The Hidden Costs of Employee Turnover: How to retain new hires in 2023

Drake Editorial

Employee turnover can be a significant challenge for organisations, impacting productivity, morale, and ultimately, the bottom line. It's crucial for businesses to invest in retaining their new hires, as the hidden costs associated with turnover can be substantial.

From building a strong foundation for workplace culture to understanding the importance of a stay interview/counter offer, organisations can create a positive work environment that fosters employee engagement and loyalty, reducing turnover rates and maximising long-term success.

Build a Strong foundation for Workplace Culture.
Creating a strong workplace culture is the first step in retaining new hires. A positive and inclusive culture fosters employee satisfaction, engagement, and a sense of belonging.

Start by defining your organisation's core values and communicating them effectively to all employees. Encourage collaboration and open communication channels, allowing employees to voice their opinions and contribute to decision-making processes. Foster a supportive environment that recognizes and rewards employees' achievements. By building a strong foundation for workplace culture, you create an atmosphere where new hires feel valued, motivated, and committed to the organisation's success.

Understand the Cost of Turnover

To effectively address the challenge of employee turnover, it is essential to understand its true cost to the organisation. The cost of turnover goes beyond the financial aspect of recruiting and training new hires. It includes indirect costs such as decreased productivity, decreased customer satisfaction, and the potential loss of knowledge and expertise.

Conduct a comprehensive analysis of your organisation's turnover rates and calculate the associated costs. This data will serve as a compelling case for investing in employee retention strategies, as it highlights the impact of turnover on the organisation's overall performance and profitability.

Let's take a look at the following scenario using the Drake Turnover Calculator

Employee A, who earns a salary of $100,000, has decided to leave Organisation A.

Replacing Employee A is expected to take 40 days, and it will take an additional 60 days for the new recruit to become productive in their new role. This amounts to a total of 100 days of lost productivity, along with various recruitment, onboarding, and training expenses.

Based on this scenario, the cost implications of Employee A's departure amount to $26,586. If 20 people with similar salary packages leave Organization A within a 12-month period, it is estimated that the business would incur costs exceeding $265,860.

The costs associated with turnover include expenses related to hiring, training, and onboarding, as well as the loss of productivity during the early and final stages of employment.

There are also additional hidden impacts, such as a decrease in morale and a decline in the remaining staff's confidence in their employer. This may lead to a rise in resignations as existing employees seek to join their departing colleagues in pursuit of better opportunities.

Given the significant costs at an economic, productivity, and cultural level, what measures are companies taking in 2023 to reduce attrition rates?

Counteroffers and stay interviews

Counteroffers and stay interviews are powerful tools to retain valuable employees. A counteroffer is a response to an employee's resignation, where the organisation presents an attractive offer to persuade them to stay. While counter offers can be effective in some cases, it's important to address the underlying reasons for an employee's decision to leave and provide long-term solutions rather than short-term incentives.

Stay interviews, on the other hand, proactively engage employees in conversations about their job satisfaction, career goals, and concerns. By understanding their needs and aspirations, organisations can take preventive measures to ensure their ongoing engagement and job satisfaction.

Effective Onboarding Strategies
An effective onboarding process is critical for retaining new hires. It sets the stage for their overall experience and determines their level of engagement and commitment. Start by designing a structured onboarding program that introduces new hires to the organisation's culture, values, and expectations. Provide them with clear job responsibilities and objectives, and assign a mentor or buddy to support their integration into the team.

Regular check-ins and feedback sessions during the initial months help identify and address any challenges or concerns. By investing time and effort into a comprehensive onboarding process, organisations can create a positive first impression and ensure that new hires feel welcomed, supported, and motivated to stay.

Retaining new hires in 2023

Retaining new hires is essential for organisational success, as the hidden costs of employee turnover can have a significant impact on productivity, morale, and profitability. By building a strong foundation for workplace culture, understanding the cost of turnover, utilising counteroffers and stay interviews, and implementing effective onboarding strategies, organisations can create an environment that promotes employee engagement and loyalty.

Investing in retention not only reduces turnover rates but also fosters a positive work environment where employees thrive and contribute to the long-term success of the business. By prioritising employee retention in 2023 and beyond, organisations can secure a competitive advantage and position themselves as employers of choice in an increasingly competitive job market.

Looking for new staff? Contact the Drake International team today to discuss how our team can source and select top talent for your business.