Recruitment, Onboarding and Retainment with Michael Worth

Learning exactly how much it will cost a business to lose an employee was one of the eye-opening topics at Friday’s C4EM Breakfast Series.

Hosted by Michael Worth, Director at Learning People & Culture, the Recruitment, Onboarding and Retention workshop was an interactive session about the costs, business risks and real dollar returns of knowing how to select the right people for your business.

Some of the information discussed included:

DIRECT COSTS OF EMPLOYEE RESIGNATION

Recruitment cost (external hiring costs)

Estimated cost: 20-30% of the employee’s annual salary

· advertising the job;

· recruitment agency fees; and

· internal time spent on the whole hiring process

Onboarding and training costs

Estimated costs: 60-90% of the employee’s annual salary

· new employee orientation, paperwork and induction (5%);

· training materials, software licenses, equipment set-up (5-20%);

· other employees’ time to support, develop and train (30%); and

· productivity ramp-up period (new employees take 9-12 months to reach full productivity) (20-40%)

INDIRECT COSTS OF EMPLOYEE RESIGNATION

Productivity loss

Estimated costs: 30-50% of the employee’s annual salary

· workload redistribution to remaining employees (causing strain and inefficiency);

· a new hire typically takes 9-12 months to reach full efficiency; and

· delays in project timelines, customer service gaps or lost sales.

Knowledge loss and company memory drain

Estimated cost: difficult to quantify, but can be 2 x annual salary in highly skilled roles

· loss of key expertise, historical knowledge and customer relationships; and

· time required to train a replacement and rebuild industry knowledge

The total cost of replacing an employee for most business is between 50-250% of the employee’s annual salary, but Michael believed the general rule of thumb was 100%.

Obviously, staff resignations are part of running a business, but Michael stressed that a higher than usual turnover was often related to internal problems.

Michael outlined Herzberg’s Theory of Motivation which listed ‘hygiene’ factors which resulted in general satisfaction and prevented dissatisfaction. These included:

· Salary

· Company policies and administration

· Relationship with co-workers

· Quality of supervisor

· Job security

· Working conditions

· Work/life balance

‘We put people in leadership roles but don’t train them – and they will fail,’ he said. ‘So, if a manager is no good, employees will leave no matter how much they like the job.’

Recruitment was another fundamental aspect of running a successful business and hiring someone who culturally fit into the business was imperative.

He suggested using the STAR method during the interview process.

An example was: Can you tell me about a time where you had to deliver an important message that the person or customer really did not want to hear; but it needed to be communicated.

What was the Situation?

What was the Task to be completed?

What Action did you take?

What were the Results and Impact?

Onboarding was crucial if a business wanted to retain a new employee for at least three years.

Michael’s recommendations included:

· Make sure the new employee’s first day is their best day ever

· Plan their first four weeks

· Then get the employee to plan each four-week period

· Set clear performance expectations on your five key selection criteria for achievement at 1, 3 and 6 months (this is a red flag if not achieved).

· Identify tasks required to meet performance expectations

· Tell the ‘what’ and ‘who’ for required tasks and let the employee onboard themselves