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Not holding on to staff? Mind the hidden costs

Nov 07, 2021 Management, Sunday Nation

You can leave this job anytime. There are many more where you came from. Hundreds out there would die for your job. 

Have you uttered those words as an employer? Or had them uttered to you as an employee? They are commonplace, even right now in the 21st century. Many of those who employ others regard jobs as a gift they bestow, a privilege. If you work for them, you should be eternally grateful—and not complain about anything. After all, there are many more where you came from.

Primitive stuff. And yet still all around us.

This much is still true: jobs are few; workers are many. That suits those who offer the jobs; it gives them power over workers: I am one of the few, they say; you are one of the many. So watch your step.

The basic idea is that workers are just resources. Humans, but just resources. No different from machinery or cattle or soil. Just means to an end. The end is the elevation of the employer; the resources to be exploited are the employees. You use them and discard them as needed. It is great that there are so many of them out there, so cheaply available, so interchangeable.

As a result, you will encounter many, many employers who have really high staff turnover. Workers leave often because the jobs are so bad, or are made to leave often, because they complain too much or fail to deliver their quotas. This high turnover doesn’t hurt, because workers are so easily replaceable. There’s no punitive cost to bear from having to change employees too often.

Really? In a new book, I Love it Here, author and workforce expert Clint Pulver asks us to rethink. In his experience of interviewing employees, he estimates that as much as 60 per cent of employees are looking for new employment at any given time—they are ready to bounce out if something better comes along.

Let’s be clear: losing employees is a natural part of business. You just can’t hold on to 100 per cent of your people. Some will always be leaving: for better prospects or a change of career; or even more personal reasons like relocating or health issues. Zero turnover is not the goal. But 60 per cent? Come on! 

Many still imagine there isn’t any real cost to this high turnover. Mr Pulver puts us right. He points out that the cost of turning over an entry-level employee is about 50 per cent of their salary. For a mid-level employee, 125 per cent; for a senior executive, 200 per cent.

How so? Because of the many, many costs hidden in changing employees. First, the employee who’s handed in her notice may still be sitting there for a while, but has usually checked out mentally. The work is suffering. Next, if it takes time to find a good replacement, the work burden is carried by other staffers, who work extra hours and suffer additional stress—and also lose focus.

There’s more to come. There is a cost to recruitment—and the higher the position, the greater that cost. Time and resources must be expended in searching for, screening and selecting the new hire. Oh, and the people leaving aren’t just taking themselves out of the door. All the training, specific work knowledge, institutional memory and deep relationships also walk out with them. If you have lost a treasured employee, you will know much fresh effort is needed—just to get back to where you were.

Add all that up and see if you’re still happy to let people leave freely, and not invest in retention.

If you’re a construction site manager who is still able to pick manual labourers off the street, perhaps you think these costs don’t apply to you. But even where alternatives are not hard to find, the costs of training and avoiding safety issues can be significant. And for those who deal in top talent, the costs are often prohibitive—but not counted.

Those costs relate to those who leave. What about those who stay? Research shows that companies with high employee churn often have very low employee engagement. Those who stay are poorly motivated and almost never give of their best. They will avoid doing anything beyond the bare minimum; and they will never go the extra mile. If that’s most of your people, then start calculating the productivity loss…

Outstanding, sustained business success does not come from being a shrewd and crafty employer. It comes from building a tightly knit band of highly engaged, pumped-up team members. Great work comes from people who enjoy working together, who work to a higher cause, and who are allowed to work to their individual strengths in kinship with the team.

That’s the team you need to be leading.

(Sunday Nation, 7 November 2021)

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