Increasing employee retention and reducing turnover costs are key factors in improving Return on Employee Investment® (ROEI®). Most HR managers recognize that there is a high cost to poor employee retention, however, turnover expenses are often underestimated. Studies show that the cost to replace employees range from 20% to a whopping 400% of their salary due to added expenses and lost productivity. A comprehensive HR system like Sage HRMS enables companies to increase employee retention, decrease turnover costs and thereby improve ROEI®.
While turnover rates in the US have decreased recently, 38% of employees plan to leave their employer in the next five years. Reasons they cite for leaving include poor relationships with a boss or coworkers, boredom in a job with no opportunities or challenges, lack of recognition, and misalignment of goals. When low turnover rates are due to a lack of employment opportunities rather than high employee satisfaction, disengagement levels rise lowering productivity. Instead company management needs to invest in ways to lower turnover through increasing employee engagement.
Last week, we discussed the effect of employee engagement on company profitability. Now, let’s look at some key areas for investment to increase employee engagement and lower the turnover rate. Many of these improvements can be realized through the use of technology.
- Information: Company-wide information is needed to monitor results of initiatives and make better management decisions. An HR solution like Sage HRMS will provide rich and precise company data, monitoring and reporting
- Communication: Better communication throughout the business is essential. Employees need easy access to company vision, mission and values. Through self-service portals and mobile technology, employees can directly access corporate goals as well as other information they need
- Work Environment: Studies have shown that employee satisfaction is increased through better social space, meeting rooms, social networking. A feature-rich HRMS system will offer social networking that can be used for informal discussions and recognition
- Employee Recognition: Actively recognizing an employee’s achievements is one of the most cost-effective means to increase employee satisfaction and loyalty. Monetary rewards are only one way to recognize achievement; employee satisfaction increases from other non-monetary awards as well. Through HR technology, managers can know when performance goals have been met and initiate recognition
- Training: Effective training programs empower employees to meet greater challenges and receive promotion. Management training can create better leaders leading directly to greater employee engagement. Your HRMS should be integrated with employee training tools and programs to track individual skill sets and abilities
- Compensation and Benefits: Even small companies need a balanced package of benefits and competitive compensation in order to increase employee retention. While healthcare benefits rate as being the most important to employees, other benefits such as holidays, paid time off, flexible work arrangements, retirement plans, tuition reimbursement and employee discounts are other offerings that employees may value. With Sage HRMS you can evaluate benefits usage and cost to evaluate their effectiveness
Investment in these areas will increase employee engagement and retention resulting in better business performance. To learn more about increasing employee retention and to calculate the real cost of replacing an employee, download our whitepaper, “ROEI®: Return on Employee Investment®, Increase Competitiveness on Your Biggest Asset”. This paper looks into investments that can help a company maximize the value of its workforce and shows how technology can help improve ROEI® and build a more profitable and successful business.
To learn more about how Sage HRMS can maximize ROEI® and empower your employees, click here. The consultants at Mindover Software can design a time-saving solution that addresses a broad array of HR requirements. Contact us to see what we can do for your company.