Many employers have slowly evolved to a system where loyalty not only goes unrewarded, it goes against the principles of self-care and self-love.
What does self-care and self-love have to do with running a business and retaining employees?
EVERYTHING.
Look at what’s happened across the U.S.
Employers have consistently been giving 3% merit increases for the past six years and it’s expected to continue.1
The cost of living is steadily increasing at 2.1% (or more depending on how you value food, housing and energy costs).2
What that means is that employees are effectively making the same or less because their raises may not be covering the total cost of inflation, or if it does, it’s marginal.
So what are employees doing to make more money?
LEAVING!
According to Forbes “Employees Who Stay In Companies Longer Than Two Years, Get Paid 50% Less. 3 Fifty Percent Less!!!!!!
Let that sink in. What is the incentive to stay in a job longer than two years if you can make 50% more by leaving every few years?
And what does it say about how you value yourself, and put your needs first if you stay with the same employer which causes you to effectively make less?
The tricky part about this whole dynamic is that the employers are willing to pay the new person coming on board the market rate or higher, more than the loyal, hard-working talent already well trained and in place. So backwards!
As an employer, you should ask “What is the incentive at your company not to job hop?” “What does your Company do to retain people?”
As an employee, you should consistently do your homework to know the market rate for your skill set and be weighing the pros and cons. It may be worth it to make a little less but not have a commute. Or you may be able to give up your commute and make more working from home. You should be your own advocate.
The employer who really understands who their top talent is and rewards them accordingly, will be ahead of the game.
The best thing about top talent, is that effectively you will need less people, less Six Sigma and Lean initiatives because you hire strategic and efficient thinkers and they excel in their area of expertise.
You could take the money you spend on all the initiatives and training to be more effective, and instead reward and promote the up-and-coming talent already in place! That’s much less work than hiring, training, and adopting new systems, right?
To use this method you have to make sure you are empowering your top talent to make decisions. Your most effective employee cannot be under an ineffective manager or the net result is ZERO.
I know so many people who are hard workers, extremely bright, love their co-workers and what they do but move on because of bad management and a low reward system.
But the biggest problem is simply that this structure does not attempt to reward or retain your high achievers. And those high achievers will always be in demand because top talent rises to the top.
Many employers overlook the high cost of turnover when determining how to reward and retain employees.
Mindfully reviewing your reward practices takes this into account.
Let’s look at some numbers:
“For workers earning less than $50,000 annually—which covers three-quarters of all workers in the United States—… 22 case studies show a typical cost of turnover of 20 percent of salary, the same as across positions earning $75,000 a year or less, which includes 9 in 10 U.S. workers.”4
That starts to add up!
“Very highly paid jobs and those at the senior or executive levels tend to have disproportionately high turnover costs as a percentage of salary (up to 213 percent)…”4
Let’s say the research feels high at 213% and significantly reduce it to 60%, that is still $90,000!
When you look at turnover costs, you should remember to include the hourly cost of every manager who interviews candidates, the training cost of every employee who trains the new hire, the cost of the time that the position was vacant and anything that fell through the cracks, customers lost, the co-worker’s time who covers the vacant role, plus a recruiting fee if applicable (see this sheet on how to calculate).
So what can you do?
Mindfully reviewing your business on a regular basis is the only way to remain in the game and keep employees engaged. Look at the “Good to Great” companies. Is it sustainable if you come up with the best way but then leave it be year over year? No. It isn’t!
Everything evolves.
Now there are other reasons employees leave outside of salary alone. They are probably giving more reasons in their exit interviews (which hopefully you are conducting!), but reviewing your salary practices and doing some market research to make sure you remain competitive will really help you retain your best employees in the long run.
Important to note that sometimes “best employees” can mean “best for the job.” There are some jobs that so many people don’t want to do because they are dull and process-oriented. If you have a person that excels in that type of role, has almost eliminated errors, they are to be commended just as much as your top sales person.
Listen to your Human Resources professionals!
What’s great about a career in Human Resources is that we tend to know the pulse of the Company and who is going to leave before they actually quit.
What’s hard about a career in Human Resources is getting managers to listen and be proactive, and to really understand the impact of that one person leaving.
IN MANY CASES YOUR EMPLOYEES ARE TRYING TO STAY AND HAVE BEEN TELLING YOU!
There are so many ways to look at a reward system beyond just salary. Some employees would love more vacation, a flexible work schedule, the opportunity to work from home occasionally, and other creative solutions.
Having been in the Corporate world for over 10 years, and listening to family and friends every day after, I can tell you, at least 90% of the time it’s no surprise your good employees walk out the door.
Being mindful, can help that!
