Without doubt one of the major challenges facing any business, whether they are a commercial operation or a Not for Profit organisation is the ability to firstly attract the right staff, and then secondly engage, motivate and retain them. All too often a company will expend enormous time and energy in developing and nurturing staff only to have them move on. This is not only frustrating, but can be costly and damaging to the business.
Mercer consulting estimates that the cost of staff turnover and replacement can be as much as 150% of salary, and some companies claim it can cost even more.
To quantify these figures, we have produced a list of the potential costs for every time an employee leaves. There are a variety of obvious and some less obvious hidden costs to be considered. They are:
Slippage. When an employee is missing, the work that isn’t getting done has a lost opportunity cost associated with it. Lost sales, production delays and lags in new product introductions can all cost your company money.
Ripple effect. Staff turnover has an impact on the peer group, as well as the management chain, making everyone less effective. Co-workers need to pick up the slack, distracting them from achieving their own performance goals while managers need to devote time to finding a new employee. One CEO I heard of had his five-year growth plan turn into a six-year plan because of delays due to employee turnover.
Customer loss. When a knowledgeable or long term employee leaves, taking experience and customer service ability with her it can have an impact on customer satisfaction. Customer commitments are often not met, and the company could lose important customers. Dealing with trainees can also be challenging. If you have a high level of staff turnover, customers can get frustrated and begin to lose interest in your business.
Lost credibility. When staff turnover is high management can lose credibility. When you have an environment with excessive staff turnover existing employees can become demoralised and decide to move on. This ripple effect can be disasterous.
I would suggest that there is also fifth hidden element. What I call “gone time”. That is the time when an employee has mentally left but has not yet resigned or physically left his job, and it goes beyond the Ripple or Slippage effect. With hindsight this can easily be seen. Time off (sick leave, dental appointments, looking after sick children etc.), arriving late and leaving early may all be signs of disengagement. A good manager should watch for these tell-tale signs in order to act early.
More importantly, a person planning to leave could become less productive, and even vindictive, making comments to other staff members or customers that may be detrimental to the business. So the impact and cost to the business could be that much greater.
Many organisations are now looking to technology to help reduce the cost of staff turnover and employee engagement programs can play a significant role.
Implementing a staff recognition and reward program can help staff retention and talent attraction in a number of ways.
Firstly, a well-planned recognition program will help to motivate and engage staff. Recognising staff who go “above and beyond” will help to motivate staff and improve morale and customer service. This is especially true in businesses that are not able to compete purely on salary packages, such as an SME or a NFP.
Secondly, a well-executed recognition program can act as a “monitor on the pulse of the business”, and should be able to identify improvements in staff performance and behaviour, while measuring the return on investment.
Happy staff = good customer service = high brand value = corporate performance.
SwanCare Group, a leading aged care provider in Western Australia are fighting this battle, and with the help of a recognition and staff engagement software program they have developed a winning formula that is helping to overcome the employee attraction and retention issue, while helping to identify efficiency improvements.
The Swan Feathers Rewards and Recognition program is unique in that it has created a whole-of-organisation solution, and has been developed from the ground up utilising their own staff combined with the expertise of the Brownie Points team.
Staff from across the organisation were specifically chosen to design and develop the program. It had to reflect the values of the organisation – respect, reliability and compassion – and the customer service they provide, while involving the whole community, including residents, their families, contractors and staff.
All staff are involved in the program with everyone except members of the executive eligible to be nominated for recognition. Residents and families enjoy nominating staff for work “above and beyond” their normal duties.
The rewards are numerous: café vouchers, iTunes gift cards, Hoyts cinema tickets, petrol vouchers, Coles Myer cards, iPods and charitable donations, with the top reward being a $500 travel voucher. They are also planning to offer low cost to the business intrinsic rewards such as a day off in lieu, time off for voluntary work, and learning and development as rewards.
SwanCare currently sources the rewards from local suppliers out of its training budget, and expects to source the rewards out of the staff recruitment cost savings and productivity improvements.
SwanCare chose Brownie Points as a partner in this project because of the level of functionality, flexibility to personalise, ease of use, simplicity of maintenance and adaptability of their solution, having looked at several other significantly more expensive supplier options.
The implementation personnel understood the key objectives and they ensured that the final product linked into SwanCare’s organisational values and delivered an incentivised, on-line solution that encourages retention, lifts morale and increases employee harmonisation.
“It is early days but thanks to Brownie Points SwanCare is already experiencing very positive signs that the Feathers Rewards and Recognition program is on track to achieve its objectives and provide a unique solution to the challenging issue of employee attraction and retention” say Graham Francis, CEO of SwanCare.
“In any organisation, large, small or NFP, staff are the greatest asset or resource, and yet many businesses fail to appreciate this. You can’t stop employee turnover, but you can minimise the impact to the business. Nurturing staff, recognising their performance and contribution and rewarding them for their above and beyond efforts is a great place to start. Making staff feel valued, appreciated, respected and involved in the business can have a tremendous positive impact on your bottom line. Engaging and motivating staff to reduce employee turnover doesn’t have to cost the earth, but the results can be dramatic” says Tony Delaney from Brownie Points.
Tony Delaney is CEO of Brownie Points, a Melbourne based software and Services Company focused on helping clients implement staff recognition programs to reduce staff turnover, increase talent attraction and improve customer service.