026 – Paper Airplanes and the Cost of Attrition
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What is the cost of poor attrition?
In anticipation of the upcoming free webinar, 7 Reasons Why Your Best Employees Will Quit This Year (+7 Strategies to Retain Top Talent & Achieve Your Goals), this episode discusses WHY retention is so important.
Although some attrition can be healthy and normal, there are significant consequences when you are faced with the unexpected resignation of one of your top employees.
Mentioned in Today’s Episode:
Free Webinar: 7 Reasons Why Your Best Employees Will Quit (+7 Strategies to Retain Top Talent and Achieve Your Goals)
Episode 26 – Paper Airplanes and the Cost of Attrition
Let’s start by talking money.
Do you know how much it costs to lose an employee? There’s been a lot of ink spilled over this question but experts suggest that your company would be looking at a loss of anywhere from 6-9 months salary to potentially 2x the employee’s salary.
If you are really curious, you can find a number of calculators online that try to help you actually measure the yearly cost of attrition for your organization, but let’s suffice it to say… it’s expensive.
Here’s why attrition is expensive
- You need to consider the money owed to your employee, which could include things like stock payouts and accrued vacation pay
- You’ll need to recruit a replacement, so you need to look at not only lost opportunity during the recruiting period, but also the hourly costs of actually finding, interviewing and onboarding the replacement
- You need to consider the cost of training a new replacement
- You need to consider the potential negative impacts to your customers and how that may affect current and future revenue
- You need consider the lower production of a new employee getting up to speed once hired
- You also need to consider the lower production over the final few weeks of your former employees work… after all, once you’ve made a decision to leave, how much time is spent generating money for the company?
- Then you need to consider your own time and the hourly cost of you being distracted from your own priorities now that you are involved in exit interviews, recruiting efforts, training… not to mention decision making, team alignment, and all of the other conversations that always follow a resignation.
As I said, it’s expensive.
But even though the hard and soft costs of employee attrition are severe and important to consider as a manager, unless you are actually running the business, you may not feel so attached to those dollars that slip away. After-all, if your bank account isn’t directly tied to your company’s bank account, your wallet isn’t any thinner after an employee quits, right?
Well, maybe… while I’m not going to run through any math here, one could argue that regardless of the level of management you hold within your organization, attrition does have a financial impact on you.
And I’m not just referring to the fact that if attrition is high and your company has a poor year, your year-end bonus could be impacted (although that may be true).
How attrition impacts YOU
I’m talking about some of the softer costs, some of the seemingly insignificant consequences of losing an employee.
We’ll call these consequences, resistance
This may not be the best analogy in the world, but hang with me for a moment. On Saturday, I made a couple of paper airplanes with my oldest son, Jake, from some scrap paper he had coloured on. Now, Jake is about to turn 4 years old in a couple months, so… he’s a toddler…
So I took his crisp sheet of paper that only had a few blue crayon scribbles, and I formed a beautiful, aerodynamic paper airplane with clean lines and a form that could cut through the air like a hot knife through butter.
Then I showed it to Jake, threw it across the room and we both watched in amazement as it glided over the coffee table, past the armchair and smoothly landed on the hardwood floor.
Then Jake picked it up. And threw it, upside down, straight into the wall.
So I tried to tell him how to throw it properly, which didn’t work and ended up bending the paper airplane a little more out of shape.
In the end, what was once an aircraft perfectly capable of flying 10-15 feet in a relatively straight line, is now deformed, crunched up and flies on a 45 degree angle for about 2 feet before plummeting to the ground.
Those nicks, those creases, those deformities create resistance for the paper airplane.
Paper Airplanes and the Cost of Attrition
In this analogy. The paper airplane is both your effectiveness as a manager and your career… and it may represent you right now. It’s the beginning of the year, your team may be established, may be trained, may be motivated… you may have a crisp, well formed paper airplane, set to glide through the next 11 months, fluttering only as the breeze insists.
Then Jake comes in. That’s attrition.
And just like some attrition is healthy and natural, like the wear and tear I’d put on a paper airplane? Well, the unexpected resignation… the top employee who quits out of nowhere? That’s a toddler throwing your plans straight into the ground.
You can try to smooth out the new creases and you can put some tape over the tear in your wing, but the reality is that next time you throw it… your airplane has resistance.
So I want you to think about your goals for a moment. Think about what 2017 could be? What things you can accomplish, where your ideal destination is.
And I want you to recognize that if you want to get there… you need the team you have now to remain or grow, rather than shrink or disappear.
And I want you to recognize the contributions of your top employees. The value he or she might bring. The impact that him or her leaving could have on your ability to achieve your goals.
But I’m going to drag you through the glass a little more here.
As I said, there is a financial impact to you regardless of your level of management. And I say that because the longer it takes you to reach your goals, the longer it takes you to reach your potential… which often includes the financial rewards of bonuses, of salary increases and other monetary incentives.
Even beyond this, maybe money isn’t a primary motivator for you, when it comes to business and careers, we are all trading our hours for something in return. If it isn’t money, maybe it’s the satisfaction that comes from a job well done, or pleasing a customer… maybe you’re motivated by the opportunity make a positive impact on someone else.
(quick side note: if you are motivated by anything that requires money in order to achieve, I’m considering you to be money motivated here. It’s not that black and white, but for the purpose of this conversation, it is.)
Regardless of what you are pursuing, negative attrition, an unexpected resignation or even an expected resignation from a top employee will negatively impact your momentum. You will face resistance as you deal with that change… resistance that ultimately will delay your ability to achieve your goals.
Can you feel the gravity of this? Do you see why employee retention is such a big deal?
The BIG attrition question
If there are so many negative consequences to losing good people, why do so many managers refuse to take action? Why do so many managers refuse to ask for help? Why do so many managers sit around complaining or playing the blame game rather than trying to reduce poor attrition and do the things that will help them engage and retain their top talent?
I don’t have an answer… I suppose pride keeps us from asking for help… and I guess as managers we can sometimes have superman syndrome where we think we are better leaders than we are… or maybe we just don’t think there is anything we can do about it?
Let me tell you something.
The free training class I’m hosting on Wednesday and Thursday will discuss 7 reasons why good people quit. But, the number one reason that good people hand in resignation letters is because of their direct supervisor.
Which means that as a manager, there are things you can do, practical things that you can do to keep your team engaged and excited to come into work every day.
That’s why I’m doing this training.
I spent 8 years helping companies hire people and most of the people I recruited had good jobs at good companies. And it was my job to find out what they really wanted… and if they couldn’t get that thing in their current role, it was my job to connect them with a different opportunity where they could get that thing.
But here’s the reality.
In many of those circumstances, these hard-working top performers could have found success and could have achieved their goals without handing in a resignation letter. It wasn’t so much that I may have had a better opportunity, but often, it was more that their manager didn’t know what they wanted and didn’t build a plan to help them get there.
So I hope you’ll join me for the free workshop and find some valuable strategies that you can implement in your business, on your team, with your employees, and sail smoothly from from here to the end of the year.