Retaining existing talent is one of the biggest problems facing business owners and hiring managers across the UK. Cultural shifts have changed the relationship people have with work. Gone are the days where employees remained loyal to one employer throughout their working lives; in fact, a recent study found that UK employees are actually the least loyal in Europe.
Why is it so important to retain employees?
1.Replacing employees is costly – both in time and money
Recruiting new employees is no easy task in today’s buoyant, candidate led market. The average duration that jobs remain unfilled remains at nearly the highest level in the past 15 years, as can be seen in the following chart:
The monetary cost of replacing an employee varies considerably between sectors, but the average cost sits at around £30,000. A survey carried out by Oxford Economics, across 5 sectors (including Retail, Legal, Accountancy, Media & Advertising and IT & Tech) revealed a staggering combined cost implication of £4.3bn per year!
2.High employee turnover can threaten a firm’s competitiveness
The knowledge lost from a departing employee is not a short-term problem; it is a long-term problem that breeds other problems and reduces an organisation’s effectiveness. This issue is amplified in businesses that rely more on human relationships. As the UK is largely a service based economy, this is a particularly relevant issue to many UK employers. Competitors may get insight into your business from your defecting employees.
A moderate level of staff turnover can be good for a business; it means fresh ideas and approaches. However, every organisation needs to have a strategy in place to retain the high performers that give it a competitive edge; they are the ones you can’t afford to lose.
3.Morale and productivity can be lessened by high turnover of staff
When experienced workers are replaced by new employees, productivity can drop dramatically. Not only are new hires very unproductive compared to experienced workers, but trainers’ productivity drops during training periods as well. A research paper published in the International Journal of Human Resource Studies highlighted the following effects of high staff turnover:
A talent management strategy can prove incredibly valuable to your organisation and reduce the cost and impact of employee turnover on your business in the long term.
Recruitment and retention trends to keep in mind:
These three trends should be considered when you review your strategy for attracting and retaining talent.
1. Employer branding
Employees increasingly demand a similar level of service to what they’d expect as consumers. The reputation, brand and emotional capital of organisations are all becoming increasingly important considerations for both candidates and existing employees when making career decisions
2. Employee referral programs
Referred employees have a longer tenure (Jobvite Index) and higher job performance
3. Non-cash reward and recognition strategies
Using non-financial rewards related to critical but non-core job roles such as brand ambassadorship and innovation has shown to be a key aspect of successful talent engagement and retention in the new, agile economy
The power of relationships emerges as a common theme within both current and future recruitment trends. Focusing on the relationships you have with your candidates, your cross-functional partners (in house marketing/PR team or agencies), and existing employees will help you attract and retain talent successfully.
Of course, an effective retention strategy needs to start with finding the right candidates and managing their expectations. For more advice on talent management and employee retention contact one of our expert recruiters today.