25/52: Steering towards Employer of Choice
Attracting the best talent to your business (and then retaining them) relies heavily on your reputation as an employer. I've been asked for more than 15 years to develop strategies to source the best people I can find for my clients. In the process, I've come to realise that the long-term success of the people I place with my clients relies heavily on the decisions business owners and managers take to steer their organisations towards becoming an Employer of Choice.
What is an Employer of Choice? The Australian Business Award for Employer of Choice recognises organisations that "have developed leading workplaces that maximise the full potential of their workforce through practices that demonstrate effective employee recruitment, engagement and retention." Simply put, by putting in place the right systems and practices, you get the best out of your people and you keep them longer.
I'm often challenged to reduce our fees on the basis that recruiting via an agency is a costly exercise. When compared to unexpected and unwelcomed turnover, however, our fees are really only a small factor in the overall hiring equation. The biggest cost to a business through the hiring lifecycle is not recruitment, it is losing quality staff prematurely. Consider some of the significant costs involved in hiring and training a new employee:
Resourcing stage - costs can include agency fees, advertising, manager screening time, etc.
Staff downtime - Many (often senior) staff can be involved in the induction and training of new hires. This is lost productivity from your organisation's best and brightest that is effectively squandered if the new hire departs prematurely.
Ramp up - it can take up to 6-12 months for an employee to be 100% productive (and some never get there). This is effectively 6-12 months where you are paying above the odds for the output you're getting.
Hiring is a necessary cost (whether it be Managers' time or advertising fees) for any business. It's the cost to re-hire and re-train that is unnecessary.
In a negative loop, multiple staff leave a business prematurely creating multiples of the lost productivity highlighted above. Over time, a staggering amount of money can be spent simply keeping bums on seats (let alone creating high levels of performance). If you're interested in what it might be costing your business, the Victorian Government has put together this handy little calculator.
The goal for an Employer of Choice is to retain the best people and either help to improve, or ultimately end the employment of the people who are not performing. It's about recruiting the best people, engaging with them positively (training, development, career opportunities) and importantly retaining a higher proportion of the top performers in any one market than your competitors. If this is achieved then a positive feedback loop allows your great reputation to grow enabling you to attract the best talent, keep them longer, build a positive and productive culture and in turn, attract more of the best people in the industry to your business.
Not sure where to start? Being an Employer of Choice is about building your company's reputation as the best place to work for prospective employees. Start a conversation with your HR Director today or speak to a professional like me to help you lay out a vision.
For the sake of lost productivity and the high cost of hiring, start considering how you might be able to steer your business to a future where you consistently attract, and ultimately keep, the best people in your market.