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Why Your Employee Retention Is Worth Millions
According to a recent survey by Paycor, 61 percent of CFOs do not think HR impacts the bottom line in their organizations. Another 43 percent of businesses surveyed don’t track how much it costs to hire a new employee.
As a manager or HR rep, you might want to rip your hair out after hearing those statistics because you know how important recruiting and HR are to the overall health of a business.
You might not change the C-suite or a business owner’s’ mind overnight, but there are a few strategies you can employ to help executives understand why they should care about employee retention.
Engagement, Retention, and Profit
A CEO, CFO, or small business owner might not care about employee engagement, but they will care about how profits are impacted when employees leave. It’s HR’s job to help them see that employee engagement and employee retention and directly related.
You can do that by making that line between retention, engagement, and profit as clear as possible. Luckily, Gallup’s State of the American Workplace report does a fantastic job of outlining that very point succinctly and in a way that will resonate with your leadership.
The report says:
“Employees who are engaged are more likely to stay with their organization, reducing overall turnover and the costs associated with it. They feel a stronger bond to their organization’s mission and purpose, making them more effective brand ambassadors. They build stronger relationships with customers, helping their company increase sales and profitability.”
Back up broad statements like that with examples from within your organization. Highlight an employee who is engaged and successful, and contrast that with someone who was disengaged and left the company.
The combination of broad metrics and individual stories represents a new mode of storytelling for HR professionals — and one that might break through to executives who previously had not spent much time thinking about employee engagement or retention.
The Cost of Turnover
Even if you can’t get executives on board with buying into employee retention, perhaps you can persuade them that employee retention matters for financial reasons when you consider how much it costs to hire and fire employees.
We’ve found that the cost of hiring an employee who does not work out can cost up to 10 percent of that employee’s annual salary. This cost becomes even higher if you are working with a recruiter to fill an open position.
A good place to start here is working out what the recruiting costs are in your organization. Once you have an idea of that, compare it to the number of employees who leave and the productivity loss that happens as a result.
Again, there are opportunities here to mix broad data sets with specific workplace examples. How was one department impacted when someone left unexpectedly? Was there a project that fell behind? Or did everyone else on the team have to work crazy hours to make up for it?
The Paycor report also revealed a disconnect between employees and executives about why people leave an organization. Executives say the most common reason is because of compensation, but employees overwhelmingly say it’s because of bad managers.
About 75 percent of voluntary turnover occurs because of bad management. This number should be high enough to shock any executive into action. With their support, you can begin using your resources to address management issues to increase employee retention and engagement.
The First Step
Assembling the large-scale data on turnover and combining it with specific employee examples takes time, but is well worth it in the end if you can convince the C-suite or business owner that they should devote resources to employee retention.
We’ll be talking a lot more about turnover in the coming weeks. Sign up to receive updates and more information about how you can make reducing it a priority in your organization.
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