According to the American Management Association, the cost of hiring and training a new employee can vary from 25 to 200% of annual compensation. The turnover cost for an employee can be 15%, which means it costs $2,500 to lose an $8/hour employee – the more the employee earns the more it costs to replace them. This doesn’t include the administrative cost of losing an employee and dealing with COBRA, hiring someone new, retraining and orienting the new hire, nor the production gap cost for the interim period of a lost employee.
Money is rarely the direct cause for someone leaving a job; instead the exodus occurs because of stress level, manager to employee relations, lack of acknowledgement of a job well done, ongoing skill development and upward mobility. The CAMP model of engagement is one that we’ve been developing recently that uses some of Hertzberg’s theory of motivation to look into ways to build a high-engagement, high-retention workplace. CAMP stands for Competency, Autonomy, Meaningfulness and Progress – all 4 must be met in order to have a highly engaged employee. In Visions Magazine’s November edition, the article Retention Deficit talks to the idea of a high engagement workplace, “Companies with low turnover rates tend to be employee-oriented. They encourage two-way communication between managers and employees. A well-developed hiring process ensures that you hire the right employees; training and development will add to their value and productivity; and opportunity for advancement will keep them engaged.”
Training and development, continuing education and tuition assistance is key in the retention of the new workforce. Bellevue University’s Human Capital Lab recently concluded a study with a well-known, highly-regarded company to analyze the employer value from investing in workforce education. The study measured the impact of retention, job mobility, and performance ratings based on implementing a TAP initiative. The total sample consisted of 2,855 employees and the study separated the employees between those receiving internal training and education and others who did not, and were required to rely on their original higher education degrees. The study showed notable differences in the group that received training over those who did not. The results implied that there are benefits to developing employees through company-wide training practices like tuition assistance programs (TAP). The results also showed that the ‘trained’ group had about 6% better retention rates, lower turnover risk, 14% more job mobility, and about 6% better performance reviews.
Many organizations fear the “learn and leave” syndrome – that is if I pour money into these employees and train them, how am I guaranteed that they won’t just turn around and leave regardless. However, providing employees with the advanced training and skill development needed to do their job well is exactly what is needed in order to retain them. Kyle Lagunas of Software Advice recently blogged about the idea of the TAP program and the “learn and leave” syndrome, addressing some of the concern:
“Plan guidelines [of a TAP] should address what skills are valuable to the employer, and why. Employees need to understand clearly what learning is appropriate and valued, as well as the outcomes that are expected by the company. Make it easy for employees to understand your business needs and how to make education choices that support those needs. Talk to employees about your tuition program in the onboarding process and periodically hold Q&A sessions to bolster interest and adoption. Tackle the learn-and-leave concern head on by indentifying opportunities for growth directly resulting from participation. Communicate the skills and competencies you value in next-level roles and encourage employees to pursue them.”
Lagunas goes on to mention that idea of “clawback clause” in a TAP program whereby participants must pay back assistance if they leave before a certain period of time.
Recently, I was at a strategic planning meeting with a company and someone said, “We don’t have a retention problem, all our employees aren’t going anywhere. We have a high retention rate and they’re staying here.” This may be a little bit of a false assumption. Right now it is extremely volatile outside the work environment. No one is going anywhere and everyone is just waiting until the dust settles.
At the point that job mobility becomes safe again, when opportunities open up, and the grass looks greener employees will start to look for a place that encourages growth in competency and career progression. Likewise, the Wall Street Journal just release last week the must-have job skills for 2013, among them number one was clear communication and productivity improvement which directly correlate to a need for training and development. Consider investing in your Training and Development program now, and show employees that you’re willing to invest in them, giving them the competency, autonomy, meaningfulness and progress they desire to succeed in your organization.