The hospital my partner works in is, like most hospitals, fighting a constant budgetary battle, with ever increasing calls on money and a limit on funds to provide the care required, both from management and patients. In a bid to combat this, a number of cost cutting measures were implemented that ensured short-term savings were made, which earned the manager in question plaudits from her own bosses.
The problem was that these cost cutting measures meant that the staff on the ward were put under ever increasing levels of stress, which resulted in huge staff turnover. To put it into perspective, in a 12 month period, roughly 40% of the wards staff left. If you’re not familiar with healthcare, let me tell you, it costs a whole lot to train someone in their first year on the job. On the intensive care unit, it costs even more, but the average cost of hiring and training a new nurse has been put at $36,000, so it gives you an idea.
Let’s do the math here. If 30 nurses leave in a typical year, that results in just under $1.1 million that has to be spent replacing them, just for that one ward. Multiply that across an entire hospital and the costs become astronomical.
You can do similar calculations in your own organization. The Hay Group produced some research a few years ago putting the average cost of replacing an employee that resigns at between 50-150% of their annual salary. Take your redundancy rate and multiply it by the average salary in your organization. Chances are the figure will be really high.
So why does this matter? Well, a CEB study earlier this year found that the 3rd most popular reason for leaving a job is a lack of respect. Respect can come in many forms, but being appreciated for the job you do and being asked your opinion on how it can be done better have to sit pretty highly in the things that matter most to employees. Harvard academic Teresa Amabile proved that making progress was the biggest contributor to employee engagement in her book The Progress Principle.
That’s where software such as that provided by Work.com comes in, because it allows employees to visibly and frequently provide the kind of feedback and recognition that people are craving in the workplace. It allows you to show that progress is being made, and that this progress is appreciated, and it can be done right at the time rather than waiting for the annual performance review.
When you think of the money wasted on employee turnover, it’s something of a no-brainer, right?