Companies struggling with turnover don’t just lose good talent. They can also suffer from all the related indirect impacts including work stoppages, loss of technical knowledge, trade secrets walking out the door, copyrights, network contact loss, and a lot more. In addition, there is then the added cost of recruiting and replacing the loss with someone else who may not have the same level of talent and has to be spent on their training to get up to speed. As a result, retention becomes a form of risk management, balancing the cost of retention with the cost of loss and replacement. In most cases, retention tends to be a lot less, with replacement expenses sometimes adding up to three times the cost of the talent before they leave. PEOs can help with the retention effort, both with data analysis and outreach.
The PEO Approach to Retention
It used to be that turnover risk was addressed in two ways: offering attractive promotion benefits to keep people on board longer, and providing proactive marketing on why the employer is a great place to work. In most cases, the latter approach didn’t do much at all after an employee had worked for a bit and learned the inside aspects of the company. The former option was only good for a while.
Eventually, even higher salaries didn’t do much to hold onto talent who didn’t feel engaged or appreciated. Nowadays, some will leave for lesser-paying alternative positions if they find an aspect that works better with their personal life, such as remote working.
Understanding that people have changed significantly in the employment world, PEOs shifted to data analysis and portfolio monitoring of employees to glean more insights into why people stay and others leave. That collected client data in turn helps identify potential talent loss risks before they walk out the door. The first step comes in establishing the baseline; what is the turnover, where is it occurring, and at what rate? The information is already in the HR files for the business, but it has to be filtered out and summarized to be useful.
The second step comes in identifying what needs to change to reset the perspectives of staff driving them to leave. More often than not, pay is not the issue. It may be how they are treated, the need for more flexible schedules, better training on equipment is needed, or specific supervisors are creating the concerns. This kind of information won’t usually come out directly, but a PEO can use surveys, data mining, and social tools to find causes that won’t be stated directly to supervisors.
Analysis and Response
With the above problems identified clearly by PEO services, new strategies can then be developed. Oftentimes, companies aren’t aware internally of all their options for retaining good talent, and a PEO’s expertise can lay out new options that have never been considered but are very viable. Common examples of this approach can be seen in education programs that help people pay for college in a new field, on-premises childcare programs, public transport subsidies or arrangements for staff who sign up, mentoring, rotational assignment programs for cross-training, and travel to business-related conferences and meetings.
Frequently, people want to feel valued and included, and alternative benefits can go a long way in that direction without triggering significant, new costs. Because PEOs are already versed in many of these options with other clients, they can leverage the same knowledge and expertise to bring them to fruition in new client operations.
Don’t Underestimate Turnover Impact
The damage from losing a talented emplpoyee can be both expensive and long-lasting. Some companies never fully recover the synergy they had when key talent was present. Rather than going through this pain, prevention can be a lot less and the benefits of retention can potentially open up new opportunities that otherwise might not have happened. PEOs have the skillset to help in this arena professionally. Companies will be well-served taking advantage of this resource versus letting good talent walk out the door.