I just purchased emergency travel insurance from a particular company for one simple reason. They answered their phone on the first ring.

They didn’t make me listen to a recording saying a few throwaway lines like, “Your call is important to us. Due to a rise in the volume of calls, our wait times have increased.”

(Let’s not kid ourselves…your employee turnover is high, and you can’t find people who are willing to work for you, which is why your wait times have increased.) But I digress.

I didn’t even bother to shop around for a better rate. Here’s why.

If I have an emergency, and I need to use this service, I’m confident a real person will quickly answer the phone and assist me.

Can you offer the same assurance to your customers?

How much business is your company losing due to high employee turnover and poor service? My guess is a ton.

The True Cost of Employee Turnover

Companies know replacing an employee costs considerable time, energy, and lost productivity, but few can put a dollar figure on the actual cost.

Lack of hard data means investments in retention and recruitment programs are placed on the back burner.

Cost of turnover estimates for a single position range from 30 percent of the yearly salary for hourly employees (Cornell University) to 150 percent, as estimated by the Saratoga Institute.

The McQuaig Institute puts this into terms that most of us can relate to. A fast-food restaurant must sell 7,613 children’s combo meals at $2.50 each to recoup the cost of losing just one crew member. To recoup the cost of losing just one salesclerk, a clothing store must sell almost 3,000 pairs of khakis at $35.

How many of your products or services must you sell to make up for one employee?

These examples represent the cost of turnover, which encompasses replacement costs, training costs, separation costs, and lost productivity.

You may be thinking that positions in your company are considerably more sophisticated than those found in fast food restaurants or retail organisations and that it’s impossible to come up with a number.

But even an approximate number is better than no number at all.

Calculating your cost of turnover

Calculating your cost of turnover is simpler than you think. Begin here:

Make a list of everyone who has left your organisation this year and using the information below, calculate how much the loss of each employee has cost your organisation.

If you want to capture a full year’s worth of information, consider capturing the data for those who left the company the previous year as well.

The business costs and impact of employee turnover can be grouped into four major categories:

1. Costs due to a person leaving;
2. Hiring costs;
3. Training costs, and;
4. Lost productivity costs.

Costs due to a person leaving

Once an employee has announced their resignation, they have begun to transition out of the company. While working out their notice period, their full attention is no longer on your business. Others in the organisation are picking up their slack, which prohibits them from giving full attention to their own jobs. In addition, consider the following costs:

• Employees who fill in for the person who leaves before a replacement is found;
• Adding temporary help using consultants to fill in while the you recruit for the position;
• A manager/executive conducting an exit interview to determine what work remains, how to do the work, why they are leaving, etc.;
• The training the company has invested in this departing employee; the cost of lost knowledge, skills and contacts of the departing employee, and;
• Lost customers the departing employee is taking with them (or that leave because service is negatively impacted).

Hiring Costs

You might be lucky and find a candidate on a free website, but most likely you will need to advertise elsewhere. Consider the following hiring costs:

• The cost of advertising, internet posting, employment agencies, search firms, employee referral awards;
• Increase in starting pay as salaries have risen since you last hired, bringing everyone else in the department up to market rates;
• Time spent screening resumes, arranging interviews, conducting interviews (by both HR and upper management), checking references and notifying candidates who were not awarded the job;
• The use of assessment testing, background checks, drug screening (usually done on more than one candidate), and time spent interpreting and discussing results, and;
• Time spent assembling and processing all the new hire paperwork, explaining your employee benefit programs, and entering the necessary data to ensure the employee receives a pay check.

Training costs

It would be nice if employees could integrate into their organisations without any training, but usually this is not the case. Things are done differently in every organisation, so factor in the following costs:

• New employee orientation or onboarding;
• Specific training for the person to do their job, such as computer training, product knowledge, company systems, and;
• Time spent by others to train this person and money spent on outside training to ensure they can do their jobs.

Loss of productivity costs

Because new employees do not enter the organisation completely trained, it will take time before they are fully productive. Factor in the following productivity costs:

• During this time, the person’s manager is also spending more time directing, reviewing work, and possibly fixing mistakes. (Errors will be made that are not caught right away and will cost money to correct down the line. A customer who receives an incorrect price or an incorrect shipment due to the new employee’s lack of experience, etc);
• Add loss of goodwill as you scramble to preserve your relationship with your valued customer or client, and;
• Employee morale plummeting as overworked employees assume responsibility while the new hire is being trained.

