RETENTION IS a problem for almost one-third of Australian employers, recent research has found, and retention problems most commonly manifest into serious productivity problems, a decrease in company morale and damage to business relationships.
With the employment market continuing to tighten, employers are working harder than ever to attract, engage and retain the talent they have, according to Simon Moylan, national practice leader of assessment & development for Hudson, which conducted the research.
“The visible cost of turnover, including recruitment, hiring, orientation and training sits somewhere between 50 per cent and 150 per cent of an individual’s salary,” he said.
“However, the additional unknown costs such as loss of expertise, reduced productivity, lower morale, the cost of the vacant position and the training of the new hire, means the true cost of turnover may be up to three times this amount.”
The survey of 7,185 employers nationally found that more than 96 per cent of organisations have formal staff engagement programs in place with the most widely-used initiatives within Australian businesses being flexible work options (67 per cent) and financial incentives (62 per cent).
These are followed by leadership development and succession planning (each 48 per cent), with mentor programs (36 per cent), formal coaching (35 per cent) and high potential programs (27 per cent).
While low retention can pose a significant cost to an employer, Moylan said a moderate level of turnover is healthy for any business. “The challenge for employers is to balance the cost of turnover with the need to inject the organisation with new talent and fresh ideas.”
While the research suggested employers appear to be getting the message that salary is no longer the key driver of job satisfaction, 11 of the 19 industries surveyed still rely on financial incentives as the leading engagement tool.
Employers within the construction/engineering/property (74 per cent), financial services (79 per cent), IT (74 per cent), manufacturing (62 per cent) and resources (82 per cent) sectors are among those using financial incentives as their key engagement tools.
Western Australia was the only state where employers rated financial incentives as the leading engagement initiative with all other states rating flexible work options as the key tool. The boom in the West Australian economy and the state’s geographic location are the main drivers behind this result, as employers use financial incentives to lure talent from the eastern states.
A successful staff engagement strategy should take a holistic approach, incorporating a range of initiatives including financial incentives, flexible work options, management support, ensuring job fit and career advancement opportunities, according to Moylan.
“A robust plan on its own however, is not the solution. Employers need to be flexible in the way they implement each of their chosen initiatives to ensure it has the greatest success, tailoring the employment relationship to the individual and their unique situation to deliver the best results.”
“The cost of losing good staff far outweighs the cost of implementing these initiatives, so ultimately it’s about offering an attractive employment proposition where employees have the option to leave but choose to stay.”
Making yourself attractive as an employer
1. Flexible work options
• Provide flexible benefits to employees tailored to their individual work-life situations
• Ensure differing culture and work environment preferences are reflected in the programs offered by your organisation
• Provide a broad range of flexible work options to staff, that reflect the values of the organisation
2. Financial incentives
• Know the market value of the roles in your business, and pay competitive salaries
• Tailor the compensation package based on individual and business needs
• Differentiate remuneration based on performance of employees
3. Management support
• Provide leaders with the skills to effectively support and develop their staff
• Provide managers with the skills to offer feedback to staff on their performance and areas for improvement
• Hold managers responsible for retention of their team
4. Job fit and opportunities
• Use a rigorous selection process to recruit the best employees who have the best cultural fit with the organisation
• Provide individualised development based on identified development needs
• Proactively provide opportunities for individuals to develop their career through succession management and development of high-potential employeesSource: Hudson