It is common knowledge among business owners and human resource managers that, when an employee leaves, it costs a company money.
At iqDynamics, our statistics tell us that it costs an average of $25,000 to replace one employee who decides to leave the company.
On first blush, that statistic may seem unbelievable. However, when you start considering all of the steps to recruiting, interviewing, onboarding, and training one employee, you can start to see how replacing a valued employee would represent a significant tangible cost to a business.
Add to that, the intangible costs of a departing employee (customer relationships, department morale, employee knowledge of the company culture etc) and employee turnover might be one of the biggest financial hurdles facing most modern companies.
What’s worse is, there is a misconception in the business world that turnover costs aren’t preventable. From time to time, your employees will leave, and you will need to replace them.
There are things you can do to keep your people around—pay them more, promote a vibrant corporate culture, so on and so forth—but ultimately, you can’t beat inevitability.
In some cases, employee departures are inevitable. Some retire; others move away, yet others find dream jobs elsewhere and leap at those opportunities. Your business cannot alter these fundamental truths of talent management.
What you, as an HR professional, can do, though, is develop a leadership management pipeline that is consistently planning for turnover and growth. Indeed, by taking a holistic approach to your talent management pipeline, you will not only be able to attract the best new hires, but you will also be able to develop the talent you already have, into the leaders and managers of the future.
We mentioned above that, by making your people feel more valued, you can reduce employee turnover at your company. Believe it or not, this idea of creating a great corporate culture connects to your company’s ability to attract new employees or to fill vacated positions rapidly with people who are already in your talent pipeline. One of the keys to creating a great corporate culture, meanwhile, is to establish a robust performance management pipeline.
To understand how an effective leadership management pipeline works, let’s take a look at the average lifecycle of an employee at your company—from the day you hire them to their final day with your company. We’ve outlined the core stages of this lifecycle below, as well as how smart talent management tactics can be beneficial in each stage.
Recruitment: Your talent management pipeline starts, quite naturally, at the recruitment stage. By monitoring the talent in your organization and their paths for advancement through the company, your HR department can anticipate which jobs will need to be filled and start sending out feelers for new recruits. A strong leadership management pipeline will help attract the best candidates to your job posts, as your business will have a reputation for valuing its employees and rewarding hard work.
Onboarding: There’s a learning curve to every job. By paying close attention to all of your talents, you can make sure your new hires are getting the training, input, and resources they need to succeed within your organization.
Appraisals and Talent Assessment: As your employees work through your talent pipeline, your HR department will want to check in regularly to assess and appraise their performance and value to the company. What are the strengths of your employees? What are their weaknesses? Who in your organization could be groomed for leadership positions later on down the pipeline? What can you do to foster employee engagement and talent to get your people where you want them to be? Making the appraisal process interactive can give your employees and managers a chance to collaborate on setting goals.
Learning Development: During the appraisal process, you will assess areas in which your employees could grow. Establishing a learning management program will help your business develop new skills and build competencies in employees. In short, you will be developing your talent with ongoing educational opportunities. Strong learning development programs can propel employees through the talent pipeline by making them feel valued. They can also draw new external talent to your company, simply because most people want to work for employers who invest in their people.
Leadership Planning: In addition to keeping employees engaged and motivated, investing in learning management can also develop the skills and competencies that your employees need to become leaders within your organization. Your ultimate goal with your talent management pipeline should be to develop each employee to his or her fullest potential. Your staff will feel that they are consistently working toward the careers they want, and you will have people ready to fill leadership positions when your higher-ups retire or move on.
Succession Planning: With a quality talent management pipeline, your company could feasibly see someone climb the ranks from an entry-level position to CEO throughout the course of their career. As such, good talent management doubles as succession planning. When someone quits, retires, or gets a promotion, you merely have to look to your talent pipeline for a successor. By hiring from within, you save most of the money you would spend on recruitment, onboarding, and training—all while also motivating your existing employees to work harder.
To make the above points even more effective and more meaningful, use a modern integrated HR and talent management system such as HRiQ.
None of these statements mean that you shouldn’t ever hire externally. On the contrary, you should consistently be looking for quality people to join your organization and become a part of your talent management pipeline.
However, by developing your existing employees and pushing them to go as far as they can in your company, you create a more agile and effective business and trim your employee turnover costs to boot.