The Cost of Staff Retention vs Staff Turnover
Many experts believe the cost of replacing a staff member can be up to 200% of their annual gross salary especially when the compounded value of a long serving staff member is considered because these staff will have a deep understanding of how the company works and may even be responsible for maintaining and retaining some key customer relationships. For high level employees such as these (staff who have served 2+ years) the financial losses incurred by the business when they leave could in fact be much greater than 200%.
The cost of hiring typically includes:
On-boarding and Training
Lost productivity whilst the new hire strives to reach the productivity levels of the staff member replaced
Lost engagement and morale amongst remaining employees
Customer service errors that result in customer dissatisfaction that can lead them to investigate their service and supply options
The good news is that there are many great ways to reduce staff turnover and improve staff retention. It is important to understand that the reward opportunities an organisation offers its staff typically have a disproportionately higher perceived value to the staff member than the financial cost to the business. All of the suggestions below have proven success results locally and internationally. These suggestions also help with staff acquisitions especially as staff acquisition and retention initiatives are relatively new in the NZ business sector.
Unlimited Annual Leave - is proven to increase the well being and productivity of staff. This concept can take many forms e.g. the staff member is empowered to take as much leave as desired but must still reach all KPIs or they can buy extra leave by paying for the time off out of their income over a 12 month period. There are many variations on this arrangement.
Student Loan repayment assistance - a simple arrangement between the organisation and the staff member to financially assist them with their loan repayments. Student Loan repayments are known as strong pressure points so an employers offer of assistance builds loyalty and demonstrates the value of an employee.
Investing in the employees professional development - this can take many forms e.g. external training programmes, access to resources such as a DVD and Book Library or an in-house Mentor-ship Programme. Again there are many ways to offer this opportunity.
Glide Time - this is a system in which employees work a set number of hours with flexible starting and finishing times. It enables work/life balance which builds a strong sense of loyalty in an employee.
Sleep In Mondays - Mondayitis is real so allow your staff to start work at their preferred time. This employee benefit is also an employer benefit as it reduces Sick Leave taken.
Relaxation Stations - provide a space for staff to relax, unwind and even nap. Research shows a clear increase in productivity when employees have the opportunity for time out during their working day.
VTO (Volunteer Time Off) - allow your employees to spend time volunteering to a cause they value. 74% of employees feel their job is more fulfilling when they are provided opportunities to make a positive impact on social or environmental issues.
There are so many ways to demonstrate to your staff that they are valued and a valued staff member is usually a loyal, long serving employee.
“Look after your staff and they will look after your customers”.