I remember years ago when the cost of employee turnover was calculated to be 150% of an employee’s annual salary. That amount included any internal recruitment costs, external search fees, and hiring and on-boarding expenses as well as the simple loss in productivity associated with losing and then replacing a talented worker. While that may have been more accurate for higher-level leaders and professional staff, recent research still suggests that the average cost of replacing an employee who earns less than $50,000 per year, or more than 40% of Workforce America, amounts to 20% of the person’s annual salary.
So is it worth up to $10,000 per year for you to develop and retain your most talented workers? What about $300,000 – or more – for your most seasoned senior executives?
Sure, there are other reasons why an employee might quit his or her job with you and accept a position elsewhere. Surprisingly, not as many leave anymore for a pay increase as you might think. Most leave because they don’t like working with their direct supervisors or they don’t feel challenged in their current positions. This is especially true with Millennials who are now known to jump ship once every 12 to 18 months!
I would offer that if you intentionally develop your employees you are more likely to create a positive work environment and establish a strong bond with them. They are also far more likely to feel challenged as you groom them for new and different opportunities.
Just to be clear, I’m not suggesting you invest $10,000 per year let alone $300,000 and up to develop any one employee. Instead, I am inviting you to consider what it’s worth to retain your star performers across the board. You can absolutely show your appreciation for and demonstrate your commitment to your employees by providing them targeted training. In addition to retaining a good number of employees in the process, you may even be able to offset certain salary increases as you do.
Most employees – at least the ones you’d want to retain – want to be better employees and want to become subject matter experts in something. They also want opportunities for growth, not necessarily promotion, so now may be the time for you to focus on employee development in your organization.
Start by determining what skills are most needed across your organization and identify how your employees can develop these skills. Then engage in coaching conversations with your most valued team members to establish individual development plans. Work with your employees to agree on their development objectives together and determine how they will go about achieving those goals.
Online webinars and local seminars or trade schools are inexpensive ways to obtain training for your staff. Mentoring and job shadowing are even less costly approaches and often prove far more effective than paying for outside learning solutions if you have internal experts who can – and want to – play a part in developing their peers and fellow co-workers. In fact, recent research shows that many Baby Boomers welcome this way of giving back to their organizations before they retire.
Losing top-notch team members because they don’t see a future for themselves at your company is tragic, especially when it takes so little to show them another way. So whatever you do, do something! Investing the time to develop your employees now can provide significant financial rewards for your organization in the future.
Want some help creating your employee engagement and development strategy? Don’t wait until your top talent starts working for your top competitor to act. Call us at 310.589.4610 or email us now to see how we can help you develop and retain your best workers. You can also visit the Innovation Workshops page of our website to see how we help our clients develop their employees and deliver powerful breakthroughs results.