You’ve got everything you need to know about spotting the signs of an employee retention problem, but how exactly does it all tie into the bottom-line health of your business?
Here, we’ll cover the tools and frameworks you’ll need to understand employee retention, and give you the numbers you need to make the business case that addressing it should be an urgent priority at your own company.
Needless to say, given the myriad ways that failed retention strategies can check the growth of your company, this one's going to be a doozy.
businesses are losing $1 trillion annually
Just how pricey are retention-related challenges for businesses overall? Stop and think about it for a moment. Try to come up with a ballpark figure. Ready?
One study found that the net impact of employee turnover and retention ultimately costs businesses as much as $1 trillion dollars annually. That's right — trillion with a "t."
In other words, if employees are leaving your company in droves, or even if they're simply not sticking around long enough to deliver the most value, then you need to start rethinking your employee retention strategy. And you need to do so ASAP.
the steep cost of squandering talent
Across jobs, how much do you think it costs, on average, to replace a departing employee? While estimates vary, the answer is almost certainly higher than you think — generally about 1.5 to two times that employee’s annual salary.
So whatever the exact number is at your company, we assure you it ain't pretty.
On top of direct financial outlays, there are other, less obvious ramifications associated with poor employee retention, each with hidden costs. For example, even one departing person can have a "butterfly effect" across your entire organization, inducing others to jump ship in turn. And when you factor in a host of other, not-so-easily quantifiable side effects — like lower morale and reduced productivity — it becomes clear that implementing a best-in-class employee retention program is an urgent business priority.
your most motivated employees will be the first to leave
Providing employees with access to opportunities where they can continue to grow and develop is a crucial component of any successful retention strategy. Indeed, some 70 percent of employees would be at least somewhat likely to leave their current companies for ones that prioritize employee development.
These folks are hungry and motivated to embrace new ideas. They possess the commitment, drive and willingness to learn your business needs in order to move forward. But if your growth-focused employees aren't engaged, you're going to lose them — fast.
Businesses today are leaking literal billions in unnecessary financial outlays each year as a result of failed retention strategies. And to make matters worse, they're losing their high-potential talent, to boot.
It doesn't have to be this way — as we'll explore in greater detail in later articles. But first, get a closer look at some retention benchmarks that can help you understand how your company's current approach stacks up, and where there might be room for improvement.