Why is Retaining Employees in uncertain economic times important? (The Real Cost of Not Retaining Talent) 

"Recession".

It's a word that can quickly send the business world into a tailspin.

But with the very real possibility looming on the horizon, it's time to start thinking about how to remain profitable in a recession. 

Luckily, there are things you can do to future-proof your business.  

Like keeping your employees.

It’s a fact: Your people are your most important investment.

Retaining employees in a recession is one of the best things you can do to minimise negative impacts and ride out the storm; you just need a retention strategy.  

Not convinced you can afford to spend time with retention strategies?

You can't afford not to. Here’s why.

Sources suggest that the total costs of replacing an employee vary from 30%, to a staggering 150% of their salary.

There are hidden costs, too, that reach far beyond the initial hiring and training stages, which can drastically affect company profit, morale and culture.  

Here's what we've uncovered about the real cost of not retaining your talent.  

Financial Costs 

So, you want to remain profitable in a recession?

Well, the cost of employee turnover is eye-wateringly high. As mentioned above, replacing an employee could cost 30% of their salary, and that’s best case scenario. At the higher end of the scale, you're looking at upwards of 150%. 

Many factors come together to make up these figures, including: 

• Recruitment costs

These could include recruiter and advertising fees, and time managers must spend away from their regular duties to read resumes/conduct interviews. 

• Training and development

Senior employees will likely need to put their work on the back burner until the training wheels come off, compromising potential future earnings.  

• Pay rise?

According to the University of Pennsylvania, employees hired externally will likely ask for 18-20% higher salary. 

💡 Nowadays, most companies have LinkedIn. 

Check out the median tenure metric on your own company's profile. It shows retention rates, or, how long the average employee has been working. How does this compare to competitors? 

If your business has a revolving door of employees, it's time to implement some retention strategies, and we’re here to help. 

Productivity 

It can take up to two years for a new employee to reach the productivity level of the person they're replacing. That's valuable time, and the whole team feels the ripple effects. The hiring process can create a gap in the workforce, resulting in an increased workload for everyone else. 

On a more positive note, if you can keep your experienced and skilled employees happy, you'll reap the benefits of retention. Employees who feel engaged, motivated and valued are more likely to be productive and efficient in their roles. This can help improve the company's overall performance and competitiveness, allowing you to remain profitable in a recession. 

Company Culture & Morale 

Long-term employee retention is essential to keeping company culture, values and ethics alive. When someone decides to leave, it can be a blow to the morale of the entire organisation.  

Currently, company culture is one of the most essential aspects of job satisfaction, as employees decide whether to stay or leave. New research suggests that toxic company culture is the most significant factor in sending employees out the door during the Great Resignation. 

Fast-forward to the future, high turnover rates can have a detrimental impact on a company’s reputation and hinder the ability to attract tomorrow’s top talent.

While it isn’t always possible to prevent employees from leaving (people have got to retire at some point!), a retention strategy can help identify and reduce reasons for dissatisfaction. 

Retaining employees in a recession can create a sense of stability and security within the company, which can help to boost employee morale, job satisfaction and overall employee engagement.

Long-term employees tend to be more invested in the company’s mission and values, and they can continue to foster a positive and productive work environment for new generations entering the workforce. 

Knowledge Base & Client Relations 

A team of experienced employees provide valuable institutional knowledge. They know the company's history, making it easier to maintain consistency of operations and strategic goals. 

When a member of the pack leaves, so does their experience, wisdom and insight.

And what about client relationships? When employees stay with a company for a longer period of time, they tend to build better relationships with clients and customers. Those sorts of long term relationships can’t simply be handed over to the new kid on the block. 

Employee experience and customer experience are intrinsically linked, as pointed out in this blog from Talenza, and savvy organisations are tuning in. 

Fortunately, most of the drivers behind employee turnover are both preventable and fixable. First, understand your employees by downloading our 2022 Candidate Motivators Report.

Why not invest in training and development? Upskilling your workforce extends the employee lifecycle. Plus, it also ensures that institutional knowledge remains cemented within your organisation; just one of the many benefits of retention. 

The ROI of Retention 

While the costs of retaining employees might seem too great, the costs of losing top talent are far greater.

Your ROI of retention should speak for itself. 

• Build your reputation
• Boost the productivity of your teams 
• Enhance morale and company culture 
• Spend less time hiring and training

When you realise the total price of employee turnover, the argument that you can’t afford the cost of retention strategies sounds a little….meh. 

Building a better workplace for your employees creates only positive benefits and savings for your organisation. If you’re ready to learn how your organisation can better support employees, download our 2022 Candidate Motivators Report.

Reducing turnover and retaining talent in a recession, what’s not to love about that?