Churn Rate Costs Millions of Rupees to an Organization!
“ Success in business is all about people,people,people. Whatever industry a company is in, its employees are its biggest competitive advantage” Richard Branson -Founder of Virgin Group.
We have all known this for a long time that a company’s most valuable assets are its employees. Satisfied, highly-motivated and loyal employees represent the basis of competitive company. Hiring employees is just a start to creating a strong workforce. Next, and the most important step to retain them. High employee turnover costs business owners in terms of money,time and productivity.
Despite the fact that most organizations know that their long term advantage resides in their people, most companies don’t think critically about how to increase employee retention. Management of the company does not often know opinions of own employees and underestimates that total successfulness of the company in the market is dependent on employees’ satisfaction.
Employee turnover is expensive. But surprisingly, in organizations especially in Pakistan have no framework for quantifying this cost, or they never even try. Employee turnover is generally understood to be bad, but there is little awareness of its quantifiable impact.
Josh Bersin of Deloitte believes “the cost of losing an employee can range from tens of thousands of dollars to 1.5–2.0x the employee’s annual salary. These costs include hiring, onboarding, training, ramp time to peak productivity, the loss of engagement from others due to high turnover, higher business error rates, and general culture impacts”. Employees, Bersin explains, are appreciating assets that produce more and more value to the organization over time, which helps explaining why losing them is so costly.
There are some major costs involved in the whole turnover process, for instance:
If you are a 150 person company with 11% annual turnover, and you spend Rs25k on per person on hiring, Rs10k on each of turnover and development, and lose Rs50k of productivity opportunity cost on average when refilling a role, then your annual cost of turnover would be about Rs1.57 million. Reducing this by just 20%, for example, would immediately yield over Rs300k in value. And that says nothing of the emotional headache and cultural drain felt from losing people.
There are a few questions to ask to check whether you’re on the right track or not. Are you offering a competitive benefits package that fits your employees’ needs? Have you dug down deep to make sure that the employees in the low tier are motivated, elevated or retained by the provided benefits? The impact a company creates applies at two levels; the impact your company is having on the world, and the impact an individual is having on your company.Finally, and just as critically, is creating a workplace that cares.
After speaking with this low tier in different organizations, the company PAXER proposes an effective solution to the companies to elevate, motivate and retain their most valuable assets. The Co-Founder and CEO of PAXER, Marium Khan says, “In Pakistan, the low tier management is the most overlooked employees of the company, therefore, their turnover is not even considered to be a cost.Talking with many senior executives of the most renowned companies, sadly,made us realize that the senior management has never quantified losing an employee from that tier. Most of these companies have outsourced their HR so when an employee leaves, he is replaced with another employee and therefore they are not troubled by the whole separation and rehiring process.”
According to The Co-Founder and Chief Disruptor of PAXER, Saad Tanveer, a motivated and a satisfied employee would promote a healthy culture at the workplace as compared to a demotivated employee. “But where does this motivation come from? According to Maslow’s Hierarchy theory, our most basic need is for physical survival and social security, and this will be the first thing that motivates our behavior. Once that level is fulfilled the next level up is what motivates us, and so on. If these needs are not satisfied the human body cannot function optimally. Physiological and social needs are the most important as all the other needs become secondary until these needs are met.” He says.
The Team PAXER believes that in a world where people are an organization’s most essential assets, companies need to be more strategic about how they think about employee retention to remain competitive. Employees are just humans who happen to be at work. You’ve hopefully learned some ways to make other humans happy in your personal life, so take that knowledge and apply it to your workplace. Once the basic need of sufficient income and job security has been met, create a culture that enables growth, impact, and care. It’ll save you a ton of money, help you stay competitive in your industry, and make the place you spend most of your waking hours much more enjoyable.
Many organizations in today’s time tend to face the utmost problem of retaining their employees on which they have invested a lot, financially and morally regardless to the where they stand in their organization’s hierarchical structure. Around 45% of individuals quit their job in the first 3 months. A particular enterprise loses its current employees while replacing them with new workers. Primarily, a high employee turnover rate influences an organization’s revenue, which, in turn, affects its profitability. Evidently, the impact of the high rate of employee turnover on the bottom line of corporations of any size can be adversative.
Being the pioneer in providing Employee Retention programs to businesses of all sizes across Pakistan, we help clients retain their valuable assets, As Employee turnover is a big worry for organisations these days Paxer being a one stop solution to our clients help businesses achieve high retention rates through the programs we offer.
Paxer tends to provide cooperation with opportunities for all the tiers of management by providing Employee retention programs which are designed in accordance to the employee needs which helps in filling the gaps. We Collaborate with our clients and blend our services which contribute to their employees needs and wants in terms of affordability and access.