Save money by improving staff retention!

We know UK plc has a productivity problem; fixing it is not rocket-science and is not expensive. Yes, it is relatively easy and cheap given the massive improvements you can achieve. Studies, conducted by academics, consultants and leaders of organisations in all of Public, Private and Third Sectors, show the links between Employee Engagement and improvements in all of the following:-

  1. Income growth
  2. Productivity and performance
  3. Customer/client satisfaction
  4. Innovation
  5. Absence and well-being
  6. Staff retention
  7. Health and safety

In this series of posts, I have been covering each area in turn. We have now reached staff retention

staff retentionWe all know that replacing employees who leave is time consuming and expensive – it can cost up to 150% of the departing employee’s salary and their job is most likely not getting done, or done well, until they are replaced with suitably trained staff. For managerial and sales staff, the costs rise to 200% to 250% of salary. These costs consist of:-

  • Costs due to the person leaving
  • Recruitment costs (both internal and external)
  • Training costs
  • Lost productivity costs
  • New hire costs
  • Lost sales costs

The Corporate Leadership Council (CLC) identified that organisations with high Employee Engagement have the potential to reduce staff turnover by 87%; the disengaged are four times more likely to leave the organisation than the average employee (CLC 2008).

Gallup showed in industries such as Retail with high staff turnover (over 60%), those companies with the lowest engagement (bottom 25%) had a 31% higher turnover than those in the top 25% for Employee Engagement. Very similar findings emerged in organisations with lower staff turnover, showing the strong connection between Employee Engagement and staff retention.

According to The Hay Group, companies with high levels of engagement show staff turnover rates 40% lower than companies with low levels of engagement.

In the UK, Rentokil found the teams that most improved engagement saw staff retention increase 6.7%, providing an estimated saving of almost £7 million.

When organisations put sound HR practices in place, they are more likely to discover that employees feel satisfied, safe and will work to their full potential…and that means they are more likely to stay put and not jump ship (or fish bowl).

goldfish jumping out of the waterA 2013 Cornerstone study in America identified that 19 million employees or 13 percent of the total U.S. workforce were angling to change jobs that year. This churn was predicted to cost U.S. businesses an estimated $2 trillion to recruit and train new workers.

Organisations can improve their employee retention, can reduce the costs of staff turnover, and can drive bottom-line improvements by introducing sensible programmes to improve Employee Engagement. These programmes do not cost a great deal and deliver higher levels of retention and lower staff turnover costs. Organisations win when they thoughtfully and consistently implement well-designed programmes to increase Employee Engagement.

Advertisements