Drive Down Employee Attrition Costs!
Voluntary turnover is steadily rising. In 2017, it reached 13.5% (up from 9.1% just five years prior).1 Collectively, turnover amounts to $160 billion per year for US corporations.2
This constitutes a significant financial loss for US organizations. And if your high performers are walking out the door, the cost of replacing them is significantly higher than for your average employee.
Employee attrition is a normal cycle organizations face. However, losing some of your great talent is preventable. Investing in your culture and the development of your leaders can result in saving your organization thousands of dollars in the long run.
Do you calculate your annual attrition rate and cost?
Many companies either fail to track this information or haven’t figured out how to put a quantifiable number to it. These questions need to be on your radar to accurately determine your current state:
- How much does your company spend in recruiting new talent and onboarding new hires?
- Is reducing your attrition rate a business metric you have in place?
- Are you operating at the intersection of business and talent strategy to achieve or even exceed business goals and develop a thriving culture?
- Are you simply scaling your organization based on current market needs or are you building an organization to last?
Those losses cut deep.
The Society for Human Resource Management places the cost of voluntary attrition at six to nine months of that employee’s pay – upwards of 75% of their annual salary.3 If the individual’s salary was set at $100,000, you’re looking at spending at least $50,000 to replace them. That percentage can skyrocket to 200%+ for highly skilled or C-suite positions.
As PeopleKeep points out, there are hidden costs many don’t factor in when good employees leave:4
- Advertising, interviewing, screening, and hiring.
- Onboarding, including training and management time.
- Lost productivity and engagement.
- Cultural impact.
The last two items directly impact your remaining team members. Low morale, increased frustration, and the loss of the former employee’s business expertise and institutional knowledge have long-term effects on the team’s ability to deliver on their goals.
When great employees are consistently leaving, remaining team members often develop a lack of trust in the organization and the leadership team. It is only a matter of time before others follow suit.
Drive down employee attrition as a business imperative – not an HR function.
When organizations change their perspective on leadership development, they treat it as a business imperative. This is necessary to assure the long-term health of the organization versus an HR function that is not tied to strategy and business results.
Start with mapping the skills you need to achieve your desired future business state. This roadmap shows how you can develop leaders across your entire organization. Ensure all employees have a clear understanding of their role and their contributions in helping your organization achieve its business goals. Then initiate discussions on how your team members want to develop and grow within the organization. This opens the door for development opportunities and massively increases employee engagement.
When employees feel their company is invested in their growth and satisfaction at work, the employee experience shifts to a completely different level, leading engagement to climb and productivity to increase. Investing in leadership development programs is powerful and significantly reduces voluntary turnover – which is very likely reducing your profits more than you realize.
Which team members do you want to retain, versus seeing them join your competition? Explore leadership development programs to align these individuals with your business growth strategy – and reap a significant ROI in the long run by retaining your key talent.
1 Employee turnover trends in 2017, Compdata, 2017
2 Employee Turnover is the Highest It’s Been in 10 Years. Here’s What to do About It., Forbes, 2018
3 High Turnover Costs Way More Than You Think, Huffpost, 2016
4 Employee Retention – The Real Cost of Losing an Employee, PeopleKeep, 2016