Let's say that an organisation is paying its HR Managers £50,000 per year. On average, they stay for three years. So, for three managers, that's £150,000 per year and £450,000 between the three over the average tenure. That’s a decent investment in ‘assets’.
It costs around 20% of someone's salary to replace them, so if:
- all three leave at around three years that's £30,000
- if turnover increases and two replacements also leave within three years, that’s £50,000
- in addition, there will be the lost productivity costs (which will be higher than the cost to replace), extra pressure on current HR employees to backfill whilst a replacement is found etc.
So, there would, in effect, be a cost saving per HR Manager if they stayed longer than three years, assuming they were still highly productive. Therefore, it would seem logical that it would be worth spending, say, £5,000 on each HR Manager within the three-year timeframe in order to encourage them to stay longer to save paying the £10,000 to replace them (plus the even higher lost productivity costs).
This doesn't necessarily mean paying them cash bonuses for each year of service. If you take people's intrinsic motivations, which you can glean from mojo:
- If someone is a Searcher, they will be motivated by a sense of purpose, so the money could be spent on allowing them to volunteer on company time. (If their day rate is around £200 and you decided to allocate £5,000 per HR Manager, then this would equate to 25 days of volunteering time, 8.33 per year.)
- If someone is a Spirit, they will be motivated by freedom, so giving them extra leave would likely be a good reward for them. (As above, this could equate to an extra 8.33 days per year.)
- If someone is an Expert, they will be motivated by learning, so paying for them to go on courses would be a suitable reward.
For decades, organisations have had business retention departments, whose sole role is to maintain current customers. The time has come for organisations to place the same effort in retaining productive employees. And the best way to do this is to understand them and to reward them with things that mean something to them.
Maintaining productive employees will not only result in maintaining or increasing performance over time, it will also save money. Organisations talk all the time about protecting their assets – surely no asset is more valuable than the people who do the work?