Employee Retention - The Costs of Staff Turnover

 “Employee engagement is the investment we make for the privilege of staying in business” Ian Hutchinson

 

 Have you undertaken any analysis of the impact of staff turnover on your organisation recently?

 

 

Were you aware of the following statistics?

  • Staff turnover is estimated to cost $20 billion annually in Australia alone
  • 71% of surveyed employees are planning a move from their current roles within the next 12 months
  • The average rate of turnover in Australia is 18.4% per annum (ie 1 in 5 staff)
  • The cost to replace an employee is estimated to be up to 2.5 times their annual salary
 
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The above statistics reveal an estimated cost of $210,000 pa to a business with 10 staff ($2.1 million pa to a business with 100 staff). Further, a recent survey of 500 directors by the Australian Institute of Company Directors identified a skilled labour shortage as the main (by far) economic challenge of the present day.

Startling statistics if you weren’t already aware of the real cost of staff turnover. Think of the savings that can be made by successfully addressing this common workplace issue.

What can you do?

Firstly, determine the financial and perfoamnce based impacts current levels of staff turnover is having (80% of respondents to the HR Pulse Research Report said staff turnover has a negative impact on their organisation). Even if 10% of your staff are turning over each year, this represents a significant cost to the organisation.

Secondly, identify those areas which are suffering most from turnover. Is your organisation struggling to retain new employees (47% of turnover occurs within the first 90 days of employment1), or even more significantly, is retention an issue within your key people - those that are critical to the success of your organisation?

Thirdly, identify the key issues that are leading to your turnover of staff. According to the InSync Survey of 2007 among the top 4 reasons for leaving were:

  • Poor Job satisfaction
  • Lack of Challenge
  • Work / Life Balance
  • Poor Perceived Career Advancement Prospects

How to address these issues?

Coach & Co. has developed our Retention Coaching Program to assist our clients retain and engage their staff.

Coach & Co. Retention Coaching Program Here

 

You need only refer to the following case studies to realise the impact that addressing this situation could have on your organisation:

Case Study 1:
Organisation Size:                      60 Staff
Annual Staff Turnover:               Average 15% (9 people)
Estimated Cost of Turnover:    $900,000 (includes recruitment & training of new employee, loss of managerial time
                                                      & reduced performance levels of disengaged employee prior to leaving and pressure on colleagues )
Retention Program Cost:         $55,000
Results:                                       Staff turnover reduced to 5% (3 people)
Savings:                                      $600,000 equating to a Return on Investment (ROI) of 10:1
Additional Results:                    Increased engagement levels
                                                       Improved communication between staff members
                                                       Enhanced leadership capabilities
                                                       Improved performance levels
                                                       Greater work/life balance

Case Study 2
Triad Performance Technologies studied and evaluated the effects of a coaching intervention on a group of regional and district sales managers within a large telecom organisation. The third party research study cites a 10:1 return on investment in less than one year.

The study found that the following business outcomes were directly attributable to the coaching intervention:

  • Top performing staff who were considering leaving the organisation, were retained, resulting in reduced turnover, increased revenue, and improved customer satisfaction.
  • A positive work environment was created, focusing on strategic account development and higher sales volume.
  • Customer revenues and customer satisfaction were improved due to fully staffed and fully functioning territories.
  • Revenues were increased, due to managers improving their performance and exceeding their goals.

Statistically, the study found that of the participants receiving coaching:

  • 73% experienced improved relationships
  • 53% were more productive
  • 67% experienced improved teamwork
  • 61% experienced greater job satisfaction
  • 48% observed better overall quality

 
 
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