Josh Bersin of Deloitte believes the cost of losing an employee can range from tens of thousands of dollars to 1.5–2.0x the employee’s annual salary. These costs include hiring, onboarding, training, ramp up time to peak productivity, the loss of engagement from others due to high turnover, higher business error rates, and general culture impacts. To curtail high cost of employee turnover Bersin notes effective system must be in place to prevent loss.
He notes is that HR systems need to focus on building structures of employee retention. “We have to remember that people are what we call an ‘appreciating asset'”, says Bersin. Most employees start out as a cost to the organization. As time passes, with the right practices, the employee appreciates in value, and begins to generate economic value for an organization. HR systems that effectively develop high levels of employee retention, may not utilize tactics that employer thinks would be helpful.
Across America employers are seeing an employee demographic shift as Baby-Boomers retire, as Millennials begin to enter management and high value positions. Millennials are motivated by “growth, career opportunity, and meaning” notes Bersin. Cultivating a work environment that fits the people, rather than forcing the people to adapt to a preexisting work environment proves effective. Poor work environments cannot be assuaged by higher compensation. While too little money may drive turnover however, striking a proper fiscal balance is not enough.
What Bersin says creates a sense of fulfillment within employees are answers to the following:
- Am I paid well?
- Does work take advantage of my skills?
- Does my work appreciate me?
- Is the work environment inclusive and diverse to that if feel that I fit?
- Does my company do work I feel proud of?
Cultivating a sense of fulfillment within work is the best way to lower turnover rates and move employees up a curve of appreciation in value. Proper training and cultivation of current employees is key to develop a thriving business that adequately uses current talent.
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