As the vast majority of business leaders and senior managers would no doubt tell you, the most valuable asset of any thriving company is its employees. After all, business is essentially powered by people. Yet in spite of this truism, the facts seem to suggest that workers are not receiving the treatment or support that their value deserves.
According to a recent Gallup survey, as much as 87 per cent of workers worldwide do not feel engaged in their jobs. And though previous generations of workers may have accepted such dissatisfaction, it seems as though newer generations will not.
When the old way of working isn’t working
A Payscale report on the staff retention rates of Fortune 500 companies reveals as much, with older employees apparently far more likely to remain loyal to their employers than their younger counterparts.
While some might argue that the reason for this might be down to the endurance and stoicism of older generations, the fact remains that modern-day staff turnover is on the increase and so too are the associated costs. And if long-standing companies do not adapt to the needs of the younger workforce, then these turnover rates and costs look set to grow.
Financial costs
HR website Eremedia.com estimates that replacing entry-level employees costs between 30-50% of their annual salary; replacing mid-level employees costs upwards of 150% of their annual salary; and replacing high-level or highly specialized employees can cost up to 400% of their annual salary.
The conservative estimate for replacing 12 employees in a single year, according to the same site, is approximately $250,000.
The intangibles
Despite such worrying figures, the less tangible costs of staff turnover are arguably even more concerning. Staff morale is damaged as remaining workers are forced to say goodbye to friends and colleagues; the company can suffer reputational damage as former employees criticise its practices or working environment; and overall productivity falls off with new hires taking up to 2 years to reach the same levels as those they’ve replaced.
Perhaps worst of all, a company that does not retain its workforce by meeting its employees needs will lose its top talent to rivals while struggling to attract new talent into its ranks. This negatively affects a company’s level of innovation as the number of new ideas being generated from within starts to decline.
Employee empowerment
The most effective way of dealing with staff turnover then is to take heed of employee expectations.
For newer generations entering the workforce, this means career flexibility, more opportunities for professional development and continuous feedback. Companies that fail to adopt to these millennial requirements will invariably continue to face problems retaining and developing top talent – a problem that is certain to lay waste to any longer-term plans for sustained business growth.
Here’s the infographic that recap the stats above:
