As part of the "Cycles of Success: Employee Engagement, Career Development & Talent Management" series, we conducted several interviews with Nicole Trapasso, divisional director of HR and organizational development at CPP, Inc. Below is an article derived from that interview.
Improving employee retention is key to a successful talent management strategy within any organization. The reason you see the costs of replacing an employee rising is that HR professionals are being more realistic about the amount of company knowledge that is lost when an employee leaves and the ramp-up time it takes to get someone in and productive. When you consider the investment you’re making in a current employee—only to have him or her move on to another employer—and the fact that it can take six months to get someone else in and trained, that takes quite a toll on the organization.
In addition, if the work that the employee was doing still must be completed, your remaining staff may become overworked while trying to cover the vacant position. And if your company has a high level of employee turnover, it could also start to affect your high-performing employees. If they continually see employees leaving, they could start questioning their own commitment to the organization and what keeps them there. (A few ways to combat this are provided in the blog Meaningfulness and Engagement in Your Workforce).
As cited in a recent article in Forbes, when employees leave a company, they can usually look forward to a 10%–20% increase in salary. This is another reason that employees may look to other opportunities and another reason employee retention is so important.
If we look at what the investment in our employees really is, that figure of 150% to 200% of salary for mid-level employees (up to 400% for high-level or highly specialized employees) isn’t so surprising. That’s why when we bring people in we want to make sure we have a really good fit up front—the cost of not getting those things right is extremely expensive and can prevent the company over time from being able to achieve its objectives. If it happens frequently, employee turnover becomes a disruptive process. You can’t expect managers to operate at the highest levels when they’re supporting recruitment for a position on their team. Indeed, investing in an employee and then having that employee leave has an emotional impact on all involved.
Here’s one way to improve employee retention: focus on employee morale. Identify some current employees who you feel are truly engaged and have a high employee morale and find out what drew them to the company initially and then what has kept them there. You most likely will find some information that validates your assumptions as well as new information that could be very helpful Considering this question through the lens of MBTI® and the variety of preferences and interests that employees bring to the organization, this feedback can be valuable for HR throughout the various phases of the talent management life cycle. Something as simple as a brief online employee satisfaction survey (with some type of incentive to participate) can provide valuable insight into increasing employee engagement and retention.
By fostering these types of discussions with a cross-section of your employees, you can help them reaffirm why they joined the company in the first place. Once you have collected some trend data, you can share it with other employees and managers by opening up the forum for discussion in the organization. This type of information on what current employees find meaningful in their work at your company is also extremely powerful for recruitment purposes so you can clearly identify what may draw potential talent to your organization and how you can help retain them.
The bottom line is that improving employee retention costs less than it does to replace them. True, it can feel expensive to invest in retention without a direct line to return, but the cost of losing your best employees to another company is always higher.