The Big Thing That's Costing Your Company Employees
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Companies lose almost one-quarter of all new employees within a year, a new study shows. But they can’t place the blame on external factors such as the economy, demographics or cultural trends, human resource experts say. Companies need to look within at factors such as underfunded onboarding programs or a lack of training and mentoring to understand why they are hemorrhaging employees.
The financial toll for these shortcomings is significant, a survey of 500 HR professionals sponsored by Allied Van Lines found. To fill one position costs an average of $10,731, with an additional $21,033 per new hire for relocation.
The money that companies spend on onboarding pales in comparison to the money spent on recruiting, the survey found. The average spend on onboarding among companies surveyed is $99,191 per year, which equates to about $67 per new employee.
[Recognizing Employees Is Critical to Retention]
Best-in-class companies spend considerably more—about $178,868 per year—and the results are telling. Employees of these companies are more likely to stay for at least a year, meet or exceed corporate productivity goals, and eventually become corporate leaders or influencers.
While most companies have some kind of onboarding program, only 19 percent have a dedicated budget for onboarding. And yet, companies with specific budgets for onboarding are almost twice as likely to be "highly successful" at it.
Further, best practices for onboarding are not widely employed. Only 66 percent of companies train their new employees. Even among companies rated best in class for onboarding, one-quarter do not train their employees.
HR professionals in the study said the top three reasons employees leave within a year of being hired are their relationship with their manager, their job performance and career advancement opportunities.
And yet, many companies are not sufficiently addressing these concerns. Just 44 percent of companies have coaching/mentoring programs, which could improve employee/manager relationships. And management participates in onboarding programs at just 35 percent of companies. Almost half (42 percent) of companies don’t identify clear job titles/expectations and only 39 percent of companies set milestones and goals for career advancement.
What’s more, the survey found, many HR professionals probably don’t know that employees are unhappy until they’re already out the door. Fifty-four percent of companies conduct "exit" interviews, but only 13 percent of companies conduct "stay" interviews to evaluate employee satisfaction while they are still employed.
Reach BusinessNewsDaily senior writer Ned Smith at nsmith@techmedianetwork.com. Follow him on Twitter @nedbsmith.