“How do we hold on to our investment in talent?” If this is a question that’s topmost in your mind, you’re not alone. According to LinkedIn’s Global Recruiting Trends 2016, nearly one in three organizations (32 percent) say that employee retention will be their top priority over the next 12 months.
Organizations are increasingly focused on keeping hold of their employees, and it’s no wonder. While there are many different calculations applied to the cost of hiring, an Oxford Economics report estimated the cost of recruitment logistics and lost output associated with each hire to be as high as 30,000 GBP—about USD$44,000.
Unfortunately, the reality is that employees are more mobile than ever, which has resulted in an upward trend for turnover in recent years. CompData’s 2015 BenchmarkPro Survey, based on data from more than 28,000 organizations across the US, showed that voluntary turnover has climbed from a low of 9.1 percent in 2011 to 11.6 percent in 2015.
What’s driving this upward trend? A wave of Baby-Boomer retirements, a high demand for (and scarcity of) knowledge workers, and and increasing number of job-hopping Millennials are just a few of the key factors increasing churn.
While a certain amount of turnover is healthy, it’s an issue most organizations want to keep a close eye on. (And while turnover rates vary widely from industry to industry, the CompData survey can be a good place to start when determining the average rates for your specific area.)
Look at WHO is leaving
Turnover can be disruptive and costly, but it’s not always a bad thing. Once you’ve identified what a comfortable turnover rate looks like for your organization, it’s important to take the further step of analyzing which employees are making a move. If they’re poor performers or those who just aren’t the right cultural fit, your turnover levels, however high or low they are, probably have a healthy impact on the organization. Conversely, if your top performers are jumping ship, it’s time to take a hard look at your HR practices.
How competencies can help: To determine whether your company culture is culling the low performers or alienating valuable talent assets, you need to be able to accurately measure employee performance. Competencies can help you identify those employees that are meeting the requirements of the job and those that are not on a granular level. Competency-based assessments measure an employee’s on-the-job behaviors against the competency levels required for job success, delivering a comprehensive understanding of employee performance. Read more about assessment best practices.
It’s not (all) about money
While a Gallup poll showed that more than half of workers (54 percent) would consider leaving their current employer for a raise of 20 percent or less, it also showed that engaged workers are much less motivated by money: only 37 percent would leave for a raise of up to 20 percent. Ultimately, setting competitive compensation for employees is only half the battle: building greater levels of engagement is equally important in boosting retention.
How competencies can help: Self-assessments can help employees gain an understanding of their potential that goes beyond their current job requirements and gives them insight into their true potential. While competency-based assessments can be used to assess an employee against their current job, employees can choose to self-assess against any job in the organization to see how closely their own behaviors, strengths, abilities, and experience align with these new opportunities. Read more about employee engagement and motivation.
Focus on development
According to the LinkedIn report, slightly less than one in four organizations (24 percent) have a well-defined program for advancement opportunities. Yet development can be an essential part of an organization’s retention strategy, enabling employers to groom, train, and redeploy top performers in new roles instead of losing them to other companies.
A 2007 study by CIPD, the global professional body for HR and people development, showed that the initiative most frequently seen to have had a positive impact on retention was providing additional training to allow internal staff to fill posts.
And a 2012 study conducted by Wharton Management professor Matthew Bidwell showed that internal hiring was not only good for employers, it was better for employees as well. By studying top performers who switched firms compared to those who stayed put, Bidwell showed that employees who remained with the same company fared better in their careers than those who hopped from job to job.
How competencies can help: Competency-based career development can help to retain employees who might otherwise move on by showing them both lateral and upward career paths available to them within the organization. When every job is defined by the universal language of competencies, it becomes easier to see the areas of overlap and divergence between different jobs. In a competency-based development framework, employees can measure their current set of competencies against new internal opportunities and see the development path that’s required to reach the new goal. Download the ebook, “Engaging and Developing Talent with Competencies” for more insight into competency-based development.