The growth of the gig economy and the emergence of portfolio careers means that job tenure is constantly shrinking. That poses challenges for any business. Anyone with experience of running an early stage business, with lots of Gen Y staff, will know how hard it is to keep those staff for longer than a year or two. If you’re managing to retain them for 3 years plus, you’re doing very well.
We’ve all seen the stats on the cost of recruiting - an Oxford Economic study carried out in 2014, for example, found that the average cost of recruiting is over £30,000. At first glance, perhaps that looks absurdly high – who spend £30k on recruiting for anything but the highest roles? And, of course, averages cover a multitude of variations.
But take a closer look at the figures.
Approximately £5.5k is spent on the logistics of recruitment itself, but of that, around £3.6k is spent on hiring temps to fill the role before a replacement is found.
Only around £900 is spent on advertisement or agency fees, with the remaining £1k coming from management and HR time spent processing and interviewing the replacement.
In practice, that means that if you’re aiming to retain staff for say, 5 years on average, and people are only staying for 2.5 years, you’re doubling your recruitment costs on every member of staff. Imagine how much that is costing you on an annual basis.
There’s only one way to consistently improve retention, and that’s if people see they can develop themselves and progress their careers within the business.
Those changes in the job market, tilting it away from loyalty and towards short term employment, mean that people are more concerned with training and upskilling themselves than ever before, in order to maintain their skills base in a competitive and continually evolving marketplace. Your development and training should be as much about retention as it is about improving productivity and skills.
Finally, remember that some attrition is a good thing. Particularly in a growing business, culture and roles change, and it’s often the fact that someone who is integral to the early stages isn’t right for the business when the challenges change as it grows. The aim should never be zero attrition, it should be minimal attrition.