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.
This is not an exhaustive list by far, but a good place to start:
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.