No company likes it when a key employee leaves. In addition to the loss of the person’s institutional knowledge and valued expertise, the business now has to find a replacement. The cost of filling the position is not for the fainthearted—as much as two times the salary of a highly educated executive and one-fifth the salary of a mid-level employee—according to the Center for American Progress.
What constitutes the high expense? More than one would imagine. “You’ve got traditional recruitment costs like advertising, background screening and interviews, in addition to onboarding the person and training them,” says Josh Bersin, principal at HR consultancy Bersin by Deloitte. “There’s also a loss of productivity, as it often takes a couple years for the new hire to get up to speed. And when employees see their colleagues pack up and go, they wonder why, which affects their productivity.”
Given the direct and indirect costs of worker turnover, the onus is on employers to engage current employees so they stay put. Studies indicate there is bottom-line value in holding on to the talent you have versus replacing it. (See Fig. 1). The way to engage employees is to give them a sense of purpose, truly meaningful work experiences and transparent feedback.
These elements must be embedded in the company’s culture. “Culture eats strategy every day for breakfast,” says Jeanne Beliveau-Dunn, vice president and general manager at Cisco, and author of the book, I’m the Boss of Me: A Guide to Owning Your Career. “People want to be inspired, particularly Millennials. They want to stay with a business, despite what the surveys indicate. The problem is that most companies bore the heck out of them.”
To keep them in place, she recommends giving Millennials and all other employees “stretch assignments,” whereby they can learn new things, expand their skill-sets and otherwise prove their merit. “Hiring young, smart talent is every company’s objective, but it’s the quality of the work experiences that count,” says Beliveau-Dunn. “Either you stretch them or they will leave.”
Economic Value of an Employee to the Organization over Time
Most employees initially are a “cost” to a business, but over time with the right talent practices, they become more and more valuable.
Source: Bersin at Deloitte