Turnover Armageddon: Avoid Crisis with a Savvy Compensation Strategy
In today’s working world, the competition for top talent is fiercer than ever. The battle to recruit and retain the very best performers calls for forward-thinking approaches, those which truly offer capable workers that which they desire most. Indeed, avoiding Turnover Armageddon hinges largely on how much you are willing to payïbut compensation goes deeper than dollars and cents.
These days, many of the most successful employers are those which best identify the wants and needs of the types of workers they’re seeking. Compensation is certainly about the paycheck, but it’s also about benefits and intangible offerings. Before you enter the recruiting battlefield, make sure you’re properly equipped to win the day.
The Cost of Turnover
Turnover Armageddon sounds like a scary phrase, as it’s meant to convey the crucial nature of employee retention. To understand just how costly turnover can be for your company, consider all of the potential expenses associated with the departure of a single employee: severance payments, unemployment insurance rate increases, cost of continued benefits, payroll for administrative duties, lost productivityïand the list can go on.
The Society for Human Resource Management estimates that these expenses combine to cost the average company between 100 -300% of the terminated employee’s base salary. When factoring in the reality that your company might not always be able to replace an outgoing worker with one of the same quality, the impact on one’s business be even greater. Don’t forget that the cost of hiring can also represent a substantial financial burden in itself.
For most companies, the loss of a single employee does not signal Turnover Armageddon. It must be noted that a domino effect can prove to be extremely damaging, however. It’s not uncommon for the departure of a key contributor to spur others to follow, a scenario which could prove disastrous for a smaller business. That’s why it’s necessary to enter the fray with a good action plan.
Equip yourself by asking a few key questions: are you paying your performers competitively Are you offering market premiums for the most crucial positions Perhaps most importantly, are you offering compensation on par with the rest of your particular industry It sounds surprising, but many employers simply don’t put enough effort into their market awareness and therefore aren’t always in tune with the value of particular employees.
What’s Plan B
Military operators have a saying about plans: they never survive first contact. This essentially means that your blueprint becomes null and void when an unexpected variable surfaces. In these instances, it’s important that you have a secondary approach to fall back on.
Avoiding the reality of Turnover Armageddon for your company might be as simple as thinking outside of the proverbial box. In other words, compensation is not solely about cash; companies compensate their employees through benefits packages, bonuses and other means as well. So if you can’t necessarily afford to pay a higher base wage, try to attract quality workers with incentives like monthly, quarterly or annual bonus opportunities. Paying for performance can often be a great way to reel in those who have the most confidence in their own abilities.
Traditional benefitsïsuch as vacation time or medical insuranceïcan be costly in their own rights, but once again, working outside of the typical lines can be an effective strategy. Many workers, especially among the younger set, place greater stock in things like work-life balance. That’s why many of those newer to the workforce tend to value flexible scheduling, telecommute options and more intriguing corporate cultures. Sometimes the best way to hook the biggest fish isn’t with the most expensive bait, but the one which appeals most to that type of fish.
Making Tough Choices
In the real world, you won’t always be able to pick and choose your staff as much as you’d like. Whether it’s due to competing companies, insufficient resources or other factors, you simply won’t always get the cream of the crop despite your best efforts. That’s why you have to ensure that you don’t lose focus on retention by putting all your eggs into the recruiting basket.
Turnover Armageddon doesn’t occur because you can’t replace outgoing talent. It occurs because the talent is outgoing, so make sure not to lose sight of those who truly make your company go. If resource limitations prevent you from keeping everyone happy, do your best to focus on the top talent in your organization. You won’t always be able to offer the compensation each employee desires, but if you can hold onto the superstars, you’ll always have a strong core to build around.
To learn more about finding, landing and keeping the best talent, utilize the helpful resources here at Mighty Recruiter.