As a Human Resources Manager, talent management professional, or corporate recruiter, one question you are often faced with is whether it costs your company more to retain a current employee or recruit a new one. When you make this calculation, you need to consider more than just the costs associated with the recruitment process as that is just the tip of the ice burg.
The quick answer according to a recent survey conducted by the EY research group clearly points to retaining a current employee as the less expensive option and what is best for the company. The question is why.
Beyond the actual recruitment costs, a new employee brings with them other associated costs. These include training your new employee on your company’s procedures and processes. They will also need time to come up to speed on your company’s specific work environment.
Also, a current employee has been there for the mistakes as well as the successes and knows what went into both. This information is shared by a group of people in the company and is called institutional memory. This is not available to a new employee until they have put in the time and experience in their new position to gain it.
Another cost to the company is the decline in productivity while you are searching for a replacement employee. This decline includes the time spent in the recruitment process as well as once the person is in the position and is dealing with their new learning curve. Studies have shown that it can take a new employee a full two years to obtain the level of productivity that your past employee had.
Finally, when workers see their peers leaving the company it does decrease morale. This, of course, leads to a decrease in productivity as well as other employees leaving.
If keeping your employees is best for your business how do you go about it? Again research shows that additional on-the-job training is the key. This training can take many forms such as on-site training, classroom training, or through subscriptions services, but the outcome will not only provide you with better employees, but your employees will feel a greater connection to the company and thereby increasing productivity and profits.
Spend your time and money on your current employees, and your company will see its productivity and employee loyalty increase and that’s a win-win situation for everyone.
