In my travels over the past year I have seen organizations that are doing great things with employee engagement and some that are very far behind the curve. So I have to ask, “If you have not started an employee engagement strategy, are you too late?”
In the past year I had the privilege of presenting in many communities across Canada. Some of these communities have unemployment rates as low as 3%! As you can imagine, with this kind of rate, attraction and retention becomes one of your biggest concerns.
What is the cost of losing an employee and what should I do to keep them?
In the past, losing an employee (although still costly) meant you went to an endless pool of human resources in Canada and replaced that person. That was in a world where there was an abundance of Boomers in the workplace and a lot of resources available to replace exiting employees.
Today we have a very unique set of circumstances: a shrinking skilled workforce, four generations in the workplace and global competition for immigrant workers.
In a scenario where an employee asks for something that you believe may set a precedent, cost the company some money or increase time off or even raise pay rates, in today’s market, you must look at the real cost of not doing these things. To replace an employee in the workplace will cost your organization approximately 25-30% of their salary. This % consists of expenses including administration cost of the employee leaving the company and the hiring and training of a new employee.
However, in some industries this cost can be as high as 3-4 times the salary cost of the employee. Some examples: Sales people who leave and take clients with them, Management Consultants and Project Managers with a high level of loyalty to your clients or Equipment Operators that can shut down production during the replacement process of that worker.
The days of potential employees waiting in the wings are over in many areas of Canada. This will continue to be the case as the economy heats up and the population ages. Engaged employees are less likely to leave your company and more likely to recommend your place of employment as a place to work and do business.
With this in mind, you have to ask yourself, is what your employee requesting as expensive as replacing them and potentially others?
I believe there is a shift in power. For the last 100 years, managers had numbers in their favour, but now employees are in a more favourable position. It is important that we take a serious look at the real cost of letting an employee walk out the door. For example, is the cost of two days training, a new phone or 5% raise worth 25-35% of their salary or worse… losing customers or slowing down production on the work site?
The competition in the future will not be for customers, it will be for human resources. If you get and keep the human resources, you will get the customers. Stay tuned for my next entry on the impact engagement has on employee retention and attraction. Thanks for reading my post.
International Speaker, Author and Employee Engagement Expert
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