Now that you’ve closely examined the costs associated with each person leaving, you can then plug this information into a spreadsheet to determine the real cost of employee turnover in your organisation.

Your Assignment

List the people in your organisation who’ve recently left. Next, jot down how much you think this loss will cost your organisation. Calculate the actual cost of this employee leaving, based on the guidelines I’ve provided above.

How’d you do? Were you close or very far off in terms of your guess? Are you in better shape than you thought? Or is it time for an intervention? Need some help? Let’s schedule a call.

Given the high costs involved and the impact on productivity and customer retention, a well thought-out retention program can easily pay for itself over and over again and is certainly worth further consideration.

© 2021, Matuson Consulting. All Rights Reserved.

Roberta Matuson, The Talent Maximizer® and President of Matuson Consulting, helps organisations achieve dramatic growth and market leadership through the maximisation of talent. She’s the author of six books including Evergreen Talent: A Guide to Hiring and Cultivating a Sustainable Workforce, and the newly released, Can We Talk? Seven Principles for Managing Difficult Conversations at Work  Sign up to her free newsletter, The Talent Maximizer®. Follow her on Twitter.

The post The True Cost of Employee Turnover: It’s Way More Than You Think appeared first on Recruitment Marketing.

Here’s what happened. I walked into a shoe store to see what could be done with a six-month-old pair of boots that were falling apart at the seams. On the plus side, this store warranties their shoes for one year. That is, if you make it through the shaming that takes place when you attempt to have the product repaired.

The clerk who assisted me said the damage occurred because my daughter is a tough walker, who wore her boots on city streets that have salt. The last time I checked (and I’m sure Nancy Sinatra would agree), boots are made for walking, and if they are being sold in a city store, you should be able to walk in them on a city street. I left shaking my head, vowing never to buy another pair of their shoes.

The experience didn’t have to happen this way. The clerk could have apologised for the inconvenience and then asked if I was interested in hearing what we could do to ensure this wouldn’t happen again. It’s worth mentioning that the store was empty on one of the biggest shopping days of the year. I no longer wonder why I was the only customer inside.

Your front-line people are your most critical hires. In many organisations, they are the only person your customers and prospects interact with. If customers have a negative experience like I did, they’ll take their business elsewhere. And on the way out the door, they’ll be sure to tell everyone they know about their experience.

What’s perplexing to me is how little thought and effort organisations are making in their hiring process. Here’s an example of this. A growing number of companies are now asking applicants to take one-sided, automated phone interviews, as the first step in the hiring process. This trend is not reserved solely for front-line employees. People applying for jobs as a digital marketing specialist, sales director, and financial controller have been asked to take them in recent months.

The organisations using such interviews say they are more efficient and candidate-friendly in a tight job market.

Really? It’s bad enough that candidates are finding it difficult to break through applicant tracking systems to have a conversation with a hiring manager. Now, they’re expected to have a call with no one! This is nuts!

Many applicants, though, say they’re still acclimatising to them. Here’s my advice to job seekers who encounter this. Hang up the phone, as this is an employer you DO NOT want to work for.

If you’re seriously thinking of introducing this idea in your organisation, give me a call. I can’t promise anyone will be on the other end of the line. However, you’ll get to experience first-hand what your applicants will encounter, when calling into your interview lines.

Your challenge: shop your place of business. Then write to me and let me know what you discover.

P.S. Can you believe while writing this, I received a call from the clerk who waited on me at that shoe store? She told me my daughter’s boots couldn’t be fixed. She implied this was because my daughter lost the tiny metal piece that came off the zipper, as she was going through TSA on the busiest travel day of the year. I swear, you cannot make this stuff up.

© 2018, Matuson Consulting.

Questions or comments? Feel free to reach out to me at roberta@matusonconsulting.com.

To your continued success!
Roberta

© 2018, Matuson Consulting. All Rights Reserved.

Roberta Matuson, The Talent Maximizer® and President of Matuson Consulting, helps organizations [sic] achieve dramatic growth and market leadership through the maximization [sic] of talent. She’s the author of four books including the newly released, The Magnetic Leader. Sign up to receive her free newsletter, The Talent Maximizer®. Follow her on Twitter.

