The competition for top talent continues to heat up as organizations fight for those who have highly sought after skills. In some industries where growth is the strongest, the search for candidates with the right stuff can take months. Yet, why is it that as quickly as companies secure their best employees, they jump ship?
Employee turnover is a major problem for companies
Studies about employee turnover can be shocking. It’s known that one-third of all new hires are already looking for new opportunities in their first six months on the job. In fact, 23 percent of all new hires turn over before they’ve completed a year of service. The Society for Human Resources Management (SHRM) indicates that half of all hourly employees leave their jobs within 120 days of employment. The numbers for millennials are even higher, because they tend to be seeking more rapid upward mobility in their careers than older counterparts. In other words, the talent that you want on your team is not planning on sticking around if you don’t give them above-average compensation.
While keeping employees is tough, paying fairly is easier than ever. Real time compensation data means there’s no reason you shouldn’t be paying competitively. Losing great people can be costly and devastating to any company. The Society for Human Resources Management (SHRM) report Retaining Talent stated, “Research suggests that direct replacement costs can reach as high as 50%-60% of an employee’s annual salary, with total costs associated with turnover ranging from 90% to 200% of annual salary.” Imagine how these lost funds could impact the company budget if you were able to reduce them through smarter employee compensation and onboarding?
What can be done to improve employee retention rates?
The truth is, unless a company takes the time to really examine the reasons why employee turnover is occurring at high numbers, there is little hope. Yet, there are measures that any organization can take now to slow the pace down and improve employee retention. One of these is to develop a well-managed onboarding process for all new hires.
Making onboarding a part of new hire retention
Onboarding of new employees supports long term success for a number of reasons that can include:
- An organized approach for sharing the knowledge and systems for accomplishing tasks
- Introducing employees to new concepts, people, and processes without overwhelming them
- Bringing new hires up to speed efficiently so they can become productive sooner
Additionally, onboarding programs demonstrate to new hires that the company is dedicated to their success on the job, integrates them into the corporate culture, and sets the stage for future growth.
Long term benefits for companies that use an onboarding strategy
When employers get employee onboarding right, the results can be magical. According to a joint survey published by the SHRM Foundation and Right Management, the long term effects of onboarding include higher job satisfaction, lower turnover, higher performance levels, more career effectiveness, greater organizational commitment, and lowered stress levels for new hires. Starting new hires out with a positive onboarding can be the key to greater retention and better human capital management.
Get the facts! Based on PayScale’s 2015 Compensation Best Practices Report, the number one reason why employees leave their companies is because of compensation concerns. There is a clear link between what employers offer their workforce and the incidence of turnover. Why not find out how compensation can support a positive onboarding experience for all employees (get the free report)? This information could be the difference between keeping your best hires and dealing with the high cost of lost employees.