Join us this week as we discuss the true costs of employee turnover and the power of recruiting from within.
Recently, we launched our innovative platform Zocket Powered, a stand-alone white-labeled HR tech tool that strengthens an employer brand and helps employees to find their perfect job match within the same company. Now, we are more passionate than ever to provide businesses with essential information on creating a sustainable workforce.
First, we’ll take a look at the most common reasons for staff resignation, the costs of recruitment, and an internal hiring solution that can save your business thousands, boost performance, and show why recruiting from within is the solution.
Your business needs to understand the reasons why your employees are leaving.
Why are your employees leaving?
Change is inevitable for any business, it can be extremely costly, and staff turnover can really affect your bottom line. Failing to provide your employees with an ideal work environment to grow is costing HR departments.
Below are our top 4 reasons that staff leave:
- There are no opportunities to grow or develop
- They’re motivated by higher pay
- They’re not engaged and have grown bored
- They’re poorly managed
By understanding the common reasons for high employee turnover, you can protect your business from a similar fate.
Employees who are well-compensated, challenged, engaged, and properly managed are likely to be loyal, productive members of your workforce for years to come.
“If businesses understand why employees choose to leave, they can better comprehend what makes them actually want to stay”.
Why is replacing an employee so expensive?
21% of an employee’s annual salary is the turnover cost for the company, so what makes it so costly?
- The off-boarding costs (severance, unused vacation pay benefits continuation, admin and payroll expenses)
- Cost of hiring (advertising, interviewing and hiring fees)
- Cost of on-boarding (training and management time)
- Lost productivity. No matter how perfect the new employee match is they won’t be able to instantly produce as much as someone who understands the position through years of experience. It make take the incoming worker up to two years
- Decreased output due to morale.When your turnover is high, the employees that remain will likely suffer from lowered morale. This may cause them to disengage and decrease their work output – which ultimately leads to a loss of revenue.
The solution – Recruiting from within
Have you considered recruiting from within? Before placing job adverts externally look for an internal candidate, the benefits are surprising and highly cost effective.
Internal candidates have multiple benefits for businesses that are often overlooked:
1. Reduction in hiring costs
Promoting internally is less expensive than hiring an external candidate.
When the company has the talent at hand, it doesn’t need to engage with recruiting agencies or place costly job adverts. Internal employees are already familiar with the organizational culture and processes. There is no need to train them on firm-specific policies and routines, which saves time and resources.
When starting at a new company, a worker needs time to adjust to the novel environment, but an internal candidate does not need this period.
A study by Bidwell even states that external hires earn substantially more than internal ones – up to 20%.
2. You know what you’ll get
When recruiting externally, a company never truly knows with whom it will end up with – an external candidate can disguise his or her true character in the interview rounds.
Hiring internally is less demanding for a business because it is more certain that the candidate has the right work ethic for the role. An internal hire already understands, from a process and procedural standpoint, how the business expects employees to operate.
In the first two years of employment in a new company, external hires get significantly lower performance evaluations than internal workers who are promoted into a similar job.
3. Increase loyalty
The same study shows that external hires have higher exit rates in the first two years.
Giving workers the opportunity to change jobs within the company adds a level of excitement and precludes the damage to morale that may result from losing a teammate. It also leads to increased engagement and loyalty, since the employees feel invested in their own professional development.
In conclusion, promoting internal talent will keep your employees happy, reduce hiring time and expenses, and ensure that you get someone who you already know is reliable and productive.
Does your company encourage internal hiring?
Are you looking for a way to better keep your internal talent?
Zocket Powered can help you to lower turnover-related expenses by giving you the tools to increase employee retention. Our stand-alone white-labeled platform facilitates internal mobility and supports professional development while allowing for complete transparency throughout the company and between departments.
With Zocket, avoid costs by promoting in-house growth and filling positions with internal candidates who already know your business.
Get started today and request a free demo with us.