The post Why strong front-line hires are critical to organisational success appeared first on Recruitment Marketing.

It’s a trend that can be seen across workers of all ages and wage brackets, including those who earn six-figures: Australians are quitting their jobs to advance their careers and chase pay rises, promotions, and progression. A recent study demonstrates 60 per cent of employees resigned from their position because of limited career progression within the organisation, and a further 46 per cent because of insufficient financial rewards.

In fact, according to a new report from Ladders, most workers making more than $100,000 are planning to quit their jobs within a year. A new survey from Deloitte – The 2018 Millennial Survey – says that 43% of Millennials plan to quit their current job within two years.

Many of you may be wondering why I recommend to my clients that they help their best employees consider outside offers, when finding and keeping talent is so challenging these days. Here’s why: you won’t be blindsided when a key employee departs.

Everyone eventually leaves their employer. That’s a fact. At some point, people will be poached, others will pursue more meaningful work, some will be fired, and others will retire. When and how they exit is influenced by their relationship with their leader.

Those who feel a strong connection to their leader, are less likely to jump ship for a small bump in pay than those working for bad bosses. A good boss puts their people’s best interest in front of their own, which is what great leaders do when they encourage team members to pursue opportunities that are better than what they can offer them.

Knowing an employee is actively looking at other opportunities gives you time to plan for his or her departure and provides you with time to train a backup. That’s a heck of a lot better position to be in than walking into the office on Monday and finding out your best employee will soon be departing.

Your employment brand will organically expand. Nothing builds an employment brand (the market’s perception of what it’s like to work for an organisation) faster than former employees touting how great it is to work for a past employer. These employees encourage friends and members of their social network to consider working for their former boss and an organisation that really has the best interest of their employees in mind.

Employees who feel they’ve been treated well by their employers are powerful brand ambassadors. They won’t hesitate to tell everyone they know why your organisation is the place to work.

Employees may return. Sometimes an employee has to go elsewhere to realise how good they really had it. Leaders, who have open lines of communication with their people, are frequently contacted by former employees wishing to return. I tell my clients to welcome them back with open arms. Here’s why.

You get the benefit of having an employee who is trained and can be fully productive on day one. These people will be sure to let others in the organisation know that the grass is not really greener on the other side, which will help to prevent additional unwanted employee turnover.

Open communication gives you time to fix what may be wrong. How many times have you said, “If I had only known, I could have fixed things?” My guess is a lot! If an employee comes to you and feels comfortable telling you what you need to hear and not just what you want to hear, you’ll be in a much stronger position to make the necessary changes to keep that person in your employ.

Now compare this to the more common scenario where you find out after it’s too late, that an employee, whom you thought was happy, really isn’t. Which situation would you rather be in? If it were me, I’d choose the first.

It’s also an opportunity to let fresh air in. We’ve become so obsessed with hanging onto talent at all cost that we forget that there is a price to pay when no one leaves. If no one ever departs, then you are breathing your own exhaust. Attrition can be healthy for an organisation. When you bring new people into your organisation, you allow fresh air in. Fresh ideas begin to percolate, and your people are re-energised.

Think about this the next time you are tempted to convince an employee that leaving is not in their best interest—especially when you know deep down inside that you are telling them this because their departure is not in your best interest. Then do the right thing. Encourage them to consider all their options.

Source

Why you should encourage your best employees to consider outside offers

Roberta Chinsky Matuson

© Matuson Consulting, 2018.

This is the second article in my new weekly series, The Talent Maximizer®. If you like what you’re reading, please consider sharing and subscribing to the series. As always, feel free to share your opinion in the comments. Want to take this conversation further? Reach out to me at Roberta@matusonconsulting.com to arrange for a complimentary call to discuss if working together is right for us.

© 2018, Matuson Consulting. All Rights Reserved.

Roberta Matuson, The Talent Maximizer® and President of Matuson Consulting, helps organizations [sic] achieve dramatic growth and market leadership through the maximization [sic] of talent. She’s the author of four books including the newly released, The Magnetic Leader. Sign up to receive her free newsletter, The Talent Maximizer®. Follow her on Twitter.

The post Why you should encourage your best employees to consider outside offers appeared first on Recruitment Marketing.