Every time you must replace an employee, you’re spending money. But the costs go far beyond the price of running a help wanted ad. The “revolving door” brings with it some of the most insidious – and staggering – hidden costs in the energy industry.
Where do these costs hide?
- Exit costs. Multiply the hourly wage of each HR employee who works on exit interviewing and paperwork related to a departure. The costs add up quickly.
- Recruitment. Measuring recruiting efforts similarly to exit costs only provides part of the picture. In fact, if your recruitment isn’t targeted or your compensation isn’t competitive, you’re not only spending this money – you’re getting little in return.
- Onboarding. One Deloitte survey estimated that it takes six months to get a new employee “up to speed,” 18 months to integrate them into the team’s culture, and 24 months to develop a full understanding of the business. In other words, every new employee needs up to two years to reach peak efficiency.
What does all this add up to? Costs of replacing an employee average between 46 percent of the employee’s annual pay for frontline work to for many professional positions, and up to 241 percent for managers and leadership, according to a study by the Corporate Leadership Council.
How can your company reduce high turnover costs?
Spotting the places you lose money when you lose employees is one way to help lower turnover costs. Focusing on improving recruiting and retention is another. Here are some tips for boosting retention and reducing turnover costs:
- Get all you can out of the exit interview process. Some costs related to an employee leaving are inevitable, but you can use the experience to improve retention as well. Start by asking employees, “What made you start looking for a new job?” Use their answers to improve your own processes.
- Go where the top candidates are. Do you know where the top candidates in your industry look for news on the latest job postings? If not, call an experienced staffing firm today. Your recruiter will know – and will focus on these resources – offering the greatest value for your efforts.
- Streamline the onboarding process. Talk to current staff about the essential knowledge for the job. Ask about their own onboarding experiences. What do they wish they had known sooner? What information was presented long before they needed it? Better onboarding helps new staff feel like part of the team more quickly, and it also allows them to contribute sooner after their start date.
At FootBridge Energy Services, our experienced recruiters specialize in helping our clients find and keep the best talent in the energy industry. Contact us today to learn more about our energy sector recruiting services.