Pegging actual figures to what the loss of an employee means is fraught, but the rule of thumb usually lands at around 6-9 months of salary for mid- and upper mid-level employees. Still, we know this figure is going to be low because there’s no way it can take into consideration what attrition does to employee morale and productivity. We know that it has adverse effects on each, but it gets murkier when assigning actual figures. So for the managers making a business case for better employee retention strategies, know that you’re likely lowballing the number if you’re using empirical data, because the intangibles are very high.
A CAP study found average costs to replace an employee vary greatly depending on role and experience, but we know that your rockstar employee could really fall anywhere in this continuum.
– 16% of annual salary for high-turnover, low-paying jobs (earning under $30,000 a year). For example, the cost to replace a $10/hour retail employee would be $3,328.
– 20% of annual salary for mid-range positions (earning $30,000 to $50,000 a year). For example, the cost to replace a $40k manager would be $8,000.
– Up to 213% of annual salary for highly educated executive positions. For example, the cost to replace a $100k CEO is $213,000.
Retention strategies can be pretty straightforward. If your office doesn’t currently have one the good news is you’ll likely see a dramatic improvement when implementing even a basic one. It’s better to implement one before attrition becomes a glaring issue, which doesn’t seem to happen enough in the real world.
The first thing you need to do for any strategy is calculate your attrition rate so you can establish a benchmark. This way you can find out what’s working and what’s not. Second, you need to create a sort of weathervane: a viable channel for employee feedback, this could be something as simple as using Survey Monkey. The last key piece is to take a close look at your bonus system and health benefits to make sure you’re on par with your competitors and to ensure you have a carrot to wave when you want to change behaviors. Remember, it’s OK to offer high-value employees better benefits; give the rockstars their due. Finally be sure to conduct exit interviews so that you can get an honest look at what happened. There’s a very compelling pattern: the companies that do exit interviews generally have better practices overall and the ones that skip this, generally have bad practices across the board. Be sure your office is part of the former rather than the latter.
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