The U.S. workforce is on the brink of a Silver Tsunami. Experts estimate that nearly one in three American workers is at least the age of 50. As baby boomers quickly reach retirement age, companies are faced with a shortage of qualified younger replacements, particularly those with science and engineering skills. Aside from the fact that organizations are about to face a high volume of retirement, modern human resource managers grapple with retaining and recruiting the right employees.
Research firm Towers Watson reports that talent challenges are connected primarily to a lack of understanding. Most organizations don’t understand what matters to their workforce, or why employees stay with companies. This lack of understanding could lead to a loss of competitive advantage among organizations of all sizes. Attrition can cause 65 to 75 percent annual productivity losses in a vacated position. In many cases, the companies that grow and thrive will be those who develop a talent retention strategy. Here are five reasons your company should plan for the future.
1. Talent Mobility Is on the Rise
As the U.S. economy continues to recover, there has been a documented uptick in hiring globally since 2013. Employees considering a move have increased opportunities to advance their careers at competitors’ firms. As opportunities grow, so does the percentage of employees who may defect. Approximately 35 percent of brands report increased turnover, particularly among their best performers. As hiring mobility increases, companies must turn additional attention to retention.
2. Advancement Opportunities Are Crucial
As talented, young employees await boomer retirement, many feel that they’re unable to advance. Forty-one percent of employees who are considered high potential for leadership or advancement would leave their organization to advance their careers. Less than one-half of employers feel they’re effective at offering career-growth opportunities internally. If you aren’t able to provide your sharpest and most competent workers opportunities for additional responsibility, they could begin looking elsewhere.
The market for big data analytics for employee retention and promotion is growing quickly. By establishing a culture of impartial performance measurement, employees may feel their chances of receiving advancement opportunities are clear.
3. Attrition Is Costly
Many human resource professionals fully understand just how costly employee attrition can be. One Silicon Valley tech organization conservatively estimates the cost of replacement at $125,000. In addition to the costs of recruitment, screening and training, employers must absorb significant productivity losses as new workers get up to speed. Few companies can afford high turnover rates.
Also, companies may be making the wrong choices when it comes to replacement. Talent expert Josh Bersin reports that one major financial services firm found through their big data analysis that their hiring priorities didn’t line up with successful performance. This lead to a reset of recruitment strategy for improved retention.
4. The Cultural Impact Is Immense
If you begin to face a high rate of voluntary employee turnover, employee morale can drop company-wide. Workers always pause to ask “why” when someone leaves for another opportunity. Maximizing retention can minimize questions.
5. Employee Retention Is Customer Retention
Too few organizations consider the impact employee defection can have on their customers. Employees who’ve built close relationships with their clients often have remarkable expertise. Clients may feel their level of expert service drops when employees walk out the door.
While most organizations have non-compete agreements in place, clients may voluntarily churn to continue working with account managers at a new organization. Less severely, they may wonder if your organization’s culture is sub-par if they notice a high volume of employee turnover. A talent retention strategy can allow you to better retain and satisfy your client base.
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