The Business Case

The Business Case for Employee Engagement & Retention

We all know what has to happen when someone quits. Feelings running high, the paperwork, exit interview (maybe), questions and concerns. The close colleagues and leaders left behind are speculating and wondering too. How do we function without them? What’s happening here?

The direct costs of employee loss can run the gamut from separation costs, to replacement costs, to training costs.

Those direct costs are often based on the salary for the position. Replacing a mid-level employee can cost 20 % of their annual salary, so a $60,000 per year manager can cost about $12,000 to replace. There are a lot of mid-level employees.

Replacing a high-level employee, with a large salary and specialized training, can cost up to 213 %. This puts the direct cost of replacing a $100,000 a year Executive at up to $213,000. It’s easy to see how this adds up with lots of turnover.

Indirect costs of employee turnover include loss of these important things – productivity, engagement of colleagues, institutional knowledge, good morale, and with increased absenteeism and gossip.

It’s difficult to track these factors with an exact monetary value, the way we do with say, boxes of pens. We know there is a cost to organizations which can’t be ignored when looking at the impact of employee turnover. Also, with senior, highly-skilled positions it can take a year or more to really get up to speed.

There’s much more to it of course, like the time and efforts of HR, the managers, and the new recruit’s colleagues. A group of people working together to meet the company needs, and their own, is a really complex jigsaw puzzle.

That said, the hard costs of insufficient use of soft skills show up on the bottom line.

Quitting a job is a big statement.

Someone who’s anonymous says … Some quit and leave, some quit and stay.

Gallup Poll research tells us that 92% of employees leave jobs because of their managers: too difficult, unreasonable, demeaning, without empathy.

And 81% of managers wrongly believe that employees leave for more money. But it’s not all down to managers.

There’s a lot said about employee engagement and retention, about pay and benefits, a good physical environment, the tools needed to do the job, the basic stuff. But working conditions also include the atmosphere, or culture, and the way the work is done. That’s where we get into trouble.

What people say in exit interviews is often not true and for understandable reasons. It was so unpleasant for them that they’re giving up a job, and that has to do with people or the company actions, or both. They don’t want to make the exit anymore unpleasant, or burn bridges. It would take a lot of confidence to speak the truth. So most say it’s about money though it’s not. That then runs through the all statistics gathered – like 81% say its money. So managers believe that. It’s avoidable.