As business analysts nationwide predict a continuation of the Great Resignation in 2022, employee recruitment will be one of the most costly – and preventable – business expenses for many companies this year, according to the turnaround management specialists at Resolute Commercial Services.
“The best way to favorably impact your bottom line in 2022 is to prioritize employee retention,” says Jerry Foster, president and founder of Resolute, a Scottsdale-based independent business advisory firm focused on diagnosing and resolving issues impacting middle market companies. “This is a critical issue for every business, whether you’re running a small firm, a middle market company or a major corporation.”
A recent Gallup report reveals it costs U.S. businesses more than $1 trillion per year to replace employees who resign voluntarily. That cost is expected to increase as nearly one in four Americans consider a job change in 2022, according to a ResumeBuilder.com poll.
Yet research recently conducted by the Gallup organization reveals that 52% of employees who leave their jobs voluntarily say their manager or organization could have done something to prevent them from resigning. A Udemy report states that nearly half of employees said they’ve quit a job because of a bad manager.
That’s why, employee retention is one of the first issues Resolute staff members address when they begin an engagement with a company needing turnaround services. In some cases, Resolute intervention has reduced a company’s staff turnover by up to two-thirds in just six months.
“In today’s workplace, a company can pay half, or more, of an employee’s annual salary to replace any given employee,” Foster says. “Covering the expense of replacing 25% or more of your staff annually is not a sustainable business model.”
The keys to keeping employees on board are transparency and quality management according to Foster. “Money isn’t always the main reason people leave a job,” he says.
Gallup reports it takes a more than 20% pay raise to lure most employees away from a good manager.
Foster recommends that business owners and company managers take the following five steps immediately to reduce potential turnover during the Great Resignation.
- Share your company’s vision for the future with employees so they know what they are working toward.
- Be transparent with any financial or business struggles that may be harming morale.
- Set clear objectives and goals for each employee.
- Give more praise and recognition, and genuinely thank your employees.
- Solicit employee feedback and really listen to what employees have to say.
Longer term strategies for reducing employee turnover include starting the retention process earlier, during the recruiting stage.
“You can increase retention by looking for a couple important traits before you make a new hire,” says Foster. “First, find someone who aligns with your company’s values, vision and mission. Then look for a track record of sticking around.”
Competitive pay, ongoing education, clear paths to advancement and remote work options, when possible, all help create a culture that retains employees, according to Foster.
“You literally cannot afford to take your employees for granted,” Foster says. “It takes an investment of time and money to retain employees, but the payoff is worth it.”
Resolute is an independent business advisory firm focused on diagnosing and resolving the challenging issues impacting middle market companies. Founded in 2008, Resolute provides solution-oriented fiduciary, financial, business, and real estate advisory services to financial institutions, corporations, law firms, state and federal courts, and trustees across the country to maximize value.
To date, Resolute has provided services in 36 states, with a strong presence in the Southwest and Mountain West regions. Its experienced staff has managed over $1 billion in distressed assets and sold more than 75 assets/enterprises with a total value of more than $250 million.