In a growing organization, when considering both recruiting and retention, it’s easy to assume you need to prioritize one over the other. However, both are necessary components to a thriving business. It’s also important to keep in mind that even though recruiting revolves around employee acquisition and retention deals with keeping current employees, the two are actually closely related.
There are many reasons an organization should prioritize retaining their employees, but the largest factor often comes down to the cost of hiring externally. If an organization has high employee turnover, they will inevitably need to spend more money on recruiting and training new employees. A study conducted by the Center for American Progress found that the average cost to replace a mid-range position ($30,000 to $50,000 a year) is 20% of the average salary. The cost can be up to 213% of annual salary for highly-educated executive positions.For example, the cost to replace a $100,000 CEO is $213,000. The cost of recruiting is significant, so it is important that you are making your best effort as an organization when it comes to employee retention.
Misconceptions about retention can negatively impact how an organization approaches employees. For example, a business may believe that the main reason that an employee is unhappy and looks for employment elsewhere is due to pay or benefits. In direct contrast to this notion, CRS evaluated 460 exit interviews from 2017 to identify the most common reason for leaving. Through this analysis, CRS identified pay as the sixth ranked reason for leaving while benefits was hardly even mentioned. Other than personal reasons (including retirement, relocation or health), the top reason was conflict with supervisor with a staggering 15%. This high percentage suggests that supervisors need to take more time to talk to employees to get a feel for how they fit into the organization and how they perceive company culture. This applies to all employees at all levels, not just decision-makers at the top. This overarching interest in employee well-being helps the company to gain a more well-rounded perspective of what your employees feel as a whole (Jessica Miller-Merrell)
Despite retention lending itself as such a vital component to a healthy and thriving workplace, according to LinkedIn’s Global Recruiting Trends 2016, 59% of companies are investing more in their employer brand compared to last year (Schmidt). The majority of the money they are putting in is going towards recruiting, not retention. This notion that recruitment is viewed as more important than retention is further bolstered by LinkedIn’s report stating that only 32% of global talent leaders view retention as a top priority (Schmidt). However, if you have high employee retention, you will not need to invest as much time and money into recruiting. It would be beneficial to employers to use more of the resources at their disposal to invest in their brand and retention.
Yet another way that an organization can improve their employee retention is to focus more on quality hires. This tactic joins both retention and recruiting strategizing into a single approach. In 2017, a client of CRS had 28.9% of employees leave the company before the 3-month mark. The time and money spent in the recruiting process was not paying off. One reason for this could be that new employees were “bad” hires. If they were “bad” hires, the recruiting process may need to be adjusted to find higher quality employees. However, if employees left due to something that occurred during onboarding, training or later, the issue would be categorized as
a retention concern. One way to discern where the issue lies would be to conduct Training Effectiveness Interviews to complement the Exit Interview process.
It’s important for a company to invest resources in recruiting and retention as they are both crucial to a company’s success. Overall, employers need to be willing to talk to their employees to see how they feel about the company culture and if they feel valued. Additionally, they should have specific communication points during the recruiting, onboarding, and training processes to ensure the employee has the support, tools, and resources they need to be successful. If employees feel appreciated by their employers, the company’s retention numbers will improve greatly.
Miller-Merrell, Jessica. Recruitment vs Retention. Chicken vs. Egg. Workology.com
Schmidt, Lars. Why Retention Will Be The Biggest Talent Challenge of 2017. Forbes.com
https://www.zanebenefits.com/blog/bid/312123/employee-retention- the-real- cost-of- losing-an-