There’s a quote attributed to insurance broker and best-selling author Elmer G. Leterman: “There is only one thing better than making a new friend, and that is keeping an old one.”
The same concept is reflected in a widely embraced business adage: It costs more to attract a new customer than keep an existing one. Keeping customers longer allows businesses to build cost-effective and predictable revenue streams, which in turn lead to superior growth compared to focusing solely on customer acquisition.
Perhaps less obvious but equally true is that it is far less expensive for organizations to keep good employees than replace them. One study found it costs between 16 percent and 20 percent of annual salary to replace a single employee depending on the rate of pay and type of position ninvolved. Just one, $10 an hour entry level position can cost an organization $3,328 in turnover costs. A mid-level manager with an annual salary of $50,000 cost as much as $10,000 to replace.
Why so much? Consider these factors: the cost of advertising, interviewing, screening and hiring a new employee; management time and costs associated with training; lost productivity during the transition; customer service errors that occur before new employees become skilled; and, the cultural and morale effects that ripple across the organization.
With such costs in mind, it makes sense for employers to invest in employee retention strategies as much or more than recruitment. This starts with employers viewing employees through the same lens they view their customers, aiming to understand and address their perspectives, problems, needs and goals.
A Towers Watson global work force study showed that 70 percent of employees agree their organizations should work to understand them as much as they are expected to understand their customers. In another study conducted by Ultimate Software, 75 percent of employees said they would stay longer in an organization that listens to and addresses their concerns. But fewer than half of employees reported having employers that do this.
So what steps can an organization take toward listening, understanding and addressing employees needs? Surveys and focus groups can be useful, but it’s important to implement these tools only when you’re ready and willing to address the issues you might uncover. If employees lose trust their voices actually matter or lead to change, such tools can do more harm than good.
Another step organizations can take is to implement well-being initiatives that address the fundamental needs of people to be safe, healthy and well. According to a 2015 Benz Communications survey, 64 percent of employees in organizations believed to effectively promote health and well-being say they plan to continue working in those businesses for at least the next five years. Contrast that with other studies that show between 52 percent to 69 percent of workers are looking for other jobs.
If a business spends just $10,000 a year on a well-being program, this cost will quickly be recoped if it helps the organization retain just one mid-level manager or three $10-an-hour employees for an extra year. And if the business can keep more than one top performer because of its attention to employees health and wellbeing, the return on investment from employee retention alone could be quite substantial.
If you’re not sure where to start with implementing an employee well-being program, consider completing an assessment to benchmark your organization’s current offerings and highlight areas for improvement. One such assessment is available through Health Links, a signature program of the Center for Health Work & Environment at the Colorado School of Public Health. By simply completing an online assessment at www.healthlinkscertified.org, you will receive immediate feedback in the form of a six-benchmark report card and an opportunity to meet with an expert workplace well-being advisor to help you set meaningful and effective goals for your organization.
As companies compete to retain the best workers, well-being programs that help employees feel valued and cared for can lead to significant returns to the bottom line. And as we begin to treat employees as well as we treat customers, we’ll create places where people flourish and choose to stay year after year.