What are the possible cost of replacing staff?
Losing staff is a pain in so many ways. However, it’s more costly than you think. Research has shown the following stats when replacing someone:
- For entry-level employees, it costs between 30% to 50% of their annual salary to replace them.
- For mid-level employees, it costs upwards of 150% of their annual salary to replace them.
- For high-level or highly specialised employees, you’re looking at 400% of their annual salary.
Hopefully, I now have your undivided attention. The above shows that your employees are your business’s biggest asset.
With massive skills shortages and being limited to bring skills into New Zealand due to border controls, we see many staff being headhunted or leaving employers because they are unhappy.
This either results in employers having to counter-offer, resulting in increasing costs on already tight margins, or having to look for a replacement when options are challenging.
It also places the employer in a challenging situation, and the following questions must be answered:
- Are they staying for the money?
- Will they leave for more?
- What was the real reason they wanted to leave?
- Have I only papered over the cracks for the moment?
- Who else has been approached?
- How can I prevent this from happening again?
I have spoken about this regularly, and it feels like a scratched record at times, but it is a massive issue facing farming businesses in our sector.
Keeping staff happy is vital for the success of your business, and I am pleased to say that we are seeing more of our clients doing things outside the box when it comes to keeping good staff.
Creating the right culture and making your workers feel valued is vital.
Unfortunately, some still do not get it, so I’ll share the hidden financial and economic costs when you lose a staff member.
- Advertising costs.
- HR costs.
- Recruitment agency — briefing and fees.
- Time for senior management or hiring managers.
- Hiring and screening costs.
- Onboarding.
- Ongoing training.
- Temporary staff hires.
- Moving and hiring costs.
- Building relationships with suppliers, subcontractors or clients.
- Managing others’ workloads.
- Managing more unhappy staff.
- Loss of your trainer’s productivity — remember, that could be you!
- Not training or inducting correctly, resulting in that new worker leaving and the process starting again.
For staff deciding to leave, an employer is often a symptom of the business perceived employee worth, and their proper value is undermined. They feel overworked and stressed, lacking opportunities to grow or lack job satisfaction or security.
The costs associated with losing an employee exceed not only the economic but cultural ramifications for your business, too.
This has been discussed in the past, but it’s always good to be reminded that when we interview potential candidate, these are the main reasons they are looking to leave:
- Workplace culture has changed.
- Loss of staff engagement, feelings of inadequacy, they feel let down, may not feel they can accomplish or achieve as much as a team member(s) that leave.
- Additional work is put on them — high expectations and lower remuneration equals employee discontent.
- Client “relationships” are compromised, causing concern with job security.
- Loss of productivity and quality of workmanship, resulting in clients becoming unhappy and frustrated.
- Always putting out fires, working long hours and being under stress.
For businesses to succeed, you require:
- A mix of talent.
- growth opportunities.
- Valued relationships with internal and external stakeholders.
- Professional leadership.
- Personal development.
- Economic value (salary).
- Individual and collective reward (culture and standards).
- Work/life balance.
Businesses, like any group, workplace or community, should actively demonstrate and achieve a feeling of belonging and understanding, coupled with open and transparent processes and communication.
The top 10 tips for retaining valuable talent are:
- Have core solid workplace values and discuss them with your team.
- Create personalised benefits for individual employees (everyone has different needs).
- Recognise talent and reward improved work standards and set clear expectations.
- Promote from within.
- Actively encourage innovation and open discussion.
- Hold social events.
- Perform regular staff performance reviews.
- Help individuals to create a plan to achieve professional development.
- Adjust and adapt to individuals’ changing personal circumstances.
- Prioritise healthy workplace processes.
Ensuring you have these simple processes will reduce the need to use businesses like mine to replace staff.
We want to find you additional staff, due to your growing success, or to replace the ones you have promoted from within.
Businesses like that are a huge attraction to those highlighted above, and those practices create loyalty and encourage staff to share ideas that can improve your business and bottom line.