In knowledge intensive roles research suggest the overall cost of replacing an employee is more than double their annual salary. With average job tenure of entry level (Gen Z) joiners at little over a year we should all be on high alert.
There are many factors that influence how long someone stays in a role. Younger employees, for example, expect work to integrate far better with personal life: with flexibility in how and where they work. 80% of workplace professionals say that flexibility is attractive to them, while over a third of employees in one survey had rejected a raise or promotion, or moved jobs, to pursue more flexible working conditions.
How long someone stays in a business is increasingly about how visible and credible opportunities for development and advancement are and what leeway there is to work from home or adapt working hours to suit their personal situation.
With it taking upwards of six months to get an employee to full effectiveness in a new role and average job tenure amongst the youngest employees being little over a year this trend is crippling business growth (and even threatening survival) in many cases. This is particularly bad in the UK, which has the lowest average job tenure amongst OECD nations. Nearly half of millennials plan to leave their jobs in the next two years.
Now consider the costs of turnover. One study from the Center for American Progress, based on 11 research papers published over 15 years, found that the average cost to a business of losing and hiring into a skilled role is 213% of the salary for that role. This will vary for different businesses and roles. But the principle is clear: high turnover can cost far more than the value of that employee to the business – and if you’re repeatedly rehiring for the same roles, that’s going to cripple morale and with that your business.
If your purpose as a business isn’t clear and those you employ not aligned to your vision and values you can expect higher employee turnover. Websites like Glassdoor make it easy for talent to benchmark against other businesses precipitating attrition, whilst great culture drives better talent retention.
The key message is hire for attitude, alignment and cultural fit above anything else.