Staff turnover and letters of resignation mean only one thing: more work for you. Managing the notice period and the paperwork, ensuring a proper handover, updating the job description, advertising, interviewing, hiring, training. It’s a lot to do and it’s all on top of your day job.
But your time and effort is just the tip of the iceberg. We set out the full cost of staff turnover to your business.
Time Equals Money
When you’re recruiting you’re not earning. Which is why many businesses decide to outsource their recruitment activities to an HR specialist. But how much does it cost to hire a new employee?
Economic modelling experts Oxford Economics ran the figures and found that replacing an employee who earns £25,000 a year will cost your business, on average, a total of £30,500. This figure varies dependent on sector ranging from £20,113 for retailers to £39,887 for legal firms.
How did they get to these figures? By considering the two main costs involved in recruitment:
a. Management time spent recruiting, inducting and administering
b. Paying for advertisements
c. Running assessment centres
d. Overtime or temporary employees to cover the work
Depending on the role and the employee’s wage, the logistical costs vary. Replacing someone who earned £25,000 per year would cost on average £5,433; those on higher salaries would cost more.
a. Inducting a new hire into the organisation
b. Training the new employee
c. Loss of productivity as the new hire gets up to speed
In the retail sector, the lost productivity while a new workers gets up to speed is £25,000 whereas in the legal sector (where the individual’s knowledge is the product) the cost is £35,300.
These numbers are eye-watering. So what can you do to reduce them?
How to Stem the Flow
If you seem to be recruiting more often than you’d like it’s worth assessing your turnover figures and comparing them to industry averages. HR Magazine reported a new high for UK turnover rates of 15.5% in 2016. If yours is above that it could be time for concern.
Before you can take any steps to address your staff turnover you need to understand why people are leaving. Asking them face-to-face may not elicit the most truthful responses; instead set up an anonymous online exit questionnaire to find out what people really think.
Once you know why people are leaving, you can pull together a plan of action to put things right.
The risk of people leaving is not small. While the Independent reports that happiness in work is at an all-time high, almost half of UK workers plan to look for a new job in 2018. What were the most common reasons for leaving?
● poor management – 49%
● low pay – 40%
● feeling undervalued – 49%
● lack of career progression – 30%
The good news is that all of these issues can be resolved by working with a specialist HR consultant.
Not All Staff Turnover is Bad
It’s worth pointing out that in some cases turnover is a good thing.
If you keep losing poor performers, you may have no cause for concern. Under-performance costs your business in terms of low productivity, high absence and additional management time.
Their departure means you have the opportunity to replace them with someone brilliant. Studies have shown that the top one percent of performers generate ten times the average output of their co-workers and the top five percent more than four times the average.
Of course, this relies on getting your recruitment, on-boarding and training spot on which is why it’s worth investing in a specialist recruiter to do the job right first time.
Three Pronged Attack for Staff Turnover
There are three main steps to address staff turnover and limit the cost to your business:
1. Understand why people are leaving and find ways to resolve these challenges.
2. Invest in your recruitment strategy to employ someone who will hit the ground running; this will reduce the £25,000 of lost productivity that accompanies the average new hire.
3. Hire someone who will fit well with your culture; the longer they stay and the more they produce the quicker they offset your hiring costs and start contributing to the bottom line.
Get these three steps right and you’ll stabilise your team and save a lot of money into the bargain.
If you’d like the support of an experienced HR consultant to reduce your turnover and manage your recruitment, contact Crosse HR on 0330 555 1139 or email at firstname.lastname@example.org.
There’s a new HR term in town: employee experience. But what does it mean and how does it differ to employee engagement?
Engagement. Experience. What’s the Difference?
By now, we should all be familiar with the concept of employee engagement. But just in case, here’s a refresher.
Kevin Kruse, CEO of online learning platform LEADx, defines it as:
“the emotional commitment the employee has to the organisation and its goals.”
The theory is that employees who have good jobs and are well managed will be happier, healthier and more fulfilled. Which means they’re more likely to drive productivity, perform better and be more innovative.
While employee engagement may sound highly positive for all involved, it actually has little to do with employee happiness or satisfaction. Someone could love their job but they may not be productive and therefore they would not be classed as engaged.
At its core, employee engagement is about employees being willing to do more for their pay cheque.
In practical terms this means engaged workers do the extra hours required without being asked. They might pick up rubbish from the shop floor because they take pride in their workplace. Or they could go above and beyond to service a particularly tricky customer problem.
Research has shown that engaged employees make a positive impact on the bottom line:
Despite there being clear reasons like these for its popularity, employee engagement has come under fire. Critics claim it’s too business focussed at the expense of employees enjoyment of their work and wider needs.
This has resulted in the emergence of employee experience as a new way of perceiving the employment relationship.
Employee Experience – More Than Engagement
Is this a case of semantics? Do the two concepts really mean the same thing? DecisionWise thinks not, defining employee experience as a much broader concept than engagement:
“The employee experience is the sum of the various perceptions employees have about their interactions with the organization in which they work.”
This includes everything from employees’ preferred technology to providing meaningful work and a fair, flexible and inclusive working environment.
By taking an employee perspective, organisations shift the focus from what they can do to get more from their people to understanding the real experiences of their employees. Once they have gained that insight, they can then find ways to meet their needs.
Unlike employee engagement, this isn’t a once-a-year survey that’s carried out and then forgotten. Employee experience is a strategic approach to how a business considers its people, placing their views at the heart of everything it does.
Treating Employee Like Customers
When a business decides to change the way it operates, it will always consider the impact on its customers’ experience. Businesses that value their employees’ experience do the same.
From a practical perspective this means employers think about changes from their employees’ viewpoint asking questions like “how will our people perceive this?”
By identifying every touchpoint an employee has with the organisation across the entire employee lifecycle (from hiring to retiring or firing), employers consider how their people, see, hear, believe and feel about every aspect of their job.
Deloitte’s comprehensive framework highlights the following elements as important to employee experience.
By understanding what employees want, organisations can involve them in shaping the experience on offer. Blending employees’ expectations, wants and needs with those of the organisation, enterprises can rebuild the way they operate.
What’s in it for businesses? Here we come full circle as employee experience can be seen as a means of delivering employee engagement with all the benefits it entails.
It’s obvious that improving employees’ experience will naturally improve their involvement too. And when engagement levels are high, so are business profits.
If you want to implement employee experience and engagement in your organisation but don’t know where to start, get in touch with Crosse HR on 0330 555 1139 or email at email@example.com.