It cost more to replace top talent than you think

The success of your business depends on a wide range of factors, such as demands of the market, your unique value proposition, business strategy, and not the least of which is, your employees. You can’t row a boat all by yourself, right? Your business needs the right people all rowing in the same direction in order to meet your goals. #squadgoals

It follows to reason that having a vital person missing from your boat (yup, still going with the analogy) is a huge problem. This is especially true for small and medium businesses for whom missing talent is more acutely felt. And in today’s economy of low unemployment, there are more openings around than there are qualified candidates to fill them. The job market is a cornucopia of opportunity for job seekers. The other side of the coin of abundant opportunity is that with so many options to lure employees away, businesses are struggling to hold onto top talent.

Small and medium enterprises are in a particularly tough spot in times of low unemployment; big businesses just have more budget to spend on recruitment. It’s a world-wide issue and many SMBs may not be aware of how costly it truly is to recruit, hire, and train new talent.

Brace yourself, here’s the hidden cost of finding talent breakdown:  

USA

• It costs an average of $4,129 and 42 days to fill open positions
• Average turnover rate is 19 percent
• $986 dollars per learning to get a new employee up to speed

Australia / New Zealand

• Average 68 days to fill open positions
• It costs an average of $5,000 just to find a candidate
• The total cost to recruit, train and hire an employee is $23,753

UK

• Average time spent on recruiting is 42.5 hours
• The average cost per employee to recruit is £4,000
• The total cost to replace an employee is £11,000

Those numbers should be sobering for any HR professional or small business leader. Australia wins the bad luck prize for most money lost on finding new talent, but the numbers are significant in each country. Enough of the doldrums; let’s focus on what you can do to avoid losing top talent and sinking costs into finding new talent.

Interestingly enough, the top reason talent leaves is the same regardless of reason: development opportunities. According to Business Insider, 77% of employees feel “on their own” to develop their careers and a full one-third quit their jobs because they didn’t learn new skills.

Australia may have won the bad luck prize for the highest cost to find new talent, but they’ve also stepped up in the biggest way, spending 35% more-time training from 2016 to 2017.

By making learning and development a core part of your business culture, your employees will see that you’re investing in them and that goes a long way towards keeping them around. Put budget towards a learning management system (LMS) with a robust course offering (both job-related and more broadly applicable “soft skills”). Encourage employees to take full advantage of on-demand courses on a regular basis.

Having a learning management system really is worth the investment. In fact, an LMS can increase course completion rates by 65% and employee productivity by 37%.

Building a learning culture may sound like a daunting task, especially at scale, but it is more attainable then you might think. We’ve got the case studies to prove it and walk you through it. Try watching this webinar from Organic Valley and get the true-life story of how one business built a culture of learning at scale.

Employees jumping ship in today’s tight labor market is cause for concern for any business, but the recipe for redemption is right in front of you. Invest in learning and keep your employees (and money) in your business.