The Challenge to Hire & Retain Top Talent
When it comes to Human Capital Management, the acquisition and retention of high performing individuals is a constant challenge. Particularly in an era when “talent” gets lured away and the average tenure of employees keeps decreasing. Significant time and effort is invested in finding that perfect candidate and we don’t want to give them any reason to leave shortly after starting.
We welcome them on day 1, check in during the first few weeks and then leave them to their own devices. If we work in a business that has pro-active HR practices and solid people management then that may be all that is required.
The truth is, it doesn’t always work out that the best candidate stays beyond a few months or even to the end of probation. In HR, we rarely have the luxury of working in perfect situations – where high-performing employees will remain long enough to make a difference.
The High Cost of Staff Turnover
All employee turnover comes at a cost to business – on that point there can be no argument, so let’s count the ways:
- The Cost of Hire – Not just the recruitment fees or the advertisement + time to review applicants, refine the list, interview the shortlist and process background checks. Before the decision is made to hire, an organisation is investing in the identification of talent, marketing the benefits of employment and building a “brand” that brings high performers knocking on their doors.
- The Cost of the Vacancy – lost revenue – Let’s imagine for a moment your vacancy is in Sales. The cost of a vacancy on the sales team has a ramp down and a ramp up factor. It’s natural for an exiting employee to slow down their work effort as they prepare to leave. If you are lucky enough to have an overlap between the exiting and entering new employee then a hand over can assist to smooth this out. But depending on the reason for the exiting employee’s departure, there may be a need to avoid a handover because of the potential for transference of “negativity” by the outgoing employee.
It can take anywhere from 3 months to 12 months from ramp down to full productivity of the new employee. And that’s providing they last to the first anniversary.
And if we consider non-sales related vacancies then there can be the cost of a temporary resource to get the work done or the pressure and burden on remaining employees who step up and share the workload.
- Lost “know-how” – The exiting employee will no doubt leave with information gained over the period of their employment. A network of contacts is a high value item for any business and while post-employment restraints may slow down the knowledge-leak, restraints are only as good as the Lawyer that can be engaged to uphold the restraint.
They may leave with market and product knowledge, all of which was acquired during their employment and that will take their replacement time to learn.
- Departing Customers – When employees who have been expert at building relationships leave it is very common for customers to follow them. Customer acquisition is costly and can often become an expensive priority when employees leave. Add to this the time it takes to re-build the pipeline, replacement sales don’t happen with the speed of switching a light on or off.
Of course, when customers leave so does the revenue they once generated.
- Loss of Productivity – A new employee will require assistance from a few or many existing employees while they become familiar with their new surroundings and settle into the job, the team, the company and their new surrounds. While this is occurring, the buddies and others assisting the process of induction and onboarding are all losing personal productivity.
- Training Costs – You probably have systems that need to be learned and ways of doing business that takes time to train. You may have specific competencies that need to be developed or organisation specific training to complete within the first month or two.
Don’t forget to consider more downtime for the new employee to attend off-site training, cost of travel and maybe even accommodation.
- Impact on Culture – We can all relate to the energy that comes from a good workplace dynamic and culture. It’s hard to quantify and hard to describe or put your finger on just what that “magic” is that comes with a great culture but when the energy is pumped, people tend to perform better.
- Early Departure – Employee turnover comes at a cost and that cost is so much more than just the time, effort and resources invested in the hire. The early departure of a high potential performer can set a business back by 6 months or more.
Take into consideration what the above costs would be in your organisation and also consider the difference that could be made by:
- Building relationships pre-hire – giving your new recruit a sense of “wow” before their first day on the job
- Developing a sense of belonging, confidence and inclusion from day 1
- Taking care of the mundane document exchange and induction components of hiring before commencement
- Allowing the new hire to hit the ground running – with confidence and motivation
- Ramping up to full productivity rapidly and hitting targets earlier than have been achieved in the past
- Building a high performance culture that attracts more high potential candidates
- Reducing the impact on the performance of others because an optimised onboarding process does more than just affect the new hire – it lessens the burden on others
- Reducing turnover, improving retention
- Retaining valuable know-how and improving customer relationships, all of which translates into valuable sales and cash flow
Pro Active Onboarding – A Business Imperative
HR Professionals don’t need to be sold on the benefits of onboarding. It’s the one area of the employment life cycle that can have the greatest impact on performance.
An optimised onboarding experience impacts the new hire’s arrival and the speed with which they integrate with the team.
Not only does it affect the productivity of the new employee, it has a positive impact on the performance of the rest of the team.
Onboarding is so much more than a handful of documents, a tick ‘n flick exercise for compliance purposes and a week of spending an hour here and there being shown what you can and can’t do, who to go to for what, where to find stationery and the avoidable “politics”.
Onboarding is a highly valuable, cost-effective business asset. It should be well planned and executed with enthusiasm.
Oh and by the way, it is NOT a process that should be just owned by the HR Department!
Want to know more about Onboarding? Our White Paper shows you:
- When to start the Onboarding of new employees
- What to include in your program
- Who, in the business must be involved
- What the benefits are – be able to quantify the ROI
- How to convince your Manager that Onboarding works