As an executive search firm, the Stanton Chase Los Angeles team spends a lot of time helping its clients find and recruit the best talent for their businesses. Our team focuses on placing professionals in new companies that need their skills, training, and experience.
Nevertheless, throughout that process, we never lose sight of the fact that retaining those individuals after the fact is just as important as hiring them in the first place.
The recent recruitment challenges caused by the Great Resignation have only underscored a truth that was very pertinent long before the crisis started: Employee retention is a critical part of business success.
One needs to look no further than the costs associated with replacing a C-suite employee to see why retention matters. Take a CFO as a good example. According to our own research, the base salary for a CFO in Irvine, CA is around $400,000 per year. Bonuses can easily boost that number to over $650,000.
Now consider a recent Gallup poll, where it was stated that a conservative estimate of the cost of replacing an individual employee can range from one-half to two times their annual salary. Another report released by the Center for American Progress highlighted the disproportionate way filling senior and executive-level roles, in particular, can add up. While the amount of training and experience can make a difference, the data put the cost per replacement hire as high as 213% of the position salary.
Based on these third-party estimates and our own CFO salary research, it could easily cost a company upwards of $1 million per leader they have to replace.
Companies also spend, on average, over $1,000 per employee on training expenses each year. Some of this is necessary to upskill retained employees (more on that further down). However, high turnover rates lead to the need to regularly replace industry knowledge and invest in team dynamics, too. These activities can add substantial training costs over time.
In contrast, there are many benefits that come from retaining employees, such as:
The takeaway here is two-sided. On the one hand, poor employee retention is a cancer that can eat away at your company’s bottom line and undermine things like collaboration and professionalism. On the other hand, a good retention rate can yield a host of powerful benefits that can directly impact your company’s long-term success.
Modern CEOs and CHROs are well aware of the need to retain employees. In fact, in a report from HR Exchange Network, nearly 60% of leaders responded that the combination of retention and upskilling was their top priority. Not one of their top priorities; it is their top priority.
The challenge is figuring out how to engage in thoughtful, effective retention efforts. Here are a few strategy suggestions that we’ve assembled to help get you started.
If you have a retention issue, the last thing you want to do is waste even more resources trying and failing to address it. That’s why the first step in any retention strategy should be identifying what is driving employees away from you.
SHRM highlights four primary paths employees take that lead to turnover:
The first option on this list is the hardest one to prevent. However, you can avoid all three of the others — or at least minimize them. The first step is investing in things like exit interviews and surveys to discover what it is that is pushing your employees and ex-employees to consider leaving your company so often.
Professional development used to be a nice perk. Now it’s become a necessity.
The work world evolves at a breakneck pace, and anyone who doesn’t strive to keep up will fall behind sooner or later. Employees are well aware of this reality, and if they don’t feel supported by their employer to keep pace with the change, it can undermine their loyalty.
Look for ways to invest in upskilling your existing workforce. That way you can maintain a staff of qualified, talented employees who are satisfied with their current employer.
There are many different ways to go about improving retention. If you’re feeling a bit overwhelmed by the options, you can follow a pre-established formula.
We recommend giving the PRIDE process a try. This focuses on five areas:
There is no single solution to employee retention. It’s important to use these suggestions and others as a launching point to craft a unique retention strategy for your company.
The post-pandemic era is quickly becoming defined by the ability or inability of businesses to retain talent. Those who can attract, train, and retain staff members put themselves in a position to succeed over time. They aren’t just maintaining their workforce in the present. They are also investing in the long term.
“Those who can attract, train, and retain talent put themselves in a position to succeed over time.”
Of course, the process of employee retention starts with recruitment. In fact, the two go hand in hand. The better you are at retaining talent, the more attractive you’ll be to new talent. In addition, the kind of individuals you hire influences how well your retention efforts will work.
Quality hiring isn’t easy, though. If you’re struggling to find good candidates to add to your team, an executive search firm can help you capture some initial momentum. Stanton Chase Los Angeles’s track record and far-reaching network have helped many of our clients discover key contributors to their leadership teams.
If you’re looking to build and retain a strong group of professionals, we can help you start the process in the name of a better, brighter future for your business.