Stay and pay is better than churn and burn

According to employment trends, it seems that many employers are concluding that it's better to jettison expensive, long-term employees in favor of youthful workers. They seem to assume that it's better for the bottom line to cut excess expense in salaries and benefits by replacing their existing employees with newer ones, thus lowering their overhead and improving profitability. This kind of thinking can cost you, especially in your role as a recruiter. Even though fresh employees may be attractive, it's generally more productive, and therefore more profitable, to keep your higher-paid, longer-term employees than to replace them with newer, lower-cost models.

 

You may not be able to find the replacement workers you are counting on when sloughing off the more expensive, older workers. With skill shortages in many industries and occupations, the talent may just not be there. Take the case of one national heavy equipment manufacturer.  This company offered an early retirement package to those approaching retirement age. Many smart, long-term employees decided to take the lucrative package. Then, the organization found it could not replace the workers and ended up hiring back many of its own retirees at a premium.

 

Wages may not be lower with newer employees.  Young employees are looking for competitive salary and benefits packages, and they often aggressively negotiate for top salaries. You might not be getting cheap labor.

 

Bad word-of-mouth is also an expense. You don't want word getting around your town or industry that your company is in the habit of turning over its employees. You'll find your pool of applicants and resumes dwindling down to a small stack of job seekers who are so desperate for work right now that they'll try their luck with your company. Your position may only be a stepping stone for their new career options, and then you'll lose even them.

 

Recruiting and selecting employees costs real money. Even if you could find replacement workers, and even if you could offer lower wages, there are many other costs of replacing workers, such as the upfront recruitment and on-boarding costs, not to mention the expensive risks of hiring unknowns, a percentage of whom you can fully expect to be bad fits.   Just consider all the costs involved in recruitment and selection:  costs of placing recruitment advertisements; costs of recruitment events, such as open houses and career fairs; costs of using third-party recruiters, recruitment advertising companies, and recruitment researchers; costs of recruitment materials; costs of administration of the selection process; costs of using selection tools, such as psychological and aptitude tests, background and reference checks, and drug tests.  Some organizations conservatively estimate that turnover, even with a bad employee, costs upwards of $10,000 per employee, and some employers with extensive training and on-boarding initiatives may realize even higher costs.

 

Training and on-boarding costs real money.  Assuming you are lucky enough to have hired a group of new, qualified employees, you can still count on experiencing lower productivity (when the position is vacant and when the new employee isn't yet functioning at full capacity), and potentially increased errors and mistakes, accidents, and even lost customers.

 

Turnover can be damaging to employee morale. When a key employee leaves the organization, remaining employees may find they have to work harder to complete the work.  They may also miss a good friend and see that loyalty gets them nowhere. Those left behind may also begin to think that perhaps they, too, should consider a move.

 

When you keep employees by meeting their needs, they tend to be more satisfied.  Satisfied employees often mean more productive employees who believe in the organization and are committed to quality work.

 

When you keep good employees, you become an employer of choice. Word gets around that your company is a good career move. When you have this kind of reputation, you'll discover that you don't have to work so hard to attract or source good candidates, since many will be waiting in line for the chance to work with a top employer.

 

Get The Best is the recruiting and sourcing idea book, chock full of tips, ideas, and how-to's for finding the best employees for your organization.  It provides specific guidelines on how to:

 

·    target labor market segments, including older workers, people with disabilities, women, and minorities.

·    creatively use non-traditional recruitment activities such as radio and television, telemarketing, and direct mail.

·    develop effective newspaper advertising.

·    improve staffing effectiveness by tracking recruitment data.

 

 

 

 

 

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Are you looking for a high-content speaker for your next conference or meeting?  Call or email Cathy to find out how she can work with you to meet your specific goals and objectives.

 

Cathy Fyock, CSP, SPHR, is an employment strategist-helping organizations develop strategies to recruit and retain top talent in an aging and changing marketplace.  For nearly 20 years she has combined her knowledge of work-force issues and her talents as a speaker to provide innovative and inspirational learning events. She has helped organizations attract top talent, reduce turnover, and improve productivity in a volatile labor market.

 

 

"Cathy Fyock offers a rare combination of mastery of HR knowledge, superior speaking skills, a passion for the HR profession, and warmth and humor that permit her to lead, inspire, and educate hundreds of HR professionals annually. I highly recommend her."

--Gary B. Kushner, SPHR, CBP
President, Kushner & Company

Permission is hereby granted to reprint articles from this report by Cathy Fyock, at no charge, with the agreement that the biographical information be included following each article used. One copy of the publication in which the article is published must be forwarded to Innovative Management Concepts. A fee of $300 per article will be expected for articles published without the biographical and contact information. Please contact us for assistance in editing this article to meet your publication guidelines.

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