It’s very likely that a person will go through 15-20 job changes during a 50- year career in the 21st century. For employers, this means that they will have to replace workers on average every 3- 4 years. For companies to retain their employees, the obvious benefits are that happy employees will produce good work for their company. On the contrary, a bad hire can cost a company in more ways than you realize. In addition to interrupting operations, lower morale and decreased productivity it can cost a company on average two and half times an individual’s salary to replace an employee who doesn’t work out, according to a PartnerIt.com article entitled “Bad Hires Can Cost You. Eliminate Hiring Decision Risks.” Employee retention is something companies should focus on in order to improve the overall well- being of the company. Here are a few reasons why and how companies can better their retention efforts:
Costs of Hiring and Training
PartnerIt.com research shows that some companies go as far as saying it costs at least three times an employee’s salary to fire and replace a bad hire. That number might seem outrageous, but some hidden costs that go into hiring and training, include the cost of advertising on a job website or fees to a recruiter. The time it takes for Human Resources and staff to review resumes, cover letters, background checks and interview potential candidates can take away from other parts of the company. It also might cost a company a lot of money in overtime to have someone do the work while trying to fill the position.
Training and on-boarding a new employee is another cost that goes into hiring someone new. The industry of a company will determine how much training costs but even someone who makes $8 an hour can cost a company $9,444.47 according to Sasha, a professional HR consulting firm. The turnover cost for a job that requires you to learn how to use different types of machinery and special software, like a nurse, cost the employer even more time and money.
Job Descriptions are Key
Job descriptions that are a small thing that will help companies retain employees. Providing a clear specific job description can weed out applicants that aren’t a good fit for the position to begin with. Getting good employees to fill positions is the first step to keeping good employees. After an employee is hired, a good job description will help employees stay on track with their duties and help them see how they contribute to the company as a whole. When managers want to give feedback, it will be easy for them to refer to the job description as a point of reference. It’s also easier for managers to see if a worker has gone beyond expectations.
Another way to retain employees is to have an unmatched corporate culture. You’ve heard about the companies that do it best like Google, who provides employees with free food like sushi and salad bars in addition to allowing dogs come to work and providing on- site fitness facilities. Netflix does things for their employees like providing them with unlimited vacation time and $10,000 in annual health benefits, allowing them to keep what they don’t use. Burton gives free season passes to all of their employees and closes down their office when it’s a powder day so employees can use the products they promote. All of these companies realize how important employee retention is. Although their perks cost the company a lot of money, weighing the cost against the turnover and productivity costs is worth it to keep their employees happy.
Rewarding Results and Holding Employees Responsible
Rewarding results is also an important factor in retaining employees and it goes way further than just monetary compensation. Apple is a good example of a company that holds their employees accountable for everything and keeps their employees for a long time. They even have coined a term for it: “Directly Responsible Individual.” Every product, feature, or success is something that someone can be held responsible for. At Apple, good work doesn’t go unnoticed which is a huge motivator for the great minds that thrive there. Although it might seem like working for a company that provides a relaxed work environment is a good thing, sometimes employees take advantage and abuse the situation which can be detrimental to a company as a whole.
Companies like O.C. Tanner specialize in employee recognition. O.C. Tanner’s client list includes just about every major company you can think of from Pepsi to American Express. O.C. Tanner’s rewards program gives incentive for workers to produce results and then tracks their results to show how recognition is imperative for any successful company. A good Human Resources department also sets up rewards programs to appreciate good work.
Hiring the right people for the job and retaining good employees will save a company thousands of dollars in the long run. You can also ready about the how better employee benefits generate perks for businesses too. The cost of happy employees winds up being priceless. How do you weigh the cost of putting money into employee retention plan verses the cost of new hires? In what ways do you keep your employees happy so they will want to stay with your company?