Employee turnover can be a costly problem for businesses, with ACAS estimating that it costs an average of 3.5 times an employee’s annual salary to replace them.
This includes the loss of productivity during the 28 weeks it takes for a new employee to become fully effective, as well as advertising costs, agency fees, and the time of HR and line managers.
To minimise these costs, businesses should focus on two areas: measuring the effectiveness of their recruitment process and encouraging staff to stay with the company. By strengthening these areas, businesses can reduce the significant costs associated with employee turnover.
Recruitment is a process that must be carefully managed and invested in. To improve recruitment process outcomes, businesses can start by analysing their current process to identify areas for improvement. For example, businesses should ensure they have a clear job description detailing the essential skills and experience needed to do the job successfully. Using profiling tools like Life Orientations to identify appropriate behavioural traits, and investing in a rigorous, unbiased screening process to shortlist candidates effectively all help to ensure the right outcome
Businesses should also invest in an efficient and appropriate induction or onboarding process for their new recruits, to reduce the 28 weeks of inefficiency it takes for a new employee to become fully effective. It’s important to include a checklist of items to cover not just the nuts and bolts of the job but also to make the employee feel welcome and part of the team.
Finally, to encourage staff to stay with the company, businesses should prioritize training, development, coaching, and mentoring for line managers. This is critical because the single biggest decision a business can make is who they name ’manager’. It’s a well-known fact that the main reason employees leave is because they are being badly managed. Businesses need to ensure that their managers have been upskilled where necessary, effective and well-trained, as this really can help to reduce employee turnover and associated costs.
Overall, by focusing on improving your recruitment, induction, and retention processes within your business, you can reduce the significant costs associated with employee turnover and ensure you are getting the most out of your staff…and they out of you because it’s a two-way street.
At Kirsty Craig Associates we can support your recruitment process from start to finish, contact us to discuss.