At times it feels like turnover is a natural part of the employee lifecycle. Some business owners write off an inflated attrition rate as the price of doing business, a cost associated with the ebb and flow of the marketplace. But quite frankly, it’s a colossal waste of time and money.
The good news? It doesn’t have to be this way.
Your business can stop losing employees, but it requires change. And human beings are notoriously reluctant to change. So how do you create urgency around a topic that istoo-often dismissed as ‘fluffy’?
By analysing the true cost of attrition.
If you already know your attrition rate, you can use our quick calculator to estimate the financial impact it has on your business.
One client – a fast growth SME – discovered their high attrition rate was costing over £700,000: equivalent toan enormous 25% of their turnover. It’s a huge sum of money; money that could be invested elsewhere such as hiring additional headcount, acquiring new technology to increase capacity, and even training to improve productivity.
When armed with significant figures like these, it’s easy to get buy-in from the board to make retention a top priority.
How did it happen?
Their overly rapid recruitment had put square pegs in round holes. All too often fast growth leads to panic recruitment and it’s easy to hire the wrong person in a bid to increase capacity. Common ways we see businesses fall down are:
Having a ‘bums on seats’ mentality
Cutting corners with the interview process
Not training hiring managers correctly
Failing to establish what good looks like for the role
Attracting new hires can cost more than you want to spend which is why retaining your people is key to business success. And it’s not just about the cost of replacing a single leaver. When employees leave it can impact morale, causing additional exits and leaving you trapped in an endless spiral of throwing money at the problem for a quick result.
This can be resolved by managing your talent pipeline effectively, a topic recently discussed by our Co-Founder Leon Milns when he joined the Word On The Street podcast. Listen here.
Ok, But Why Are My Employees Leaving?
Understanding this is vital to improving your retention rate. Ultimately, each business faces a unique challenge here, but the most valuable tool at your disposal is free: Your existing team. Making use of employee engagement techniques such as EE surveys, forums and regular 121s can provide beneficial insights into the real employee experience at your company.
That being said, there are some common patterns that occur in high turnover businesses:
The grass is always greener, and we’re attracted by cool new brands and shiny benefits
We’re social creatures who are influenced by our peers
We take existing employees for granted
There’s a lack of opportunity and/or personal development
Employees aren’t bought in to the company mission
And while turnover is expensive, not all of it is bad. You’d rather a rotten apple fall from the tree before it can infect the rest of the crop, after all. But in some cases, you will have truly regretful losses; those high performers who generated more revenue and will cost more to replace.
So How Can I Retain My Best Employees?
Did you know that as many as 75% of leavers could be retained? That’s a whole lot of opportunity! Whilst taking time to listen to your workforce may have given some quick wins, detailed analysis can offer more significant gains.
Review market rates
Underpaid employees are more likely to resign and whilst you might think a £10,000 a year counter offer is expensive; it’ll shave even more off your overall attrition costs. Keeping abreast of the salaries on offer and performing regular reviews tied to performance is a great way to retain your highest performers.
Look at reward as a whole
Fair compensation goes beyond basic salary. What else can you offer? Options include performance-related bonus, medical insurance, increased holidays, flexible working, company care, employee ownership… to be honest, there are far too many to list!
Engaged employees = loyal employees
People demonstrate their unhappiness at work through lateness, regular sickness or other absence, poor performance and of course, leaving. Low productivity levels are another indicator poor engagement so this one impacts your business in more ways than one. Keeping employees engaged at work is critical to overall business performance, so don’t be afraid to get creative! Need inspiration? Check out this blog.
Look for cultural blind spots
If you’ve identified recurring behavioural themes, it’s highly likely you have a cultural problem. Are you too slow to react to opportunities? Does your team have the tools they need? Is there a lack of communication? When culture doesn’t align with business aims and ambitions you drive your people to the door, so act quickly.
Start at the beginning
We can’t emphasise enough the importance of your onboarding process for future retention! Losing someone in the first 3 months is the costliest, as you’ve invested in recruitment, operational costs, onboarding, and training but the employee is yet to get up to peak productivity – the point at which they have covered costs and are actively contributing to profitability.
Train your managers
Promoting people with strong technical skills makes sense, but they don’t automatically make good managers. Set them up for success with a robust management training programme so they can provide the type of support your employees need to thrive.
Understanding the root cause of turnover is an essential step in combatting The Great Resignation. With a skills shortage looming in a candidate short marketplace, it’s more important than ever to make your business an attractive place to work. Plus, with every leaver taking a significant chunk of profit with them, controlling turnover means controlling costs – something every business is acutely aware of in a post-pandemic environment.
Do you have an expensive turnover problem? We can help. We Are Adam have developed an unrivalled service, combining your unique HR statistics with expert guidance, helping you to identify key opportunities in your employee lifecycle.
To book your free, no obligation consultation, simply click here or call 0161 359 3789 for more info.
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