Article: 1 Mn USD =The attrition cost of 150 employees - Here’s how employer branding can help!

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1 Mn USD =The attrition cost of 150 employees - Here’s how employer branding can help!

One of the first building blocks of an employer brand strategy involves doing market research with your target candidate segment.
1 Mn USD =The attrition cost of 150 employees - Here’s how employer branding can help!

If you’re a Business Unit Executive running your P&L or a CHRO, with attrition as one key concern, you’re probably looking at the title of this article quizzically wondering if I’ve been smoking something strange of late. But read on and you might just be surprised at the linkages.

Placing a quantifiable dollar value on reduced attrition

Beginning with the end in mind, let’s touch upon the bottom line impact here which in this case is the value of reduced attrition that employer branding can enable. Here’s a quick finger in the air estimate on that. SHRM estimates the cost of attrition varies between 50% & 250% of an employee’s annual compensation. For a detailed look at the various factors that contribute to that cost, look here  LinkedIn suggests that one should add to that the cost of reduced productivity of the same employee when he/she is in their last year of work. Gallup consulting estimates that disengagement costs 34% of an employee’s salary. So let’s do the math for a company of 1000 employees and an average turnover of 15%, you have 150 employees leaving each year. At the entry level, The average salary of a graduate IT engineer is about 3.5 lakh INR. Doing the back of the envelope math & taking midpoint ranges, that’s a minimum of USD 1 Mn per 1000 employees that a typical India IT services company employs.

Exploring the employer branding & attrition reduction linkages

At a 30,000 foot level, a comprehensive Employer Branding journey involves a couple of key elements that help significantly in this context. In the paragraphs that follow, I help connect the dots between these key elements & the subject of attrition.

  • What your candidates need & are looking for from their career & workplace
  • An assessment of the Internal reality within the organization 
  • Shining a torchlight into the minds & hearts of your candidates 

One of the first building blocks of an employer brand strategy involves doing market research with your target candidate segment. The intent of this research is to find out 2 things:

  • What is your target candidate’s career aspirations & goals
  • What are the other key facets of a job that are most important to them 

There are dozens of examples of the sorts of insights such research could throw up. I list here a few to give you an idea of the types. Examples of career aspirations that you could unearth with such research would be things like wanting to become a people manager as quickly as possible, to get international exposure, to work with clients directly or to be promoted every 2 years. Examples of facets of the job & work environment that the research might reveal are things like wanting a friendly & supportive work environment, international travel or flexible working hours.

Looking into your organization’s mirror

While the former was external market research, another key & significant building block of employer branding is internal research. The internal research attempts to understand what the current reality is for employees within the organization. It’s important to understand that this internal research is not a root cause analysis of attrition. Instead, through this research, what one is trying to get is a pulse for what it really feels like to work here. In most instances, we’re looking for what’s working best for employees as they work there, what makes them tick & what makes them stick. This is typically done by way of focus group discussions with a sampling of employees.

Tying it all together for attrition reduction

With the above 2 sets of data & information, you’re well equipped to tackle attrition.  You’ve now got a good sense for what your target population, say millennials, deem important both from a work environment & job characteristics perspective as well as purely from a career perspective. In addition, you have a pulse for what the reality within your organization is. Put the two together and you will likely see gaps. Thereafter you’ve got to get going addressing the gaps. The gaps could be of 2 kinds:

Perception gaps: If you’re seeing significant attrition & you’re happy with what you’re seeing from the internal research, it is likely that candidates are either coming in with a very different or higher set of expectations than those your organization can realistically deliver on. In this case, you would go ahead & get started right away with your employer branding to set more realistic expectations.

Environment/Engagement gap: If you’re seeing significant attrition & what you’re seeing from the internal research is not one to them .. how should we put it …. Not one to shout from rooftops about. In this case, you might want to consider developing employee engagement programs to address the gaps in the work environment.

In summary 

The benefits & value of embarking on an employer branding campaign as an approach to combat attrition stems from the fact that it helps you better understand the needs & aspirations of your target candidates, helps set expectations accurately and work on any gaps within your organization’s working environment. By working on this, an IT services giant in India could end up saving approx..1 Mn USD for every 150 employees that leave the company

Topics: GuestArticle, Employer Branding

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