When was the last time you had to replace a key employee? It doesn’t matter whether you’re a CEO, mid-level manager, or you work in HR for a major corporation, hiring employees is time consuming and expensive.
Did you know that just keeping your employees happy can save you money? Yep. Every single employee/position you need to replace costs money! This is often a difficult thing for some business owners to understand or even accept.
Hiring Costs Much More in the Long Run
There are actually a couple of reasons hiring will cost you money, and it goes far beyond the perfunctory ‘Yes, I have to pay this new person’ issue. Salary is the price a business pays in exchange for work/services provided.
According to a study by the Society for Human Resource Management, employers will need to spend the equivalent of six to nine months of an employee’s salary in order to find and train their replacement.
Whether you’re creating a new position or replacing an employee, there are expenses you’ll need to think about. Let’s talk about a few of them first.
1. Advertising. Most businesses today will rely on one of three key outlets to advertise a new position: newspapers, online services, or college/university bulletins. Some of these services are free, but that doesn’t offer the best targeting approach. Every job position that a company would have to pay for will add up throughout the year.
2. Vetting prospective candidates. In strong economies, job applicants are often fewer than during recessions. In either case, though, it takes time for whoever is screening resumes and CVs to look through them. That time costs money.
3. Interviews. Once the candidates are narrowed down, it will take more time for the hiring manager to interview each prospect.
Add these things together and every time you have to hire someone it could be hundreds or even thousands of dollars. (‘Wait just a minute,’ I hear you thinking to yourself. ‘How could it cost thousands?’) Oh, right, we forgot one expense …
4. Training. This little tidbit is easily overlooked, but even when you find the perfect candidate, offer her the position, and you’re both excited, there’s a learning curve. From entry level to high management careers, it will take time to train, fill out paperwork, watch corporate videos, take tests, fill out more paperwork, and then, when they finally get to do the actual work, they won’t likely be as efficient during those first weeks as they will after months or years of experience.
Some estimates put the cost of hiring a new employee (for large corporations, at least) in the tens of thousands of dollars. The more elevated the position, the higher the cost.
That’s why it’s crucial to retain your employees.
You won’t keep everyone. You could be the best, most hip, influential up-and-coming business out there and your employees do nothing but praise what you’re doing and you’ll still have to replace them from time to time. For some, it’s because they’re moving away. For others, it’s about growth and opportunity. Still for others, it’s about passion.
Whatever the reason, it stings when you need to replace a great employee or frustrating when you have to can a bad one. But there are steps you can take (starting now) that may help you slow or even shut down that revolving door of constant hiring.
How to Keep Your Employees from Leaving
“Show me the money!” Or so Cuba Gooding, Jr. and Tom Cruise shouted to one another in the movie Jerry McGuire. And this is exactly what most managers assume their employees want most.
Yes, a decent salary is important, but it’s not that crucial to keep key and quality team members. Professional sports is loaded with megalomaniacal men and women who only want the highest paycheck in the league and have no brand or team loyalty, so we’ve come to accept that as standard practice. They’re paid more than most of us could ever dream of getting and they’ll just as soon play for their team’s arch enemy if they pay better.
Paying employees well doesn’t keep them in place longer. It’s essential to pay them their value, but no need to overpay. Here are a few things you might consider doing to help retain more employees, thus reducing your turnover and saving money.
The Federal Reserve Bank of Boston conducted an economic study that revealed that engagement is much more motivating to employees than a high salary and actually found that big financial rewards for employees doing jobs that require cognitive skills brought about poorer performance.
Understand their motivations.
Why do they want to work for you? You know why you started this business or took the position you have now, but some people are only ‘finding their way’ through life or seeking a paycheck.
There are plenty of ways to ask key, pointed questions during the interview process that will uncover this truth, or lead you to realize they’re just giving stock answers they think you’ll want to hear.
For your current employees, spend some time with them. Remember their names. Get to know their families, what they do when they’re not at work, and make them feel like you actually do care about them.
Say ‘thank you.’
“I pay them,” some employers say, “that’s thanks enough.”
They could get paid anywhere. Sometimes, though, a simple ‘thank you’ every once in a while can help people feel their work is appreciated and that they mean something to the company. How much effort does it truly take to say those two simple words?
Consider the benefits.
When people think about ‘benefits’ at a workplace, they usually think of health insurance or 401(k) matching contributions. While these are decent, there are plenty of other ‘benefits’ you could provide, including flexibility to work from home every so often, extra sick time, being more understanding when people need a day or two off because of some family emergency, and so on.
It could also be coffee in the breakroom, bonuses, or an exercise room on site.
Some people just don’t want to advance in their career, but for those who do and they don’t see anywhere else to go, it can be frustrating. Offering training and seminars to help key employees move up the proverbial ladder (even if they don’t ultimately stay with you) will generally lead to more loyalty.
R-E-S-P-E-C-T, find out what it means to me. Aretha Franklin sang that line and today, millions of employees around the world still search for it. Ultimately, at the end of the day, people want respect.
They want to know their efforts are appreciated, that their boss cares, and that they’re making a difference (and it’s being noticed).
When you focus on these fundamentals, you’ll find your employees staying longer with you, being more loyal, and that you’re saving money not having to constantly hire new team players to fill in for those who went in search of something better.