The future of your company rides on whether you can retain your talent . If you're a smart leader, you know that your organization is inexorably tied to the people who are working there. But retaining talent in this business environment can be challenging.
The unemployment rate in the US is currently at historic lows. It's a great labor market for employee, which means it's harder for employers to hire and retain good people.Currently, there are 7.3 million unfilled jobs according to the Bureau of Labor Statistics. As the economy grows, this employment gap will grow as well.
Here are some of the critical reasons why your company should make employee retention a high priority in your organization if it isn't already. The future of your organization depends on it.
Cost of Turnover
According to this study by the Center for American Progress, it typically costs a company 21% of an employee's annual salary to replace them. This might not seem like a lot but it can add up. For example a teacher at a private school making $40,000 a year will cost the school $8,000 to replace. This has caused schools to look into how to retain teachers . This isn’t just a problem in the education industry but is a problem in various industries across the world. The costs in recruiting and training alone is a huge price to pay only for your new hire to quit shortly after. Also experience that was gained by that employee is lost and it's value immeasurable to any organization.
Most leaders know that the best new hires are going to come from referrals of quality employees they already have in their organization. Research backs this up as well. Careerbuilder recently released a survey indicating that the number 1 source of hire among employers were employee referrals .
On top of that, 82% of employers rated referrals above every other source of hiring as the best return on investment for acquiring new talent. In addition, 88% rated it as the best source for getting 'quality' new hires. When you lose a quality employee, you're not just losing that person with their skills, talent, ability and experience. You are also losing a whole host of other potential quality hires that would be in their wake. That is not something you can easily quantify.Related: 5 Important Facts to Know While Running a Business
People Are A Company's Most Important Asset
If you think about all the t hings that generate revenue and produce for your organization , many don't think about the people. They think in terms of machines, systems, software, products, intellectual property and many other things.
The success organizations and the great leaders know that people are their greatest asset. And when you know that your company and the future of your venture is dependent on the people you employ, you will think about employee retention very differently.
There was a study conducted on how engaged employees generate extra revenue for the business. It showed that 50% of engaged employees post about the companies they work for on social media. That's free marketing folks that includes real social proof, which is a super powerful way to get new customers. Only 33% shared unsolicited positive comments and they were 24% more likely to boost sales than unengaged employees. That means you are losing revenue when you don't engage employees.
In addition to the 20-21% of your employee's annual salary that is costing you to replace them, think about all the lost potential revenue when someone leaves. On top of that, think about the exponential effects of losing an entire network of potential high quality, future hires.
When you add it all up, it costs your company an immeasurable amount of money and value over time when you don't retain even one employee.