Employee retention and the cost of not paying enough attention
Retaining is certainly cheaper than replacing, so what can we do to improve this? Let's have a bit of a deep dive into employee retainment!
So firstly let's get the numbers straight - how much does it cost to replace and how much does it cost to retain?
On average, if you have an internal talent team, hiring a new employee will cost you starting around 5-7k Euros in 2023. Having this in mind, you also have to calculate the time it takes to train and have the new employee up to the level you need them to be, this cost can easily grow 3-5 times. Plus, you are also running the risk of a bad hire, which could be even more costly.
Also, you don't have a guarantee that you will be able to replace the employee with someone who would be willing to work for the same salary, so have to keep in mind that as well.
So what about just trying your best to make sure the employee is happy within your company and not constantly looking for a way out?
It's harder to calculate a price on that but let's break down what are the ways to retain employees:
1) Pizza party every Friday! (just kidding)
Here is the real list:
On average, if you have an internal talent team, hiring a new employee will cost you starting around 5-7k Euros in 2023. Having this in mind, you also have to calculate the time it takes to train and have the new employee up to the level you need them to be, this cost can easily grow 3-5 times. Plus, you are also running the risk of a bad hire, which could be even more costly.
Also, you don't have a guarantee that you will be able to replace the employee with someone who would be willing to work for the same salary, so have to keep in mind that as well.
So what about just trying your best to make sure the employee is happy within your company and not constantly looking for a way out?
It's harder to calculate a price on that but let's break down what are the ways to retain employees:
1) Pizza party every Friday! (just kidding)
Here is the real list:
Make sure your CEO is aware of the current economic situation in employee countries
It is too often seen, that company has opened an office in another country to do some cost-saving and maybe 10 years ago the offered salary levels were very solid for the country. Time passed, the "cheap labour" country had inflation but the salary level barely changed and the CEO is not keen on upping the salaries to match the market. This drives the employees on the constant lookout for new opportunities and makes it hard to attract new employees.
Offering a solid benefits package
There are several crucial aspects that should be included in the benefits package such as - health insurance, option to have some days working from home, flexibility in day to day, annual bonuses, grievance and wedding/childbirth package.
But it also goes beyond that - be mindful about what kind of insurance are you offering, cheapest insurance is still better than no insurance but your employees will feel that they are being undercut.
Often times others include in their benefits package - phone bill coverage, transportation help, gym membership and more.
Be on the constant lookout how you can improve your benefits package and be up with the competition in the market.
But it also goes beyond that - be mindful about what kind of insurance are you offering, cheapest insurance is still better than no insurance but your employees will feel that they are being undercut.
Often times others include in their benefits package - phone bill coverage, transportation help, gym membership and more.
Be on the constant lookout how you can improve your benefits package and be up with the competition in the market.
Working conditions
Some of the first things that candidates ask us when interviewing for a position - what are the working conditions? Is there a remote or hybrid possibility?
Here's a example of what we have encountered from a great employer who nailed the working conditions:
Here's a example of what we have encountered from a great employer who nailed the working conditions:
- Coming to office is only necessary for on-site meetings or special occasions
- No time trackers that constantly make you feel micromanaged
- You are valued by the work done not hours worked and can manage your own time
Compensate properly
This is the main reason why employees leave and look for a new job.
Be aware of what the current market is offering, are some of your departments underpaid? If so, adjust the salaries as soon as possible and offer salary review once a year or if inflation is on the rise, then once every 6 months.
There's not much to add here, just compensate properly.
Be aware of what the current market is offering, are some of your departments underpaid? If so, adjust the salaries as soon as possible and offer salary review once a year or if inflation is on the rise, then once every 6 months.
There's not much to add here, just compensate properly.
Encourage internal growth in all directions
This is a great one not only just to have your employees stay with you longer but also to save costs on recruitment.
But keep in mind that not all employees want to grow vertically, if you have a larger organisation, some of your employees, especially more on the junior side, are very interested to grow horizontally and switch departments. If you can create a growth-oriented space for your employees, their will most definitely be more inclined to stay with you for the long term.
But keep in mind that not all employees want to grow vertically, if you have a larger organisation, some of your employees, especially more on the junior side, are very interested to grow horizontally and switch departments. If you can create a growth-oriented space for your employees, their will most definitely be more inclined to stay with you for the long term.
So by having a robust employee retainment system, you can really have some great cost cutting in the long run. Of course the list can go on as there are several great thing to add like - feedback and engagement systems, whistleblower program and more.
Of course you can have all of the above and have employees still leaving you for another employer, usually for this it is best to have set up internal feedback sessions to get the reasons straight from the people.
Being a great employer also isn't cheap but it beats struggling constantly to fill roles and losing money in the process.
So if you have any trouble with employee engagement or are looking for a reliable recruitment partner who can help you find great talent reach out to Behman & Bergman and we will have a in-depth look at your struggles in recruitment.
info@behberg.com
Of course you can have all of the above and have employees still leaving you for another employer, usually for this it is best to have set up internal feedback sessions to get the reasons straight from the people.
Being a great employer also isn't cheap but it beats struggling constantly to fill roles and losing money in the process.
So if you have any trouble with employee engagement or are looking for a reliable recruitment partner who can help you find great talent reach out to Behman & Bergman and we will have a in-depth look at your struggles in recruitment.
info@behberg.com
Do you have any questions? Contact us!
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