Recruitment vs Retention? Where Should You Focus?
To be blunt, there’s just no point in recruiting talent if a lack of focus on retention means they soon walk straight back out the door.
Whilst there are endless benefits to focussing on retention, not least of which being improved productivity, customer satisfaction and ultimately company performance, here I wanted to present a purely financial assessment.
The cost of staff recruitment varies greatly depending on factors such as the position being filled, the industry, and location, but it is always significant.
According to a recent study by the Society for Human Resource Management (SHRM) it is estimated that the average cost to replace an employee is around one-third of that worker’s annual earnings, when taking into account “soft costs” (reduced productivity, lost IP, interview time) and “hard costs” (recruitment, advertising, training, etc).
For example, if you hire someone on an average US wage of $60,000 a year, it typically will cost $20,000 to recruit and get this person up to speed. These costs have a significant impact on a business' bottom line. However, there’s little sense in costly recruitment programs when your most experienced and "valuable" people slip through your fingers due to a lack of focus on retention.
There are many ways that businesses can improve staff retention at significantly lower expense than the cost of turnover. The reasons people will leave their job are often varied, as revealed by our recent research project conducted with the Data Science Team at Essex University on predicting attrition. Whilst it's often believed that salary and benefits are the predominant primary drivers for people to leave, our research has shown that this is rarely the case. We recommend a strong focus on understanding employee priorities as ‘one-size-fits-all’ solutions are not proven effective.
As a quick checklist, here are some simple suggestions that won’t cost the earth, but can have dramatic effect on your retention:
- Can you improve staff recognition? I’m not suggesting adding an employee of the month program, but instead are managers and leadership celebrating employee successes, large and small? Have you considered even celebrating employee failures? Although that might sound odd, failure can often mean employees are testing new boundaries and exploring new ways to work better or solve problems. Ruling out how not to do it can often lead to innovation.
- Are there career paths open for people, and are they prescriptive or do they have choices? Not everyone aspires to management so creating paths, or being able to build and tailor career development programs can not only help retain talent but also create personal goals for them to work toward.
- Find out what your people want, get to understand their challenges, aspirations, suggestions and frustrations. Ask them if they could change one thing, what would it be. Surveys or more modern employee feedback platforms provide a great way of getting on the same page as your employees.
- Having done the above, pick a few of the most significant issues and search for solutions. If in doubt, ask your people how they would fix it, they often have the perfect answers. All too often they might also be willing to help you implement the changes.
- Do your people have access to the training they want and need to flourish? Consider not just day-to-day skills for their job but also team working and soft skills. Find out what they would find most helpful.
- Is the work environment safe and nurturing? Are your people able to express themselves freely, is there a solid support network that they know they can turn to if they are struggling with mental health, or pressures, or anxiety?
- Do employees understand why they are working for your company, and what their input really means? It may sound obvious but if they consider themselves just a tiny cog in a giant machine they might seek to move on, but if they realize how important that cog is, and how valuable they are, they will be more tempted to stay. An easy example of this is to look at whether managers give their teams tasks, or do they share the problems and ask for help in working out how to fix them? If you are just doing tasks you are likely to feel undervalued, but if you are helping fix the problems of your team you will feel engaged and that you are contributing.
- On a related note, do you seek and harvest general action ideas and suggestions from your people? Not only can this be an amazing and hugely valuable company resource it will empower employees if they can see they can help shape the company they work in.
- Are employees always treated fairly and consistently – this has always been important and now never more so. Employees, rightly, expect to be treated with respect with no fear of discrimination or bias. Make this a part of your culture and is fully implemented not just an entry in the employee handbook.
- Listen to employee concerns and take action to address them – there is nothing worse than building up the courage to express a concern to your manager or HR only for it to fall on deaf ears. It’s important to acknowledge all concerns in a timely manner and ask the person for their input in any resolution. It might be that all they need is some reassurance.
- Do your people have fun at work? I’m not suggesting making the workplace a holiday camp, but allowing people to feel relaxed, and to have fun is essential for team-building and to create a sense of belonging. Supporting flexible or hybrid working, allow time off for charity activities and social events, discourage sending work related emails or Teams/Slack messages in the evenings or at weekends, etc.
- Of course, you should ensure you provide competitive salaries and benefits, but these two are intentionally last in the list. Research shows you don’t need to immediately raid the company coffers to offer people more money or enhanced benefits packages to keep them happy and engaged, far from it. Of course, reward does matter, but putting in place a series of comparatively low-cost retention initiatives presents better long-term results and a lot less disruption associated with a revolving door recruitment approach.
We hope you have found something useful in this blog, and even if reading the list above you felt “yes, we already do some of that”, maybe ask yourself if it could be better. Investing in your people has enormous dividends and can dramatically cut your recruitment budget at the same time.
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