Over the last year, Engagement Multiplier clients experienced 60% less employee turnover than published averages.
For the twelve months ended on 30 September, organisations suffered a turnover rate of 57.3%. For the same period, our clients’ average turnover was 23.17%, a 60% difference.
These are big numbers. And when you do the math, they get even larger.
The cost of employee turnover is rising sharply
The estimated cost of losing an employee has risen this year, to at least 50% for most roles, up from the prior estimate of one-third of the departing employee’s salary. The costs of losing specialised roles and senior leaders are even higher, up to almost 150% in the worst cases.
A number of factors are driving increases in cost, including:
- A fiercely competitive job market, which is eroding the candidate pool and slowing hiring for many employers,
- The strain on current employees when roles go unfilled, as many are burned out themselves, reducing their productivity and potentially resulting in more departures,
- Opportunity costs, in terms of being unable to handle additional growth or service existing customers to established standards, causing declines in revenue.
Consider two 100 person firms, paying median salaries of £31,285, which also happens to be the median salary in the UK for 2021. Firm A loses 57 employees over the year. Firm B bids adieu to 23 members of their team.
For the sake of this exercise, we’ll be conservative, and use half the median salary, or £15,642.00, as the cost of losing an employee. Company A, which lost 57 people, also took a real hit to the bottom line, tallying a whopping £891,622 in expenses related to their turnover challenges. Company B, which lost 23 people, has a tab of less than half of what Company A’s penalty was – £359,766. While both estimates are large, the £532,000 difference is impossible to overlook.
Why Engagement Multiplier clients have significantly better employee retention than average
Employee engagement has long been recognised as a stopgap against employee turnover, but given the dramatic increases this year in both the number of people leaving their jobs and the associated costs, it’s useful to understand why and how engaging employees can slow the rate of turnover.
- Fresh data. Engagement Multiplier recommends assessing your team every 90 days, and designed its survey and reporting to be both easy to use, and effective in capturing and identifying shifts in employee engagement levels.
Employees’ levels of engagement and morale can shift very quickly, and can actually be quite volatile. In fact, that volatility has been a hallmark of the last two years, and there’s no indication of that changing anytime soon.
However, organisations that regularly assess their teams can spot trouble early, and nip it in the bud, and they have ready access to in-the-moment employee feedback that can be a fantastic source of ideas for improving the business. Taken together, organisations that make gathering feedback routine truly have their fingers on the pulse of their organisations, as well as access to ideas that can make immediate improvements to the business.
- Insight into what employees are really experiencing. The first time a CEO or GM sees one of our comparison reports, it’s a real lightbulb moment for them. Because we can slice and dice data by multiple criteria our clients designate, such as hire dates, locations, roles, and project teams – in addition to more usual groups such as team, department, and division – they can get a clear picture of where discrete groups within the organisation are thriving, and where people need help. In addition to using this information to focus their attention where it’s needed, employee feedback also adds additional detail to the big picture.
What does all this mean? It means that leaders take action based on truth, not assumption, saving them from “they don’t get it” gaffes and spending time, energy, and resources on programmes that fail.
- The ability to identify (and remove) the barriers that are holding people back from doing their best work. We’ve long said our definition of employee engagement is simply creating an environment that enables employees to be present, focused, and energised at work. It may sound overly simplistic, but imagine the following scenarios:
- An employee who consistently has to join group meetings via Zoom, and can never get a word in edgewise. Will they ever be truly present in a meeting?
- A gregarious head of sales who was a star manager before the pandemic, but has struggled with the isolation of working from home. How can he regain his energy?
- An engineer who spends more than half her time in meetings, and is constantly being pinged by her micromanager boss. Is she going to be able to focus productively on her work?
Engagement surveys uncover all manner of obstacles that prevent employees from being fully present, focused and energised, and instead leave them frustrated, exhausted, and burned out. Identifying and resolving these issues can immediately make the workday better for people, by removing sources of frustration and worry, and simply ensuring employees are fully equipped for their roles.
We’re gratified by the numbers but we’re not surprised. Over the years, watching our clients onboard, begin their journey to reaching engaged status, and then moving into the realms of higher performance – which is, after all, the whole point of employee engagement – we’ve seen organisations turn themselves around, time and time again.
There’s also a real message of hope and optimism to be found within the gross disparity in turnover rates experienced by our clients, and organisations on the whole, and it’s this: Engagement still counts. Empathetic leaders can stem the turnover tide, and take action to immediately and effectively retain their employees. So don’t delay surveying your team. If your organisation has reached engaged status, use one of our On-Demand surveys to assess remote workers, check-in on mental health and wellbeing, or evaluate your firm’s progress on diversity, equity, and inclusion. Don’t overlook engaging your team as we close out the year.