Thursday, December 22, 2011

How To Reduce Employee Turnover And Get 3,650% ROI

Recognize This! – Give employees the specific recognition and feedback they need, and save yourself from over-the-top retention costs.

In today's stagnant jobs climate have you heard this comment (or something similar) from a senior leader: "I don't care if they leave. They're not senior. We can replace them easily enough."

Do you think that reaction would change if you told that manager, "Sure. It will cost us $104,185 to replace that employee. Are you okay with that hit to the budget?"

Blogging4Jobs recently provided a brilliant infographic (be sure to click through for the full graphic) of the results of a recent Harris Interactive  and Cornerstone OnDemand study revealing 21 million Americans will change jobs in the next 12 months, for a total cost to employers of more than $2 Trillion.

The infographic includes these compelling stats:

  • $41,674 average salary per employee; $104,185 average replacement cost per employee; total cost to US employers is $2 trillion
  • 43% of employed US adults do not plan to have a long term career with current employer
  • Only 37% have been given useful feedback from their manager/employer
  • 32% indicated their performance goals are aligned with their company's business objectives
  • 20% have established career goals with their manager/employer
  • Only 28% said they were given a clear understanding of how their job performance impacts business results
  • Only 34% say the feedback they receive helps them improve their performance and succeed in their role
  • 43% would like peer feedback (21% get it today)

These requests are not unreasonable – more feedback, from more sources, on things that matter to both their personal jobs as well as the organization as a whole. All employees are asking for is the big picture – where do I fit, does what I do every day matter to our group success?

Strategic recognition is a critical factor for meeting this need with tools for social performance management. By encouraging all employees to frequently and in a timely way notice and recognize the efforts, contributions and successes of their peers and colleagues you meet two goals. You give employees the feedback and sense of purpose they so clearly crave, and you get far more data points on employee performance for a more complete performance picture year-round.

And, of course, meeting employee needs for this kind of frequent, timely and specific recognition and feedback is also proven to increase employee engagement by double digits – for far less cost than $104,185 per employee.

SO what's the ROI? Taleo recently reported:

"Taleo Research estimates a company that loses 500 employees during the economic recovery may face turnover costs of $75 million, while a company that spends $2 million raising employee engagement could avoid these costs and see an ROI of 3,650 percent."

Now, what hard-hearted senior manager could argue with that?

Thanks to Derek Irvine / Recognize This Blog!++With+Derek+Irvine%29


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