymore. If a company is unwilling to meet the needs of their workforce, that workforce will look elsewhere.
Can you Calculate the Actual Cost of Losing an Employee?
Short answer, no. There is no objective method of calculating the cost of losing an employee. Many managers just accept that turnover is inevitable and spend their energy managing a pipeline of potential talent. However, the cost associated with training a new employee can be substantial, and the training and knowledge given to a new employee is a substantial investment that shouldn’t be ignored. To continue to train new employees as a result of even a modest employee turnover rate can be costly.
Yes – finding, recruiting, hiring, training and development another employee is expensive. In fact, the total cost of “losing” an employee is far greater than any other cost in your business (including equipment). It is estimated that the cost of replacing an employee is 70-200% of that employee’s annual salary.
So, what can you do to attract good employees and keep them? We’ll address this question in more detail within another post (or 2 or 3 – it’s a big one), but it all starts with making the right hire to begin with.
Recruiting Support with Recruiteze
An effective recruitment and retention strategy starts with Recruiteze. Want to use it for free? You can access our online recruiting software for free with a basic membership. Recruiteze is our online applicant tracking system that allows candidates to apply to be added to your database immediately. End-users can access candidate resumes online and make changes quickly. Recruiting based on your needs has never been easier with your custom job board. This feature allows candidates and customers easy access to information and creates a level of professionalism expected in today’s marketplace.
When your staffing agency or firm needs help with recruiting online, make the right choice by using our powerful recruiting software! Recruiteze is a world-class ATS that makes recruiting and hiring a lot easier. Your job candidates can easily apply to your open positions and instantly be added to your talent database allowing you to access and format their resumes anywhere at any time.
We offer an ATS free trial for 15 days and our other memberships and paid packages start at only $10 per month with unlimited support, users, and more. Contact us for more information.FacebookTwitterPinterestLinkedIn