The Importance of the Recruitment and Retention of Staff

Recruitment and Retention of Staff

More people are staying in their jobs because of the economic crisis but the flip side of the coin has kept recruitment and retention as a high priority. Yet, the latter continues to be underestimated.

Recruitment and Retention of Staff and HR Suicide

In 2004 CIPID found that only four percent of UK organisations calculate employee turnover costs. They recorded the average cost of replacing an employee at £4,800 and replacing a manager or professional at £7,000.

This excludes opportunity time lost waiting for the new recruit to reach an average level of performance. It is not hard to demonstrate how large organisations with employee retention difficulties can realise massive savings by reducing staff turnover rates.

At a base level, consider company X with 1,000 employees and 25% staff turnover. They would save £240,000 a year by reducing employee turnover to 20% (assuming the conservative £4,800 figure).

That year the aggregated rate of labour turnover was 16.1% by 2007 it had risen to 18.1%. Overall 39% of organisations reported a rise in employee turnover.

CIPID has now reported in their annual Resourcing and Talent Planning survey that there has been a lowering rate of voluntary leavers from organisations. This is attributed to the current economic situation.

Unfortunately, for the same reason, there has been a marked rise in redundancies. Yet, skills shortages persist in certain occupational groupings.

They said, “Turnover levels can vary widely between occupations and industries. The highest levels are typically found in retailing, hotels, catering and leisure, call centres and among other lower paid private sector services groups.

“Levels also vary from region to region. The highest turnover rates tend to be found where unemployment is lowest and where it is relatively easy for people to secure desirable alternative employment.”

Read: Recruitment Strategies and Employee Retention are a Mixed Bag for the NSPCC.

Clearly not all employee turnover is negative. A moderate level of attrition ensures the recruitment of new and energised employees, while creating career development opportunities for existing staff.

Difficulties generally occur when staff turnover becomes too high, when employees with key skills and talent leave or when newcomers leave early. The latter particularly represents an investment cost with no dividend.

Though, great{with}talent has found that top talent are still as likely to leave. This is the group that organisations invest in the most. Yet, the economic crisis has not slowed their willingness to move on.

Higher workforce commitment has other benefits than just reducing recruitment costs. Logically a committed employee will be more motivated, impact more positively on both customers and colleagues and generally perform better than their indifferent counterpart.

A report on a major retailer by the Institute for Employment Studies concludes that a one percent increase in employee commitment could lead to a monthly increase of up to £200,000 in sales at the retailer’s outlets.

The underlying mechanism is a proven link between employee commitment, satisfaction and motivation, and customer satisfaction and sales.

Ignoring these aspects can only hold an organisation from being profitable, competitive and enduring in turbulent times. There are two sides to staff turnover and two sides to reducing it: recruitment and retention.

Contact great{with}talent and find out more about their TalentEngage employee engagement surveys.


(Main image from Recruiter)

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