You may have heard of the concept of the employee economy. Well sourced, correctly placed, appropriately trained employees have genuine value.

The longer an employee stays with the organization, the more value they are to the organization.

However, if failures in organizational learning cause the employee to cut short their time with a business, the investment made in ramping them up towards full productivity is lost.

When calculating the cost of employee turnover, be sure to factor in both the direct and indirect costs.

Direct Costs of Turnover

Training costs:

  • remuneration of employees involved in learning processes and on-the-job training
  • certification fees

Separation costs:

  • remuneration for time to conduct exit interviews
  • termination payouts
  • leave entitlements

Replacement costs:

  • remuneration for time spent conducting interviews
  • fees for advertising or recruitment agency
  • fees for employment testing

Indirect Costs of Turnover

Time to replace a hire:

  • Typically, it takes 8-12 weeks to replace a knowledge worker. In the meantime, the slack has to be picked up by other members of the team.
  • Ramping up a new staff member to full productivity takes 1-2 months
  • Companies are taking longer to fill positions, up from 48 days in 2011 to 52 days

Time to train a new hire:

  • A smart CEO will put the best people in charge of training a new hire, which impacts on the production capacity of (often) the most efficient staff members
  • During the new hire’s first 3 months, those hidden labour costs can quickly add up to tens of thousands of dollars

Lost productivity and engagement:

  • Frequent turnover has a negative impact on employee morale, which may further impact customer service, productivity, and company revenue
  • In a given organisation, more than 25 percent of employees can be categorised as flight risks
  • Lost productivity from continuity issues

As a broad guidance, statistics indicate that median costs for employee learning/replacement/training across a broad scope of pay levels are around 21% of the employee’s annual salary. For highest-paying executive positions, this can go up to 213%.

Engagement Learning Reduces Employee Turnover

Early impressions matter.

“86% of new hires make a decision how long they will stay with a company in the first six months”

– Aberdeen Group

Separately, research shows up to 20% of turnover happens within the first 45 days of employment.

The risk of turnover is even more pronounced today, because many companies engage in Employment Branding exercises to attract talent during the recruitment process.

Any mismatch between the candidate’s expectations, formed during recruitment, and the reality of working at a company, can cause them to become disengaged and may significantly shorten their stay.

Because organizational learning acts as the bridge between the highly-engaged recruitment stage and also directly shapes the first experiences of an employee at a company, effective training processes directly influence business success and growth by minimizing employee attrition and turnover, particularly during those early stages.

When building your business case, be sure to quantify the cost of employee turnover for your organization, and how much of this cost can be attributed to learning failures.

Building a Relevant Organizational Learning Experience for Today’s Talent

So how exactly do you use technology to create an engaging learning experience that is both relevant and attractive to new hires, such that it contributes to your employment branding? The key is relevance. Today’s workplace is a diverse mix of Baby Boomers, Gen X, Millennials and Gen Z.

This means it is important to deliver personalized learning experiences via channels that your employees are already using.

For instance, the modern employee is increasingly mobile-first in their approach to communications, and often prefers to consume short, snappy content delivered in bite-sized form.

Additionally, if your company employs a geographically dispersed workforce, you may need to personalize learning communications in line with local cultural norms.

The right organizational learning software has the logic and communications channels in place to deliver content in the correct channels for any employee type and according to job role, team, region, and even individual preferences, all without requiring a heap of manual work.

And this is what PX Business does best. Try it free today.


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