Or how to retain new hires & save your company money
The implications of a new employee leaving are immense for any company. It impacts morale, culture, productivity, customer experience and bottom lines. This is why figuring out how to reduce employee attrition is the reason many HR leaders are losing sleep at night.
There are many stakeholders involved in recruiting, onboarding and training a new hire. To quote from an article by Josh Bersin, the total cost of losing an employee includes the following:
1. The cost of hiring a new employee - advertising, interviewing, screening, and hiring.
2. The cost of onboarding a new person - paperwork, compliance, background checks, training, management time, etc.
3. Lost productivity - a new employee may take one to two years to reach the productivity of an existing person. The longer they stay, the more productive they’re likely to be.
4. Lost engagement - employees who see people leaving tend to disengage and lose productivity.
5. Customer service and errors - new employees may be less adept at solving problems.
6. Training cost - a business invests around 10-20% of an employee's salary on training over two to three years.
7. Cultural impact - whenever someone leaves, others take time to ask ‘why’.
Here ‘cost’ implies both money and time. And since in most cases time = money, what does this mean for a business' financial losses? Most companies and HR teams will struggle to tell you. Bersin suggests that it adds up to about 1.5 to 2X of that employee’s annual salary. There are too many moving parts during an employee’s professional journey to measure accurately. The larger the company - the losses pile up .
Based on the list above, we need to collect data from a whole bunch of people - recruiters, HR (onboarding specialists, L&D, Culture officers, etc.), vendors, team managers, finance, customer success teams, etc. And we can’t even begin to add up the impact of attrition on the productivity of those left behind.
So, how can you reduce first-year attrition?
This is not an exhaustive list by far, but a good place to start:
- Hiring right. Selecting the first candidate only because he or she ticks all the boxes in your JD is unwise. Get creative.
- Throwing money at the problem might be one way, but it doesn't always work. The high that comes with a higher salary can only last so long. The right compensation is more a matter of hygiene than anything else.
- Providing growth opportunities early on. When an employee feels like their company is investing in their growth, they will return the favour.
- Keeping an eye on the competition and the benefits they offer. Say hello to Paw-ternity Leave, paid gap years, free concert tickets, unlimited kombucha vending machines, etc.
- Assigning mentors and buddies is a must-have, especially for enterprises. The quality of these interactions will determine if the new hire wants to stick around.
- Asking for feedback at regular intervals is another important task. But it can only be effective if you’re closing the loop after pushing out your pulse surveys. Gathering insights and then running timely interventions can make a big difference.
- Highlighting positive actions, whether they’re linked to business outcomes or personal achievements. Lack of recognition in the workplace drives 44% of employees to quit.
- Getting it right from the start. New hire onboarding may feel like a tiny part of an employees professional life. But the statistics speak for themselves. One out of three new hires look for a new job within the first 6 months of joining. If onboarded well, 69% decide to stick around for at least three years. Those who develop a sense of belonging in their new workplace show a 56% increase in job performance.
This is where we come in
Now more than ever, companies need to build a relationship with their employees. And as relationships go, it has to be based on trust, mutual respect and transparency.
The best employee experience is personalized, stress-free, inclusive, standardized, and inspiring. Designed as a two-way conversation, it has to make employees feel valued, connected and heard.
Our advice to companies who want to improve their employee retention rate is to start at the very beginning. Winning the war for talent involves combining HR skills with marketing tactics. It is in realizing that the gap between employee experience and consumer experience is shrinking. Candidates expect their hiring interaction with companies to be personalized, optimized and authentic. If a company can’t be bothered, neither will they.
Once the candidate has accepted your offer, the focus needs to be on reassuring your new employee that she made the right decision. The first few days in a new company is when most people feel overwhelmed and lost, especially in large enterprises. A personalized experience makes them feel valued and connected. Simple things like getting your new work laptop pre-configured with all the tools you need says a lot about how much your company cares about your success. The direct result of which is shorter time to productivity, better performance and a 65% drop in first-year attrition.
Focusing purely on improving your employee engagement stats is no longer enough. By taking the first step and making an effort to make each interaction more meaningful from the get-go, your employees will automatically believe that your company is worth engaging with.
Not convinced? We'd be happy to take you through the ROI you can expect when you use our EX Personalization platform. Get in touch to schedule a quick demo!