The Mounting Costs of Recruitment: How to reduce high staff turnover
Sandra Smart, Company Director of Octopus Personnel, explains how to reduce employee turnover and recruit efficiently to attract and retain top talent.
Unfortunately, it is incredibly rare for an employee to work for the same company for their whole career, retiring after 50 years with a good pension and a golden watch. Redundancy is a permanent feature of the modern economy and employees all too often find it too expensive to be committed to one employer for years on end. Wage increases are minimal, hovering at 3 percent on average, while jumping to a new job might mean a significant pay increase. The result is that staying at the same place for too long could cost workers thousands of pounds with little reward in terms of job security.
What are the costs of losing an employee?
According to research by Oxford Economics and Unum, the average cost of turnover per employee (earning £25,000 a year or more) is £30,614. That means if you replace three employees on this wage in one year, the cost of employee turnover will be close to £92,000.
Therefore, it is no surprise that employee turnover is a big concern for many businesses. The investment and the cost to replace workers can often be overwhelming. So how can you make sure that you are attracting and retaining the best talent in the industry?
Employees are an investment
From the second you invite them to interview, the costs for an employee start accruing. Training, equipment, payroll are contributing to the mounting costs and are carried out under the presumption that the time spent will ultimately generate value for your business. When your company has a high turnover of employees the repetition of this process, plus the cost of recruiting a replacement, costs your company significantly – spending an average of £5,433 on the process of finding a replacement employee, according to Oxford Economics and Unum.
Why is reducing employee turnover important?
The long-term implications of turnover don’t just affect the company’s profits; it reduces the level of experience within the company, leading to decreased productivity and, often, a reduction in quality, ultimately having a negative impact on the reputation of the company.
While you’re busy advertising, interviewing, finding a replacement and getting them up to speed, other employees can become stressed, unhappy and overworked. The potential for others to leave as well increases, and to have to pay overtime. To be precise, Oxford Economics and Unum say that, on average, it takes 28 weeks and it’ll cost you £25,182 for loss of productivity.
So the benefits of reducing employee turnover are clear. So what can be done?
Establish genuine communication
It may sound obvious, but this is often the most important tools in retaining staff: encourage genuine communication. People leave or stay for their managers, not jobs or companies. This idea is supported by the Gallup report, How Millennials Want to Work and Live, which found that the 61% of millennial workers who feel they can talk to their managers about anything expect to still be with their employers one year from now. Many aspects of any business can be improved through internal communication, as well as ensuring employees feel heard and valued.
So how can you encourage ‘staff voice?’
You can use engagement tools to keep your employees talking to you. These can include a satisfaction survey administered by a third party, clearly defined training opportunities and/or committee creation for certain aspects of your firm. You can even ask for feedback and opinions on a relevant matter to help reinforce the channel of communication, and establish their position as an active participant.
Anything that adds value to an individual’s experience as an employee will help reduce employee turnover. Even the smallest gestures and rewards help to improve the work environment.
Staffing provider, LaSalle Network, surveyed 6,000 recent graduates about the most important factors they consider when evaluating a company to work for. And while 69% ranked remuneration as the number one factor, a surprising 61% listed company culture as the second most important factor.
Once you determine fair pay for a role, you’ll improve your odds of attracting the best talent and keeping the great talent you already have by promoting and refining “positive culture and values” within your business.
How does training help to reduce employee turnover?
According to the Gallup report, 87 percent of respondents said development opportunities are an important job feature. Additionally, the LaSalle survey found that 71 percent of respondents said opportunity for growth was the number one factor when considering a new role.
Training your employees is investing in them as people – and can help to improve employee satisfaction. Training shows that you see them as part of a long term strategy for your business, and gives them the encouragement and tools to improve in line with the direction of the company.
Not all employee turnover is negative
If your talented individuals are getting itchy feet, then it can be a good idea to consider moving them within your business. This can help you to retain the most talented individuals, while helping to quench their desire for a change of scenery.
How can Octopus Personnel help?
We know you fully recognise the value of top talent – those individuals that can drive your business forwards and boost the bottom line, but HR departments face a tricky task when it comes to ensuring a flow of continual talent into the business, and making sure they hire individuals who are suited to the job and the culture of the organisation. In the current buoyant jobs market, where employers are competing with one another for the most skilled and experienced staff, this becomes even more difficult.
Using Octopus Personnel to identify and attract talent, and negotiate terms, can relieve a huge amount of pressure. We can help you find the right people to drive your business forwards, bring them to interview, and secure their services within budget.
The trick is making sure that a candidate’s skills, qualifications and personality match your requirements; this match making ability is our key strength. As a consequence, we are one of the fastest growing recruitment and employment agencies in the South West of England.
What makes the Octopus difference?
We personally interview each and every candidate to assess their suitability. This isn’t just in terms of skills and experience, but also in terms of career development and personality. It is this attention to detail that ensures you will only see candidates that not only meet your specified selection criteria, but who you can be confident will gel with your team and achieve within your business culture.
To save you time, we include a resume and synopsis of every CV we send you, providing you with information fundamental to the selection process. We assess our candidates’ skills using a range of tools and provide this information to assist your shortlisting process.
To ensure that perfect match, we get to know your business and the requirements of the role like the back of our hands. We know about the challenges of the role, the Health & Safety requirements of your site, the rhythm of the work and we fully brief all our candidates prior to interview. Knowing exactly what the jobs entails prior to interview means you are not faced with ill-informed applicants who subsequently withdraw because of the ‘surprise elements’ of the role they discover during the interview.
Excellent value for money and a money-back guarantee
Where other agencies use a system of scaled percentages, which increase costs dramatically in line with high value candidates’ starting salary, instead we offer a flat rate of 10% of starting salary across all permanent placements. We are dedicated to providing a first class service and we are so confident in our abilities that we offer a unique 100% money back guarantee if our candidates don’t meet your expectations.
Our service is quick, efficient and above all cost effective! What’s our secret? We love what we do and we get a genuine kick out of changing people’s lives for the better and by helping our clients to grow and expand their businesses.
Have I convinced you? What have you got to lose?
At Octopus Personnel, we have years of industry expertise and outstanding relationships with our clients, understanding the ever-changing needs of their businesses. We are perfectly positioned within the market to guide you to the right employee who will drive your business forward. Call the office on 01747 825568 to discuss how we can help you.