It is time consuming and expensive to replace employees, and as the CEO of corporate recognition provider RedBalloon attests, it is employee engagement – not remuneration – that is key to retaining employees.
“Many businesses might feel the pressure to increase salaries to retain employees, but wage rises will only hold interest for a short while. Employee engagement is key to retention – and business success overall,” Kristie Buchanan said.
“People are the core of Australia’s two million small businesses, yet research shows that business owners failing to engage employees may risk up to $1 million in staff turnover every year,” she added.
Buchanen outlines five reasons why business owners should be rethinking how they engage employees. “While you can’t save everyone, there is a lot you can do to at least slow down unnecessary attrition in your organisation.”
1. The (preventable) cost of employee erosion. It is estimated that staff turnover costs up to 150% of a person’s annual salary. In an organisation with 100 employees, an average salary of $75,000 and staff turnover of 18%, that equates to around $1 million per annum*.
This figure accounts for recruitment, induction and the loss of productivity during the on-boarding period. You will be alarmed when you take a look at this number as a percentage of your overall profit line.
2. Money is not enough to save them. Around 38.6% of people jump ship for better pay*. The good news is keeping your people is largely in your control and with the right mix of recognition, communication, shared values, motivating tasks and career advancement opportunities, your people are more likely to stick around and give back over and above what you have invested to secure them.
3. Your managers influence the destruction. Managers have the greatest opportunity to lead by example and drive a team of engaged employees. Engaged employees are more productive, deliver higher profits and are less likely to be tempted to leave your organisation, so it makes sense to keep your managers in check and equip them with the training and resources they need to lead a highly engaged team.
4. Do unto others…Don’t expect loyalty from your people if you aren’t offering them the same courtesy. Show your employees that you respect and have trust in them and they will reciprocate by sharing their skills and ideas, and will be more willing to commit to achieving your long-term business goals.
5. Other companies are prepared to recognise your people. Almost 50% of employees would leave their current job if they had the opportunity to be better recognised for their contributions elsewhere*.
A dedicated recognition program can lower voluntary turnover, drive productivity and lead to repeat positive behaviours. Recognition doesn’t need to be expensive, just make sure it is frequent, specific and most importantly, personal. “Thanks” goes a long way in showing someone they are valued.