Heading into an economic downturn it is understandable to consider cutting business costs. One area we can make big cutbacks in is recruitment. The problem is that this is a counter-intuitive move if our staff are leaving at higher rates than they were last year.
We believe the key to understanding employee turnover and improving employee retention in 2023 and beyond is considering that one of the biggest reasons why staff leave is a lack of development opportunity.
In this blog post, we will look at employee retention in relation to staff training and how you can cut recruitment costs by developing the talent you already have.
What is employee retention and how do you calculate it?
Employee retention is the rate at which we keep staff within our business over a period of time. In HR, we usually look at this figure once a quarter and once a year.
How employee turnover is calculated
To calculate your business’ retention rate you need to divide the number of employees that stayed employed with you during the time period of consideration, by the number of people who started with you on day one. Then multiply this by 100 to get your percentage or rate.
For example, let’s say you started with 100 staff on January 1st 2022 and by the 31st of December 2022 you had 65 of those original staff left.
Divide 65 by 100 and multiply by 100. The retention rate for your business in 2022 would stand at 65%.
What is a good employee turnover rate?
It would be obvious to say that the higher your retention rate the better it is for business when it comes to staff engagement, productivity and employer branding. But do you know what is considered a good rate of retention? What is a solid benchmark?
Employee turnover rates will vary widely from industry to industry and even brand to brand. For example, nursing saw its biggest drop in staff retention for years during the Pandemic, in the US and Europe particularly. Equally, other industries also saw shifts in workforcesafter the Pandemic, as returning to hybrid working became an organisational struggle for employers.
Other factors contribute to why an employee chooses to leave and they aren’t all related to health, social or political factors. It could be as simple as feeling valued.
In 2019, pre-pandemic workforce retention figures were 45.1%, rising to 57.3% in 2020 and dropping again in 2022 to 47.2%.
Let’s put that into perspective for a moment. If you started the year with 100 employees and ended the year with just 47, you’d be hard-pressed not to think that things were in pretty bad shape.
We agree.
We like to consider that a good employee retention rate is somewhere above 90%. Aiming for this figure you are likely to spend less time and money recruiting and more time honing the skills of your workforce.
This will reflect in employee engagement and productivity, which in turn improves customer engagement and retention rates, as well as sales.
What is an employee retention plan and what should it include?
To appreciate the real definition of employee retention in your business, you first need to consider your organisational goals towards keeping your team productive and motivated. You do this by documenting an employee retention strategy.
A great employee retention plan should include
● Compensation strategies
● Environment strategies
● Personnel management
● Personal growth and job training management
● Recognition strategies
● Support systems
The personal growth and job training management strategy is vital, so let’s discuss that now.
How training your staff improves retention
Over the last five years, and aside from the Pandemic,one of the biggest reasons why employees left a business was due to a lack of training and development opportunities.
This is a global issue.
And not one that will go away.
We know, as business owners, that it is far more expensive to recruit new team members than to upskill and develop teams already in situ. For example, an entry-level employee costs 30-40% of their first annual salary to hire, mid-level staff cost 150-200% and high-level positions can cost up to 400%.
Staff development, by comparison, is estimated to cost an average of USD 1,200 per year.
To meet our employee’s desires and our business goals for retention, a personal growth and job training strategy makes good financial sense. It’s also likely to produce bigger interim results for you too.
As corporate training providers we have seen clients who provide quality and timely training benefit from staff with
● Increased job satisfaction
● Enhanced engagement
● Increased productivity and performance
All of which contribute to building a company culture focused on performance and value.
At this very point, you start to see an uplift in your retention rates, because you are actively contributing to the reasons why an employee chooses to stay with your business.
The results are not just measurable in retention, but also in sales, simply because your staff are more focused and motivated to push their results within the business. Deloitte found that businesses that create quality training strategies increase business turnover by 218%.
How to develop the best staff training plan
It’s simple, contact us at mselect!
We will work with you to design your learning and development strategy, providing professional development across your workforce.
There are many ways we can implement training and development for you, from breakout sessions to specialised industry certification.[LINK to “How L&D gives you a more creative and focused workforce” when published]
We work with the largest international corporations operating in Iraq to provide a full HR function. This includes
● recruitment (including outsourced manpower if you need it)
● onboarding
● HR management and reporting (including cloud software integration)
We are also recognised experts in training for Oil & Gas sectors, Leadership & Management, Sales & Marketing, HR Management, Finance & Accounting, PMP™, Mini-MBA, Computer Skills, Language Skills, and much more. Accreditations are fully recognised as we partner with OSHAcademy and IEMA.