The cost of Employee Attrition & Mitigation Strategies to Implement now
Business Impact of Employee Attrition
Would you believe that Australian businesses have some of the highest rates of employee attrition globally? The greatest flight risk is among workers under 30 years of age - 28% of them are looking to change jobs within their first year of employment and more than 50% are planning to exit within two years. In the over-30s demographic, merely 36% plan to change employers by the two year mark, a significant difference from the younger demographic. Organisations simply aren’t doing enough to support their younger workers and keep them happy, engaged and committed to the long-term outcomes of the business.
Employee attrition has a significant impact on businesses in terms of workplace culture, employee engagement and satisfaction levels, and even on company or brand reputation. Worse yet, it is a primary cause of loss in productivity, and comes with hefty recruitment and training costs to find a suitable replacement. This can impact the bottom line, influencing the sustainability and financial viability of the business in the longer-term. If we look at the cost of losing people, it is quite confronting.
Take a look at the following scenario:
Employee A, on a salary of $100,000 chooses to depart from Organisation A.
It is expected to take 60 days to replace Employee A and 60 days for the new recruit to start to produce in their new role. So a total of 120 days or 4 months of loss in productivity, among other costs.
To fill the vacant position, you will need:
- Advertising costs - $250/ad
- Hiring Manager at $80,000/annum
- 8 hours resume screening
- 12 hours of interviews
- 2 reference checks on 3 short-listed candidates
To train the new hire, you will need:
- Training Manager at $100,000/annum
- 3 days+ onboarding and ongoing training
Based on this scenario, the cost implications on Organisation A of Employee A’s departure is $31,447. If 20 people depart Organisation A in a 12 month period, this will cost the business north of $628,920.
Drake International has a Calculator that you can use to determine the cost of turnover in your organisation. There are some key strategies that you can implement to aid in keeping staff turnover to a minimum:
1. Flexibility is a must-have if businesses want to remain competitive
In a post-COVID world, flexible working arrangements are going to be essential. If the last 18 months has taught us anything; remote working does not derail employee productivity, and businesses can flourish regardless of where their workers are based. Research states that 75 - 80% of workers want flexible working to stay, but that is going to come at a cost to employers both in terms of workplace culture and reliance on the necessary tech stack.
2. Give your employees a voice
Don’t try to guess what your employees want, ask them for their input and give them a voice. What better way to meet your workers’ needs than by asking them first hand what drives them, what they need to remain satisfied and how you can better support them in reaching their professional goals. According to research, more than two-thirds of workers believe it is very important that employers listen to their feedback.
3.Proactively support employee health and wellbeing
We are living through unprecedented times. The reality is, most organisations are reporting a decline in their workers’ mental health and are looking for solutions to better support them through this trying period. It is important to highlight that despite workers needing immediate access to health and wellbeing resources and support, it is best to opt for a more proactive approach whereby wellbeing solutions influence systemic change and are ingrained in organisational culture. Reactive solutions may fix an immediate issue or manage a crisis, but will have little long-term benefit to the organisation.
Here is a short checklist to ensure you’re doing all that you can to maximise employee engagement, and minimise employee attrition:
- Check in with your workers regularly.
- Ensure an open line of communication between workers and their direct reports.
- Be open and flexible - not only when it comes to working arrangements.
- Ensure your workers have access to essential support tools - this is not limited to wellbeing, but providing support in other areas such as professional development and career progression.
- Internally promote, where possible.
- Treat your workforce as your organisation’s greatest asset.
It is critical to understand the cost implications and damage of high levels of employee turnover, and develop key strategies to reduce attrition and become a highly competitive employer of choice.
Drake have a number of service lines to help you along the way:
- Looking to implement a bespoke wellbeing solution? Contact Drake WellnessHub
- Looking to implement an EAP service or need help managing critical incidents? Contact Drake WorkWise
- Understand your workers by assessing their personality and compatibility - Drake P3
- Develop your workers and support their ongoing professional development. Contact Drake Training
Looking for more information?