Did you know it costs firms a minimum of 50-60% of an employee’s annual salary just to replace them? And that’s just the conservative estimate – Deloitte believes the true figure is much higher. ‘The cost of losing one employee can range from tens of thousands of dollars, to 1.5-2 times their annual salary.’
Then factor in further costs such as recruitment advertising, setting aside resources for interviews, onboarding processes, and the time it takes for a new employee to get up to speed. New Zealand’s median income is $52,000, so even before all the above happens, this is clearly a lot of money – huge costs that start-ups, SMEs and ‘larger SMEs’ can ill afford.
| Workers will fulfil their potential somewhere else
Furthermore, few firms can build a business with high employee turnover. It’s disruptive in an organisational sense, affects the bottom line, and sends out a negative message – telling customers and prospective employees that your business is ‘not a great place to work’.
What can owners do? Employee retention is one of the simplest and strategic, but often overlooked, ways to keep your business on track.
| Use training to inspire the workforce
People move on to other jobs for many reasons – not just money. A lack of training opportunities for career development and enhancement is one of the four main explanations for why employees call it a day (overselling the position, lack of clarity around expectations and bad managers also matter, according to PwC research).
What's more, approximately 77% of employees feel ‘they’re on their own’ to develop their careers at the company, say The Harris Poll, a US-based Insights and Analytics group. The message is clear: continuous training and access to professional development to upskill will make your employees stay.
| Make upskilling a business imperative
The cost of sending an employee on training and upskilling programmes is far more cost-effective than letting your employees go. It’s good financial sense to spend a smaller amount on training – to create higher-skilled, highly-motivated, more productive and loyal teams than just having your front door as a revolving door.
Good leaders know that continuous training will:
- Boost morale – it shows that you are prepared to invest in your employees
- Attract new talent – there’s a career path for those that want to take opportunities to rise
- Increase customer satisfaction – happy employees do better work, which reflects on the customer experience
- Develop soft skills – crucial and sought-after in today’s workplace
| Making affordable training opportunities available
'[Make sure] everyone has access to those opportunities. You might be surprised who takes advantage and benefits the most from your offerings.’ (Forbes)
Training your teams isn’t just damage limitation. It’s about shaping a brilliant team for now and over many years; a team that possesses the necessary skills to excel at their jobs in an inspiring and supportive workplace. Building a long-serving team that enjoys working for you and wants to work with you to drive business growth will keep you permanently ahead of the competition.
For more business ownership and leadership advice check out more of our blogs.