A growing number of organisations are realising that retention of talent is a key issue affecting their performance, yet very few actually formalise their retention strategies , says Ron Eldridge, Director at retention specialists Talent Drain.
The old adage that ‘people are an organisation’s greatest asset’ has been called into question by a research report which finds that 75 per cent of UK organisations do not have a strategy nor a budget for employee retention.
Although HR practitioners pay lip service to retention, they still spend a far greater amount of time and money on recruitment and selection. The organisational emphasis, it seems, is on getting people in, rather than on ensuring that they stay. This is all the more surprising when evidence shows that lowering staff turnover can reduce unnecessary recruitment costs and improve the morale, motivation and performance of existing employees.
Assessing staff turnover rates
According to the Employee Retention Survey 2008*, 93% of organisations have implemented retention initiatives over the past year, yet nearly half (47%) still admit that they have a problem retaining staff and two-thirds (65%) say they want to reduce their employee turnover.
44% of organisations have a staff turnover rate higher than 15% per year, with one in ten exceeding 30% per year. In organisations with over 500 employees, more than a third (36%) have a turnover rate exceeding 20%. 81% of organisations believe staff turnover has a detrimental impact on their effectiveness.
It is worth stating that not all staff turnover is negative. An indifferent employee can have a damaging impact on performance, staff morale and customer satisfaction, so it is better for all concerned if that person leaves.
However the issue becomes a problem for organisations if employees with key skills or potential are leaving, particularly when you consider that the average cost to replace an employee is between £7,750-£11,000, with additional ‘costs’ such as lost opportunity time. Even a one per cent reduction in staff turnover would cut these costs significantly, as well as increasing overall organisational effectiveness.
The HR/employee discrepancy
A key issue for organisations, ra