Our previous blog, Reducing staff turnover, revealed how an affirmative HR approach and application of a range of job-satisfaction mechanisms reduces staff turnover rates.
Every situation is different and one size doesn’t fit all, but estimates suggest that Certified Top Employers, companies recognised for being at the forefront of a progressive HR style, enjoy staff turnover rates in the region of 33 percent lower than the UK industry average: 10 percent versus 15 percent.
This has a cost saving. Reduced employee turnover results in reduced financial turnover. Exactly how much money is involved is difficult to pinpoint. Though application of some rudimentary mathematics and published industry averages of turnover rates and cost per replacement employee, indicate as much as £7,000,000*per year, compared to companies of similar size.
How do the HR teams in Certified Top Employers bring about this saving?
Well, people don’t quit a job for fun. Finding work is a hassle, an effort and emotionally draining. Extenuating circumstances aside, most employees leave either because they are headhunted for a better role or they feel as though they can’t carry on where they are anymore.
Investing in staff retention measures can result in big savings long term
The key reasons cited for leaving a job revolve around skills-based learning and personal fulfilment, or rather, a lack of skills-based learning and personal fulfilment: no advancement route; no mentor or role model; no recognition for achievement; not learning anything new; overworked; bored!
Too much of this, for too long and employees become disenchanted, emotionally disconnected and, ultimately, physically removed from the firm. The ‘sorry you're leaving” card signed by the boss is too little too late. And, if they really were sorry, shouldn’t they have done something about it, before it happened?
The more progressive and alert companies do something about it, adopting a prevention rather than cure approach. For example, coaching, personal development plans, mentoring, performance rewards and job enrichment schemes are all prevalent among Certified Top Employers.
There's strong evidence to suggest a significant ROI. Our analysis, though based on averages and estimates, is not unreasonable logic. Providing fewer reasons for staff to leave your company will ultimately reduce spending on recruitment and training.
In addition, Top Employers Institute data shows us year-on-year increases in the percentage of Certified Top Employer companies incorporating these types of programmes into their Human Capital Management operations. Among the top five, is a 100 percent uptake.
It takes time, effort and investment to implement these programmes, but at £30k a pop to replace people, it might be time, effort and investment worth considering.
*Our working out: Oxford Economics estimate the average cost of replacing one employee to be £30,614. A selection of publicised figures suggests an average staff turnover rate in the region of 15% per annum for UK industry: this varies depending upon sector, company size and season. Certified UK Top Employers have a recorded average turnover rate of 10% per annum and an average workforce size of 4,494. Multiplying average replacement cost of £30,614, by average workforce size of 4,494 by percentage turnover rates of 0.1 and of 0.15 generates two turnover figures of £14m and £21m.